Video game retail sales increased in November, primarily
driven by strong hardware sales, which fully offset the declining
software sales during the month. According to market research
firm NPD, sales increased approximately 7.2% year over year to
November sales were significantly up from $791.1 million reported
in October and were better than $1.08 billion reported in
Software sales plunged 24.0% year over year to $1.09 billion, but
were considerably higher than $482.5 million reported in October
and $754.3 million in September.
Call of Duty: Ghosts
was the top-selling game of the month, which pushed
Take Two Interactive
Grand Theft Auto V
to #5 position.
Electronic Arts' (
was the #2 best-selling game, pushing Nintendo's
Pokemon X for 3DS
out of the top 10 list.
Assassin's Creed 4: Black Flag
captured the #3 position, pushing Nintendo's
Pokemon Y for 3DS
out of the top 10 list.
Hardware sales surged 58.0% year over year to $1.3 billion, much
higher than $171.7 million reported in October and $183.2 million
The stupendous growth was driven by strong unit sales of the new
consoles Xbox One and PlayStation 4 from
, respectively. According to NPD, both the companies sold more
than 1 million units within a short span of time, creating the
highest console sales record in a month.
Microsoft sold 909,132 Xbox One within the first nine days post
the consoles debut on Nov 22. To date, the company has sold more
than 2 million units globally. On the other hand, Sony reportedly
sold 2.1 million PlayStation 4s from its debut on Nov 15 through
According to NPD, PlayStation 4 was the top-selling console in
November. However, Xbox One was the leader on an average per-week
Nintendo's 3DS sold approximately 770K units in November, as the
sales of Wii U console soared 340% over sales in October,
primarily driven by a price cut in September.
Accessories increased approximately 17.0% from the year-ago
quarter to $327.4 million, primarily driven by robust sales of
interactive gaming toys from both
in the quarter.
Digital Games Sales
According to market research firm Super Data, overall digital
sales increased 25.0% year over year to $1.07 billion in
November. This was higher than $1.03 billion reported in October
and $970.0 million in September.
Revenues from social games increased $169.0 million, which
remained almost flat on a month-over-month basis. Mobile gaming
revenues surged 34.0% year over year and 4.0% month over month to
Free-to-play revenues were down 17.0% month over month to $217.0
million, while average spending per user declined approximately
10.0% month over month.
Subscription-based MMO revenues were $81.0 million, down from
$86.0 million reported in October. Downloadable game content
sales increased 41.0% year over year to $325.0 million in
We expect video game retail sales to improve significantly in
December due to strong unit sales of new consoles from Microsoft
and Sony. However, the November decline in Software remains a
Although we expect retail software sales to increase in December
(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 that slow console sales growth reflects ongoing
consumer transition to smartphones and tablets. We expect
increasing revenues from mobile and downloadable contents (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.
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,
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
Currently, Activision has a Zacks Rank #2 (Buy), while both Take
Two and Electronic Arts carry a Rank #3 (Hold).
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