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June is really five weeks

There had been some question before the June hybrid futures contracts were listed whether the month of June covered five weeks of sales rather than four weeks. In our obliviousness of this retail data accounting method, we IPOed the June hybrid futures at the expiration of the May hybrid futures. We got word from NPD that June is in fact a five-week month. This means the current futures predictions are priced one week short.

Martin at NPD explained to me that this actually is not an NPD invention but the retail industry’s standard calendar. “Retailers track and report their data on a weekly basis, with each week running from Sunday through Saturday. When they calculate monthly sales, they add up the weeks - since they historically didn't have daily sales data available, they didn't actually calculate the exact month's sales (e.g. June 1st to June 30th), they just add up the nearest 4 or 5 weeks, depending on the month.”

“The official retail industry calendar has March, June, September and December as 5-week months, with the rest being 4-week months. And since a year is slightly more than 52 weeks, every few years there's a "leap year" declared and one of the months gets an extra week to keep the retail calendar's months roughly in sync with the regular calendar. This past February was a 5-week month for that reason, which made year-on-year growth comparisons for that month a bit biased.”

“There are other oddities caused by the retail-vs-actual calendar gaps. For example, if a game is release in the first or last couple of days in a month, and if those days end up in a different retail month, a game might either show no sales in the month it's released (e.g. if it released May 30th and ended up in June data) or it might show sales in the month prior to its actual release (e.g. if it releases the 1st of a month, but that date is included in the prior retail month).”

Now this is all common knowledge among industry professionals, but may be something new to you. These accounting differences are important because they affect the forecasts in ways that may be unexpected to the average gamer. So now you know, if June sales are larger than May sales, it doesn’t mean the console is actually selling better because the “month” is including a longer time period. Thanks to Martin for explaining this. For listing hybrid futures contracts 25% too low, we can only blame our noobishness and scream “beta” in defense.

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