We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can 2023 Turn the Fortunes of a Slowing Video Game Market?
Read MoreHide Full Article
The fortunes of the videogame industry took a wild swing this year. After hitting record sales during the peak of the pandemic, videogame sales slumped in 2022, making it one of the worst years in recent times. Sales began to slow down with the economic reopening and declined in the first three quarters.
However, sales have been picking up lately and the holiday season might aid in the recovery as the industry is projected to bounce back from its lows in the coming months. Moreover, the industry could do well with the release of several new games from top videogame developers.
Holiday Season to Help Videogame Market
After a disappointing first half and a second quarter, the videogame industry is finally seeing some hope, as sales rebounded in October. According to The NPD Group, consumers spent a combined $4.3 billion on videogame software, hardware and accessories in October. Although hardware sales were still 2% down from the same period last year, software sales climbed 2% to 4 million.
The videogame industry is suffering due to several challenges. The pandemic saw sales skyrocket in 2020. Experts had projected sales to gradually drop with economic reopening and finally decline as consumers would have more options for outdoor amusement.
The projections, however, didn’t match because 2021 also turned out impressive for the gaming sector, as a number of new title releases continued to drive sales. Beginning this year, things began to change.
There is little doubt that the sharp decrease in sales is being caused by inflation, which is at multi-year highs and concerns over a recession. The global gaming market could see its first decline in annual sales in a decade owing to these concerns.
According to Newzoo, consumer spending on video game software is expected to fall by 4.3% in 2022. Consumer spending on gaming software, in contrast, increased 7.6% last year and grew 25% in 2020.
Videogame Industry Poised to Grow
Another major reason behind slowing videogame sales has been a dearth of new platforms and game releases in 2022. Consumers had been waiting for new releases almost throughout the year but the first half remained almost dry. New title releases and console launches typically boost sales.
The recent jump can be attributed to the release of a number of new titles. Hardware sales have also been showing signs of improvement. In October, eight new titles were released. And there was sufficient justification for gamers to spend more money on software and equipment.
The holiday season typically helps boost retail sales. Also, more new titles are expected to release in 2023.
The October release of Call of Duty: Modern Warfare 2 (2022) by Activision Blizzard instantly made it the top game of the month. The new title has been helping ATVI's earnings lately after reaching a $1 billion sell-through in just 10 days of its release. Other games by Activision Blizzard have also helped to increase its sales.
The Oct 4 global launch of ATVI's Overwatch 2 has also been received well. In its first month, the game was played by more than 35 million individuals, with more gamers playing on average each day than its well-liked predecessor.
With sales rebounding, Activision Blizzard posted net bookings of $1.83 billion in third-quarter 2022, which is down from last year’s $1.88 billion. Activision Blizzard presently has a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gotham Knights, another October title from Warner Bros. Interactive, came in second, with FIFA 23 from the Electronic Arts (EA - Free Report) stable coming in third. In September, EA's FIFA 23 occupied the top position.
In fact, Electronic Arts' sales have been getting a boost from FIFA 23. Unit sales for FIFA 23 were 10% higher in the first four weeks following release than last year’s edition. EA now expects its net bookings for 2023 to range between $7.65 billion and $7.85 billion.
The PlayStation 5 from SONY (SONY - Free Report) was the most popular gaming system in terms of both unit and dollar sales. According to SONY, 3.3 million PlayStation 5 consoles were shipped during the third quarter. As a result, SONY sold 5.7 million PlayStation 5 consoles overall in the first half of 2022. Naturally, the introduction of new games is also boosting console sales.
SONY’s Game & Network Services segment recorded a whopping $4.8 billion in sales in the third quarter of 2022.
Microsoft Corporation (MSFT - Free Report) also has been maintaining its position as one of the top sellers of gaming consoles. Microsoft Xbox Series consoles took second place in both units and dollar sales. Microsoft reported that while gaming revenues increased 4%, Xbox hardware sales increased 13% in the first quarter of fiscal 2023.
According to the latest global video games market report, the global video game market is projected to grow by $133 billion between 2022 and 2028, at a CAGR of 9.1%.
The jump in October is a good sign given that the rebound comes just ahead of the holiday season. Demand for both software and hardware is projected to rise in 2023 as more next-generation consoles and new games go on sale.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Can 2023 Turn the Fortunes of a Slowing Video Game Market?
