FunMan2001 : Merrill Lynch lowered its market projections ...
In early trading, shares of Electronic Arts (ERTS: news, chart, profile) surrendered 3 percent to $66.18, and THQ (THQI: news, chart, profile) fell 4 percent to $13.78. Activision (ATVI: news, chart, profile) slipped 6 cents to $19.05. Take-Two (TTWO: news, chart, profile) and Midway Games (MWY: news, chart, profile) traded lower.
Acclaim (AKLM: news, chart, profile) was the only company bucking the trend. See related feature on game-software developers' post-holiday blues.
In its new report, Merrill Lynch says it expects video software sales to rise 10 percent in 2003 -- that's down from its previous estimates of 15 percent growth. Sales are expected to remain flat in 2004.
"As a result, we believe it will be challenging for publishers to post strong top-line growth in '04 without solid market share gains," analyst Justin Baldauf wrote.
Baldauf estimated overall video game software sales rising 22 percent to $7.32 billion this year. This is slightly lower than his prior estimate of $7.45 billion.
For 2003, video game software sales are expected to grow 10 percent to $8 billion, a growth rate that's 30 percent below Baldauf's prior projection of 15 percent.
For 2004, sales are expected to stay close to $8 billion vs. previous estimates of $8.3 billion.
The lowered projections are partly due to an assumption that console unit sales will remain flat in 2003