There were quite a few developments in the video game space last week. Activision Blizzard announced the release date for Destiny 2, while Glu Mobile released its much anticipated game -- MLB Tap Sports Baseball 2017 -- amid much fanfare. Also, GameStop (GME Quick QuoteGME - Free Report) announced store closures as challenging retail landscape, aggressive promotional strategies and waning store traffic have been weighing on performance.

Recap of the Developments

1.  Activision Blizzard announced the much anticipated sequel to its hit game, Destiny. Destiny 2 will be launched on Sep 8, 2017 on PS4 and Xbox One. For the first time, the game will also be available on desktop as well.

Destiny has been developed by Bungie of Halo fame and published by Activision. First released on Sep 9, 2014, it is a first person shooter game set in a mythical-cum-science fiction world. It is the first title to be released under Activision-Bungie’s 10-year deal. In fact, Destiny holds the record for being the biggest new franchise launch. It earned over $500 million within just a day of its release. The franchise has an aggregate score of 75/100 on Metacritic while Game Informer has given it 8.75 out of 10.

At present Activision carries a Zacks Rank #2 (Buy).

2. Glu Mobile has launched MLB Tap Sports Baseball 2017 on both iOS’s app store and Android’s Google Play. The game has been developed in collaboration with Chicago Cubs star Kris Bryant, MLB, MLBPA and MLBPAA. Tap Sports Baseball is one of the biggest titles for Glu Mobile.

Also, the company’s roster of celebrity games is one of its biggest positives.Glu alos said that the company is working on turning its 85 games (released over the past six years) into “evergreen revenue generators” by adding new gameplay modes, community-enhancing features, etc, which is likely to help it to grow bookings by the first half of 2017. 

Glu Mobile carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. Meanwhile, all is not well for video game retailer, GameStop. After reporting mediocre fourth quarter fiscal 2016, the company announced its plans to shut down 150 stores following dismal performance over the holiday season.

Despite this, management remains positive as far as the performance of its segment, Technology Brands is concerned. In the last reported quarter, Technology Brands sales jumped 43.9% to $256 million, driven by year-over-year growth in stores. Collectibles sales surged 27.8% to $212.4 million, buoyed by robust sales of Pokémon-related toys and apparel.

Management expects strong performance of Technology Brands and Collectibles to continue in fiscal 2017, and added that new hardware innovation in the video game category also looks promising.Itexpects operating earnings of the segment to rise over 30% to $120 million during fiscal 2017 and to be $200 million in fiscal 2019. The company expects Technology Brands sales to increase 10–16% in fiscal 2017.

At present, GameStop carries a Zacks Rank #5 (Strong Sell). In the past six months, the stock has declined 19.15%, compared with the Zacks categorized Retail-Consumer Electronic industry’s increase of 15.92%.

Performance

The following table shows the price movement of the major video game companies over both the past five trading days as well as the last six months:

Over the last five trading sessions, Glu Mobile was up 13.55%, whereas Activision Blizzard was down 1.37%.

In the last six-month period, Take Two Interactive (TTWO Quick QuoteTTWO - Free Report) surged the most (30.66%). The company continues to benefit from its popular offerings like GrandTheft Auto V and Grand Theft Auto Online (though sales are slowing down), along with its other releases like NBA 2K17. In fact, higher sales of the digital version of the games add to the company’s margins.

The company continues to expect growth in digital revenues driven by higher sale of full game downloads and increases in recurrent consumer spending. Take Two recently forayed into free-to-play games space with the acquisition of game developer, Social Point. The acquisition will help it to boost its performance going ahead.

Also, the company is well positioned to benefit from the highly anticipated launch of Red Dead Redemption 2 later this year.Take Two also inked a partnership with NBA to launch NBA 2K eLeague, making it the “first eSports league operated by a U.S. professional sports league.” The NBA 2K league will be functional in 2018.

Zynga was down 1.03% over the same time frame owing to a slowdown in its user growth for a while, which remains a major concern. Moreover, a slowing web business along with intensifying competition from the likes of Glu Mobile, Electronic Arts (EA Quick QuoteEA - Free Report) and Nintendo remain concerns.

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