The fortunes of the videogame industry took a wild swing this year. After hitting record sales during the peak of the pandemic, videogame sales slumped in 2022, making it one of the worst years in recent times. Sales began to slow down with the economic reopening and declined in the first three quarters.
However, sales have been picking up lately and the holiday season might aid in the recovery as the industry is projected to bounce back from its lows in the coming months. Moreover, the industry could do well with the release of several new games from top videogame developers.
Holiday Season to Help Videogame Market
After a disappointing first half and a second quarter, the videogame industry is finally seeing some hope, as sales rebounded in October. According to The NPD Group, consumers spent a combined $4.3 billion on videogame software, hardware and accessories in October. Although hardware sales were still 2% down from the same period last year, software sales climbed 2% to 4 million.
The videogame industry is suffering due to several challenges. The pandemic saw sales skyrocket in 2020. Experts had projected sales to gradually drop with economic reopening and finally decline as consumers would have more options for outdoor amusement.
The projections, however, didn’t match because 2021 also turned out impressive for the gaming sector, as a number of new title releases continued to drive sales. Beginning this year, things began to change.
There is little doubt that the sharp decrease in sales is being caused by inflation, which is at multi-year highs and concerns over a recession. The global gaming market could see its first decline in annual sales in a decade owing to these concerns.
According to Newzoo, consumer spending on video game software is expected to fall by 4.3% in 2022. Consumer spending on gaming software, in contrast, increased 7.6% last year and grew 25% in 2020.
Videogame Industry Poised to Grow
Another major reason behind slowing videogame sales has been a dearth of new platforms and game releases in 2022. Consumers had been waiting for new releases almost throughout the year but the first half remained almost dry. New title releases and console launches typically boost sales.
The recent jump can be attributed to the release of a number of new titles. Hardware sales have also been showing signs of improvement. In October, eight new titles were released. And there was sufficient justification for gamers to spend more money on software and equipment.
The holiday season typically helps boost retail sales. Also, more new titles are expected to release in 2023.
The October release of Call of Duty: Modern Warfare 2 (2022) by Activision Blizzard instantly made it the top game of the month. The new title has been helping ATVI's earnings lately after reaching a $1 billion sell-through in just 10 days of its release. Other games by Activision Blizzard have also helped to increase its sales.
The Oct 4 global launch of ATVI's Overwatch 2 has also been received well. In its first month, the game was played by more than 35 million individuals, with more gamers playing on average each day than its well-liked predecessor.
With sales rebounding, Activision Blizzard posted net bookings of $1.83 billion in third-quarter 2022, which is down from last year’s $1.88 billion. Activision Blizzard presently has a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gotham Knights, another October title from Warner Bros. Interactive, came in second, with FIFA 23 from the Electronic Arts (EA - Free Report) stable coming in third. In September, EA's FIFA 23 occupied the top position.
In fact, Electronic Arts' sales have been getting a boost from FIFA 23. Unit sales for FIFA 23 were 10% higher in the first four weeks following release than last year’s edition. EA now expects its net bookings for 2023 to range between $7.65 billion and $7.85 billion.
The PlayStation 5 from SONY (SONY - Free Report) was the most popular gaming system in terms of both unit and dollar sales. According to SONY, 3.3 million PlayStation 5 consoles were shipped during the third quarter. As a result, SONY sold 5.7 million PlayStation 5 consoles overall in the first half of 2022. Naturally, the introduction of new games is also boosting console sales.
SONY’s Game & Network Services segment recorded a whopping $4.8 billion in sales in the third quarter of 2022.
Microsoft Corporation (MSFT - Free Report) also has been maintaining its position as one of the top sellers of gaming consoles. Microsoft Xbox Series consoles took second place in both units and dollar sales. Microsoft reported that while gaming revenues increased 4%, Xbox hardware sales increased 13% in the first quarter of fiscal 2023.
According to the latest global video games market report, the global video game market is projected to grow by $133 billion between 2022 and 2028, at a CAGR of 9.1%.
The jump in October is a good sign given that the rebound comes just ahead of the holiday season. Demand for both software and hardware is projected to rise in 2023 as more next-generation consoles and new games go on sale.