Videogames have been the only source of entertainment apart from video streaming services during the pandemic. As people continued to stay at home, videogame sales soared.
The momentum seems to be growing with sales jumping in May after unexpectedly declining in April. According to the NPD Group, videogame sales soared again in May, thus indicating an overall good year so far.
Videogame Sales Grow
According to the NPD Group, consumer spending on videogames, accessories and content and hardware jumped 3%, reaching $4.5 billion, on a year-over-year basis in May. The jump in May follows an unexpected decline in April after a 13-month-long growing streak.
Spending on content jumped 3%, while hardware and accessories sales were up 5% and 8%, respectively, on a year-over-year basis.
The videogame industry has been performing well and has been one of the biggest beneficiaries of the pandemic. Despite the economic reopening, people kept on spending more on videogames, which has continued into this year too. On a year-to-date basis, consumer spending on videogames has jumped 17% to $24 billion.
Another reason behind the higher sales last year and this year has been the launch of new titles and consoles. In fact, even in May sales were driven by the launch of
Resident Evil: Village, which was the bestseller. Other titles that dominated the market were MLB: The Show 21 and Call of Duty: Black Ops: Cold War. Momentum to Continue
After a successful 2020, videogame sales had solid growth in the first quarter. According to the NPD Group, spending on videogames jumped 30% in first-quarter 2021 on a year-over-year basis to reach $14.92 billion. Gamers spent across all gaming categories in the quarter. An 81% surge was seen in spending on hardware.
Although the economy is reopening and restrictions are being eased, with the vaccination drive in full swing, NPD believes that the industry will grow in the coming days, as some big titles await release. Moreover, the vaccination drive started six months back and millions have been vaccinated and are now stepping out confidently. However, that hasn’t hampered sales.
In fact, sales are far higher than the pre-pandemic and pandemic levels and the momentum is likely to stay so. According to Newzoo, global videogame revenues could reach $189.3 billion in 2021, taking the total number of gamers to 2.8 billion worldwide. And it seems that the industry is on track, with sales soaring in the first three months of the year.
Stocks to Watch
The videogame industry is seeing robust sales in 2021 too, given that the pandemic is still keeping people indoors. Thisthus makes it an opportune time to invest in gaming stocks that are sure to benefit in the near term.
Microsoft Corporation ( MSFT Quick Quote MSFT - Free Report) is one of the leading videogame makers and manufacturers of hardware and accessories. The company has been expanding its footprint in the 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 35.4%. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the past 60 days. Microsoft carries a Zacks Rank #3 (Hold).You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Sony Corporation ( SONY Quick Quote SONY - Free Report) designs, manufactures and sells several consumer and industrial electronic equipment. The company’s product roster comprises audio and video equipment, televisions, displays, semiconductors, electronic components, gaming consoles, computers and computer peripherals, and telecommunication equipment.
The company’s expected earnings growth rate for next year is 17.1%. The Zacks Consensus Estimate for current-year earnings has improved 9.7% over the past 60 days. Sony has a Zacks Rank #3.
Electronic ArtsInc. ( EA Quick Quote EA - Free Report) is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). It distributes its gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals.
The company’s expected earnings growth rate for the current year is 11.5%. The Zacks Consensus Estimate for current-year earnings has improved 5.2% over the past 60 days. Electronic Arts has a Zacks Rank #3.
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 of the e-sports concept.
The company’s expected earnings growth rate for the current year is 8.9%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. Activision Blizzard carries a Zacks Rank #3.
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