Video game retail sales unexpectedly increased in August.
According to market research firm NPD, sales climbed 1.0% to
$521.0 million from $516.3 million reported in Aug 2012. Sales
were significantly up from $443.0 million reported in July but
were slightly down from $593.3 million reported in June.
Software sales (including PC) increased 21.0% year over year to
$293.4 million, considerably higher than $222.3 million reported
in July but lower than $313.8 million reported in June.
Electronic Arts' (
Madden NFL 25
was the top-selling game, pushing EA's
NCAA Football 14
to the #7 place.
Saints Row IV
from Deep Silver claimed the #2 spot and pushed
to #5. Disney Interactive's
claimed the #3 position.
Hardware sales plunged 40.0% year over year to $90.8 million,
lower than $99.4 million reported in July and $142.0 million in
June. Nintendo's 3DS was the bestselling hardware platform in the
month, while Microsoft's Xbox 360 remained the best console in
terms of unit sales.
Accessories sales increased 7.0% year over year to $136.7 million
in August. Although accessory sales increased from $133.4 million
reported in July, sales were much lower than $155.2 million in
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 Sales
According to market research firm Super Data, overall digital
sales increased 4.1% year over year to $846.0 million in August.
This was much lower than $1.1 billion reported in Jul 2013.
Revenues from social games were almost flat on a month-over-month
basis at $166.0 million. Revenues from mobile games declined as
average spending fell below $20.0.
Free-to-play subscriber base remained almost flat at 46.0 million
in August. Average revenue per user ("ARPU") was approximately
$36, much lower than $40 reported in July.
announced a new free-to-play game
Activision Blizzard (
launched the beta version of
The Hearthstone: Heroes of Warcraft
Subscription based MMO revenues declined 26.0% on a
year-over-year basis to $88.0 million. Subscriber base remained
steady in August, while conversion rate jumped to 15.0%.
World of Warcrafts (WoW)
lost 200K subscribers in the recently concluded month.
Downloadable game content sales decreased to $116.0 million in
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 Battlefield and
Call of Duty. This will further boost revenues from DLC going
Among the traditional gaming companies, we believe that EA,
Take-Two Interactive (
have strong growth opportunities due to their strong and
innovative product pipeline in the near term.
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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