Video game software sales continued to disappoint in Feb 2014.
Software sales declined 9.0% to $318.0 million according to
Venturebeat.com, which tracks video games market research firm
NPD's monthly data. However, according to The Wall Street Journal
(also quoted NPD data), software sales actually declined 11.0% to
$328.0 million in February.
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Although the difference between the sales figures is immaterial,
it is easy to note the fundamental problem that is crippling
sales. Games for new consoles from big players such as
Electronic Arts (
Activision Blizzard (
have failed to offset the plunge in retail unit sales for older
NPD cited few game releases in the month as another reason behind
the dismal software sales. Moreover, gamers continued to spend on
new consoles from
, which further affected software sales. Hardware sales soared
42.2% year over year to $347.0 million.
Total retail sales increased 9.0% year over year to $887.0
million. NPD figures do not include digital and online sales.
Call of Duty: Ghosts
retained the #1 position.
The Lego Movie Videogame
from Warner Bros.' subsidiary TT Games grabbed the #2 position,
to #3 spot.
announced that it sold 200K and 180K units of 3DS role-playing
, and Wii U's
Donkey Kong Country: Tropical Freeze
, respectively. The strong performance from
Donkey Kong Country: Tropical Freeze
drove Wii U sales by 25.0% from the year-ago period.
Microsoft announced that it has sold 258K Xbox Ones in February.
Per NPD, Sony's PlayStation 4 sold more units than Xbox One, but
earned less revenues in dollar terms. On a month-over-month
basis, most of the hardware consoles achieved double-to-triple
digit growth in the month.
Digital Games Sales
According to market research firm Super Data, the highly
anticipated launch of EA's
(finally hit stores on Mar 11, 2014) negatively impacted digital
game sales in February. This, coupled with sluggish social gaming
performance, overall digital sales declined 5.0% month-over-month
to $959.0 million. However, on a year-over year basis, digital
sales jumped 17.0%.
Revenues from social games decreased to $167.0 million in
dropped to #3, while
International Game Technology
grabbed the #2 position.
Average revenue per user of King Digital's Candy Crush Saga
remained almost flat at 58 cents in both January and February,
while Supercell's Clash of Clans increased from $1.29 to $1.34
during the same period.
Downloadable content (DLC) revenues surged 23.0% year over year
to $291.3 million. Revenues from free-to-play games jumped
approximately 27.0% from the year-ago quarter to $584.8 million.
We expect video game retail sales to improve slightly in 2014 due
to strong unit sales of new consoles from Microsoft and Sony.
Although we expect retail software sales to increase in 2014 (due
to new game releases), the long-term outlook remains bleak.
According to PwC, worldwide console game sales are expected to
grow 4.2% to $26.0 billion in 2013 and 6.4% in 2014. However,
this is much slower than the 28.0% growth reported in 2007, after
the release of Xbox 360 and PlayStation 3 consoles.
We believe slow software sales growth reflects the ongoing
consumer transition to smartphones and tablets. We expect
increasing revenues from mobile and DLCs to drive digital
revenues, going forward. Mobile has strong growth potential due
to improving gaming quality, which is a major factor behind
higher user spending.
Among the traditional gaming companies, we believe 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 near-term headwind.
will boost EA's sales in March. The game's exclusive availability
on Xbox One will boost the consoles' unit sales, driving
Microsoft's near-term revenues.
Currently, Microsoft has a Zacks Rank #2 (Buy). Take-Two has a
Zacks Rank #2 (Hold), while EA and Activision carry a Zacks Rank