Back to top

Analyst Blog

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’ (EA - Analyst Report) August release 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 Microsoft’s (MSFT - Analyst Report) Minecraft to #5. Disney Interactive’s Disney Infinity 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 Jun 2013.

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. Sony (SNE - Snapshot Report) announced a new free-to-play game EverQuest Next, while Activision Blizzard (ATVI - Snapshot Report) 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%. Activision’s World of Warcrafts (WoW) lost 200K subscribers in the recently concluded month.

Downloadable game content sales decreased to $116.0 million in August.  

Our Take

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, Battlefield 4 and 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 forward.

Among the traditional gaming companies, we believe that EA, Activision and Take-Two Interactive (TTWO - Snapshot Report) 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).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%