Video game retail sales continued to decline in July.
According to market research firm NPD, sales plunged 19.3% to
$443.0 million from $549.1 million reported in Jul 2012. Sales
were significantly down from $593.3 million reported in June but
were much better than $386.3 million reported in May.
Software sales (including PC) fell 20.0% year over year to $222.3
million, considerably lower than $313.8 million reported in June
but higher than $175.1 million reported in May.
Electronic Arts' (
NCAA Football 14
was the top-selling game, replacing
The Last of US
that fell to #3 position.
climbed one place to claim the #2 spot, pushing
Animal Crossing: New Leaf
from Nintendo to #5.
Activision Blizzard's (
Call of Duty: Black Ops 2
remained at the #4 spot at the end of the month.
Hardware sales plunged 34.1% year over year to $99.4 million,
significantly lower than $142.0 million reported in June but
slightly higher than $96.0 million in May. Nintendo's 3DS was the
best selling hardware platform in the month, while Microsoft's
Xbox 360 remained the best console in terms of unit sales.
Accessories sales declined a modest 3.0% year over year to $133.4
million in July. Although accessory sales declined from $155.2
million reported in June, it was much better than $115.3 million
posted in May 2013.
According to NPD, sales of physical goods (hardware, software and
accessories) accounted for approximately 50% of consumer
spending, which was almost $1.2 billion in the month.
Digital Games July Sales
According to market research firm Super Data, overall digital
sales increased 5.4% year over year to $1.1 billion in July. This
was much higher than $841.0 million reported in Jun 2013.
Conversion rate improved 2.11% across all categories.
Revenues from social games surged 23.3% on a month-over-month
basis to $164.0 million. In July, King's Candy Crush Saga
as the most played social game on
in terms of monthly active users ("MAUs").
International Game Technology
DoubleDown Casino Slots & Poker
claimed the #3 spot.
Revenues from mobile games soared 32.0% year over year to $271.0
million, with an impressive conversion rate of 5.0%, which
indicates consistent higher spending. King's
Candy Crush Saga
War of Heroes
were leading apps, followed by Kabam's
The Hobbit: Kingdoms of Middle Earth
Free-to-play subscriber base slightly declined to 45.8 million
from 46 million in June. Average revenue per user ("ARPU") was
approximately $40 much higher than $27 reported in June.
Subscription based MMO revenues declined 9.0% on a monthly basis
to $76.0 million. Subscriber base declined to 5.8 million from
6.3 million in June. This was much anticipated due to the loss of
600K subscribers for Activision's
World of Warcrafts (WoW)
in the recently concluded quarter.
Downloadable game content sales increased 5.0% on a monthly basis
but declined 13.0% year over year to $286.0 million. The
month-over-month increase was driven by strong performance from
PC, which fully offset a decline in console sales.
We expect video game retail sales to remain sluggish over the
next few months, till the release of new hardware consoles from
Microsoft and Sony. The new consoles and a host of new game
releases such as
Grand Theft Auto V
Call of Duty: Ghosts
will boost retail sales.
We believe that increasing revenues from mobile and downloadable
contents (DLCs) will drive digital revenues going forward. Mobile
has strong growth potential due to improving gaming quality,
which is a major factor behind higher user spending.
Further, game developers such as EA and Activision are actively
using the digital distribution platform to provide additional
downloadable contents for popular titles such as
Call of Duty
. This will further boost revenues from DLC going forward.
Moreover, Facebook's entry into the gaming market as a publisher
is a major growth catalyst in our view. Its massive user base is
expected to attract game developers that will eventually boost
revenues from social gaming going forward. Currently, Facebook
has a Zacks Rank #2 (Buy).
Among the traditional gaming companies, we believe that both
Take-Two Interactive (
have strong growth opportunities in the near term based on the
Call of Duty: Ghosts
Grand Theft Auto V
Activision's recent announcement that it will buy back Vivendi's
429 million shares worth $6.0 million is major positive will
provide the company more freedom to decide the fate and
operating structure of most of its games including WoW.
Currently, Activision has a Zacks Rank #1 (Strong Buy), while
Take-Two carries a Rank #2 (Buy).
ACTIVISION BLZD (ATVI): Free Stock Analysis
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