Video game retail sales declined for the thirteenth
consecutive month in December 2012. According to market research
firm NPD, sales slumped 22.0% year over year to $3.2 billion last
month. Overall video game sales in 2012 declined 22.0% to $13.26
billion from $16.99 billion reported in 2011.
Both software and hardware sales plunged in December 2012. The
holiday season failed to revive software sales, which declined
26.0% year over year to $1.54 billion in December.
Call of Duty: Black Ops II
continued to top the game sales chart in December 2012.
Currently, Activision has a Zacks Rank #3 (Hold). Ubisoft's
Just Dance 4 was #2
, which pushed November runner-up
Halo 4 from
to #3 position. Microsoft has a Zacks Rank #3 (Hold).
As per NPD,
Call of Duty: Black Ops II
was the top-selling game in 2012, followed by
Madden NFL 13
Electronic Arts (
, another Zacks Rank #3 (Hold) stock.
took the #3 spot, while Ubisoft's
Just Dance 4
grabbed the #4 and #5 spots, respectively. Activision's
Call of Duty: Modern Warfare 3
FIFA Soccer 13
made it to the top 10 games list for 2012.
Hardware sales plunged 20% year over year to $1.07 billion.
The year-over-year decline was due to 37.0% decline in
stand-alone hardware sales. Hardware sales declined 27.0% year
over year to $4.04 billion in 2012.
Microsoft's Xbox 360 was again the top-selling console with
1.4 million units sold in December. Nintendo sold 1.25 million
3DS and 470,000 of standard DS last month. After a gap of six
years, Nintendo released its new gaming console Wii U on November
18, 2012 and sold approximately 460,000 units in December, less
than 475,000 units sold by the original Wii during the same
period in 2006.
To date, Nintendo has sold 890,000 units of Wii U in the US.
However, the new console earned more revenue (approximately $30.0
million more) compared with the original due to higher pricing.
The most expensive Wii U costs $350, compared to Wii's single
We expect video game sales to remain sluggish over the next
few months. Although we believe that the ongoing transition from
the physical to the digital platform will ultimately benefit the
video game industry (due to the cost effectiveness), low priced
digital games have failed to offset the rapid decline of
high-priced retail sales in recent times.
Moreover, declining software sales remain a concern. We
believe that the rapid adoption of free-to-play games will
continue to cannibalize retail software sales in 2013. Further,
the highly fragmented video game market will continue to witness
increased competitive pressures, which will hurt overall
However, we believe that the highly anticipated launch of new
hardware consoles from Microsoft and Sony (expected in 2013) will
boost the sagging video game retail sales market going
We maintain our Neutral recommendation on Activision, EA, and
Microsoft over the long term (6-12 months).
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