After a brief rise in January, video game sales plunged in Feb
2013. According to market research firm NPD, sales decreased
25.0% year over year to $810.0 million last month. This was also
short of $834.7 million reported in January.
Software sales decreased 27% year over year to $369.9 million
in February. This was slightly short of $373.1 million reported
Dead Space 3
Electronic Arts (
,a Zacks Rank #3 (Hold) stock,was the top-selling game in the
month, which pushed January topper
Call of Duty: Black Ops II
,a Zacks Rank #4 (Sell) stock, to #2 position.
took the #3 position, while
was placed at #4. Currently, Take-Two has a Zacks Rank #2 (Buy).
Metal Gear Rising: Revengeance
from Kojima Productions occupied the #5 position. EA had another
game in the top 10 list,
Madden NFL 13
at the last position.
Hardware sales fell 36.0% year over year to $244.2 million.
Hardware sales were better than $205.0 million reported in
Xbox 360 was again the top-selling console with 302,000 units
sold in February. This was also much better than 281,000 units
sold in Jan. Currently, Microsoft has a Zacks Rank #3 (Hold).
According to NPD, total US video game sales were $1.2 billion
in Feb, 2013.
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 Nintendo (released in Nov 2012), Microsoft
and Sony (expected in 2013) will boost the sagging video game
retail sales market by the end of 2013.
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