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Can Videogame Sales Bounce Back to COVID-19 Highs?

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Videogame sales in the United States jumped in April, but the industry hasn’t been in the pink of its health. Videogames hit record high sales during the peak of the pandemic, and several months following it, but stagnated all of a sudden.

While new games are being launched, sales have somewhat slowed this year. One of the biggest challenges is the supply chain crisis but there are several other difficulties pulling sales down. Despite all of this, videogame makers are leaving no stone unturned to bounce back to the earlier highs.

Rebound in Videogame Sales

After witnessing a few months of decline in sales, the videogame market bounced back in April. According to the industry-tracking firm The NPD Group, April proved to be a great month, with console hardware sales jumping 16% year over year from $295 million to $343 million.

However, the overall spending across video game hardware, accessories and content fell 8% year over year to $4.3 billion, indicating that the industry is faced with challenges. On a year-to-date basis also, consumer spending on videogames is 8% down.

The decline comes despite some big achievements from several videogame makers. Nintendo’s (NTDOY - Free Report) Switch surpassed the lifetime sales figures of its biggest rival Sony Group Corporation’s (SONY - Free Report) PlayStation 4, making it the fourth-highest unit selling console in the history of the United States.

However, PlayStation is still number 1 in terms of dollar sales. PlayStation 5 led hardware dollar sales in the United States in April, followed by Microsoft Corporation’s (MSFT - Free Report) Xbox series. On a year-to-date basis, Xbox still leads the overall hardware sales in terms of dollars. Microsoft has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On the other hand, seasoned players like Activision Blizzard, Inc. (ATVI - Free Report) have continued to generate decent sales. ATVI’s Call of Duty: Vanguard ranked number 6 in April videogame hardware sales, while it ranked number 7 among the top-20 best-selling games of April. Nintendo’s Kirby and the Forgotten Land, ranked eighth, while Electronic Arts’ (EA - Free Report) Madden NFL 22 ranked ninth.

Challenges Ahead

The videogame industry witnessed a surge in sales following the COVID-19 outbreak. As millions remained confined to their homes and outdoor entertainment remained closed for months, people were not left with much choice.

This saw videogame sales skyrocket during that time as indoor entertainment was the only option left for millions. Sales hit record highs during 2020 and early 2021. Also, major videogame makers launched a range of new games and consoles, which gave a further boost to sales.

With the turn of 2021, people started getting vaccinated and outdoor entertainment joints started reopening. Experts had predicted that sales would decline. However, the launch of new titles from major industry players helped drive sales. This made 2021 an overall great year for the videogame makers.

Supply-Chain Crisis Dampens Sales in 2022

Things actually started changing from the beginning of 2022. Sales have been declining year over year for the past few months. One of the major reasons has been the supply-chain crisis, which has been affecting the other industries too.

Also, the global semiconductor shortage has been hampering videogame production, which is further hurting sales. Sales declined in both the first quarter of 2022 and April.

However, the picture isn’t that gloomy and this year can still prove to be one of the best for videogame sales, with a whole range of big titles up for release in the latter half of the year. Several titles that were scheduled to be released in 2021 will debut this year, giving more choice to the players. Also, once the supply chain crisis is over, sales are likely to pick up again.