One of the biggest beneficiaries of the coronavirus pandemic is the videogame market. With people keeping indoors most of the time due to safety reasons, they have been left with nothing much but stream videos and music or play games.
This has given a further boost to the already-thriving videogame industry. According to market research firm The NPD Group, COVID-19 saw consumer spending on videogames in the United States reach new highs in the third quarter. And with coronavirus cases once again on the rise, it won’t come as a surprise if the fourth quarter turns out to be equally good.
Videogame Spending on the Rise
Per the NPD Group report, consumers spent a whopping $11.2 billion on videogames in the third quarter of 2020. This reflects a 24% year-over-year jump in sales. Of the total money spent, $10.04 billion was on content. Also, sales of hardware, physical software, digital console, mobile subscription spending and PC content saw a sizeable increase in the third quarter.
Spending on hardware and accessories increased 16% and 35%, respectively. Needless to say, gamers are buying more consoles, and those who already have consoles are spending more on games to play on them.
Industry Set to Soar Higher
The videogame industry so far had a great year with both the first and second quarter generating record sales. The third quarter was even better, with sales touching new highs.
Games such as
Animal Crossing: New Horizons, Call of Duty: Modern Warfare, Among Us and Fortnite, Ghost of Tsushima, were some of the top-performing titles in the third quarter.
According to Research and Markets, the global console games market is expected to grow from $40.6 billion in 2019 to $57.9 billion in 2020. In 2017, there were 2.21 billion gamers worldwide and the number is expected to reach 2.73 billion by 2021. Besides, NPD Group also predicts an impressive fourth quarter, as PlayStation 5 and Xbox Series consoles are about to enter the market.
Given this sudden surge in sales and upbeat sentiment in the video gaming industry, it makes for an opportune time to invest in gaming stocks that are sure to gain in the near term.
Microsoft Corporation ( MSFT Quick Quote MSFT - Free Report) is one of the leading videogame makers and manufactures hardware and accessories. The company has been expanding its footprint in this industry and recently announced that it will be acquiring videogame maker ZeniMax Media.
The company’s expected earnings growth rate for the current year is 17.1%. The Zacks Consensus Estimate for current-year earnings has improved 5.5% over the past 60 days. Microsoft carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Activision Blizzard, Inc. ( ATVI Quick Quote ATVI - Free Report) is a leading developer and publisher of console, online and mobile games. The company’s Call of Duty is one of the most popular gaming franchises globally. Its Overwatch League can be considered a pioneer in the e-sports concept.
The company’s expected earnings growth rate for the current year is 51.6%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 60 days. Activision Blizzard carries a Zacks Rank #2.
Nintendo Co. ( NTDOY Quick Quote NTDOY - Free Report) is the acknowledged worldwide leader in the creation of interactive entertainment. Nintendo has created such industry icons as Mario and Donkey Kong and launched franchises like The Legend of Zelda and Pokémon.
The company’s expected earnings growth rate for the current year is 47%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 60 days. Nintendo has a Zacks Rank #2.
Glu Mobile Inc. ( GLUU Quick Quote GLUU - Free Report) is a leading global publisher of mobile games. Its portfolio of top-rated games includes original titles Super K.O. Boxing!, Stranded and Brain Genius.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. Glu Mobile has a Zacks Rank #2.
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