Video game retail sales jumped significantly in September,
primarily driven by higher software sales, which fully offset
declining hardware sales in the month. According to market
research firm NPD, sales surged 27.0% year over year to $1.08
billion. Sales were significantly up from $521.0 million reported
in August and $443.0 million reported in July.
Software sales soared 52.0% year over year to $754.3 million,
considerably higher than $293.4 million reported in August and
$222.3 million reported in July. The strong growth was primarily
driven by robust performance from
Take Two Interactive
Grand Theft Auto V
, which became the top-selling game of the month.
Madden NFL 25
was the #2 best selling game, pushing
Saints Row IV
from Deep Silver to the #10 spot.
from Take Two claimed the #3 position.
Despite declining 13.0% year over year to $183.2 million,
hardware sales were much higher than $90.8 million reported in
August and $99.4 million in July.
PlayStation 3 was the best console in terms of unit sales in the
reign at the top for 32 consecutive months. Nintendo's 3DS was
the bestselling hardware platform in the month.
Digital Games Sales
According to market research firm Super Data, overall digital
sales increased 6.0% year over year to $970.0 million in
September. This was higher than $846.0 million reported in August
but lower than $1.1 billion reported in Jul 2013.
Revenues from social games increased 16.0% year over year to
$176.0 million, better than $166.0 million reported in August.
Mobile gaming revenues surged 52.0% year over year and increased
14.0% on a month-over-month basis to $266.0 million. Monthly
active users were 246 million at the end of September.
Free-to-play revenues were $249.0 million in the month, while
subscriber base grew approximately 700K. Subscription based MMO
revenues were $82.0 million, down from $88.0 million reported in
August. However, subscriber base declined by 300K in September.
Downloadable game content sales decreased 23.0% year over year to
$198.0 million in September.
We expect video game retail sales to improve significantly over
the next couple of months due to the launch of new hardware
consoles from Microsoft and Sony and a host of new game releases
such as Battlefield 4 and Call of Duty: Ghosts.
Moreover, higher consumer spending during the holiday season will
further boost sales in the near term.
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 Blizzard (
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.
Among the traditional gaming companies, we believe that EA,
Activision and Take-Two Interactive have significant growth
opportunities due to their innovative product pipeline in the
near term. However, market fragmentation remains a major headwind
in the near term.
Currently, Take-Two has a Zacks Rank #2 (Buy), while Activision
carries a Rank #3 (Hold).
ACTIVISION BLZD (ATVI): Free Stock Analysis
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