When it comes to sports video games,
rules. But some analysts see
(TTWO - Get Report)
becoming a serious challenger to the throne.
That's because Take-Two is using cut-rate prices to take on EA -- a plan that has boosted sales of its
ESPN NFL 2K5
game, which Take-Two co-publishes with
. Analysts fret that EA will have to resort to discounting prices on its own sports games -- or risk losing sales to Take-Two.
"I don't think [EA is] accustomed to competing on price. I think they're really confused as to what to do," said Michael Pachter, who covers the video-game industry for Wedbush Morgan. But "if EA doesn't cut their prices, they're going to have real trouble," Pachter added, projecting that the video-game giant could lose up to $40 million in sales to Take-Two this holiday season -- about 2.5% of EA's expected December quarter revenue.
(Wedbush Morgan hasn't done investment banking with EA or Take-Two, and Pachter doesn't hold either stock.)
At first glance, the latest sales data seem to reinforce EA's dominant position. The company's
Madden NFL 2005
game was the bestselling title in August across all platforms, according to a recent report from NPD Group. And a special collector's edition of
and the company's
NCAA Football 2005
were Nos. 2 and 5 in sales across all platforms.
Using NPD data, Pachter estimated that unit sales of
were up 14% from a year ago.
That's a healthy number, to be sure. But console sales grew at a considerably faster clip over the last year, noted P.J. McNealy, who covers the video-game software industry for American Technology Research. For instance, the number of people who own a PlayStation 2 is up 30% from last year, McNealy said.
NPD's data also indicate that
market share is down considerably from last year, especially in terms of units. Take-Two sold nearly 760,000 boxes of
in August, according to NPD. Since the company released the title last month,
has sold about 1.5 million units. In July and August of last year, all of
competitors combined sold about 44,000 units.