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Can Videogame Makers Bounce Back From Their 2022 Lows?
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The videogame industry, which saw sales reaching record highs during the peak of the pandemic, has so far struggled in 2022. Sales started slowing with the economic reopening and the decline in sales continued in all the first three quarters of this year. However, things seem to be improving, with sales of gaming software picking up in October.
Also, the supply-chain issues have somewhat eased, and the release of a series of new titles from top videogame makers in October bodes well for the industry. Also, a number of new titles are slated to release in 2023, which is likely to boost sales.
Videogame Sales Bouncing Back
After declining in the first three quarters of the year, consumers spent $4.3 billion on videogame software, hardware and accessories in October, which is roughly the same on a year-over-year basis, the NPD Group reported. Hardware sales came in at $424 million, down 2% year over year but software sales jumped 2% to $4 billion.
The videogame industry has been suffering due to multiple reasons. The pandemic helped sales to pick up in 2020. As a result, between 2019 and 2021, the gaming sector expanded by 26%, reaching record-high revenues of $191 billion. Videogame sales have been growing since 2015, and the pandemic provided a further boost.
Experts had predicted that sales would slow and eventually decline with the economic reopening as people would have more options in the form of outdoor entertainment.
However, the predictions didn’t match as 2021 too proved to be a solid year for the gaming industry as multiple title releases kept driving sales. Things started changing at the beginning of this year. Inflation is at multi-year highs and that definitely is behind the steep decline in sales.
Rising prices have posed a serious threat to the sector and consumers are aggressively reducing their spending on discretionary items and cautiously spending on necessities.
Sales have been hampered by a variety of factors. Soaring commodity prices isn’t the only factor. The lack of new platforms and games coming out is one of the numerous reasons behind the decline in sales in 2022.
Videogame Industry Poised to Grow
The jump in sales in October can be attributed to the release of a number of new titles. Also, hardware sales have been picking up lately. Eight new titles were released in October. And that gave enough reason for gamers to spend more on software and hardware.
Activision Blizzard ’s Call of Duty: Modern Warfare 2(2022) was released in October and emerged the No. 1 game for the month. The title has been boosting ATVI’s revenues lately after it crossed a $1 billion sell-through within 10 days of its debut. Activision Blizzard’s other titles, too, have been giving a boost to its sales.
The worldwide release of ATVI’s Overwatch 2 on Oct 4 is also gaining traction. The game was played by more than 35 million people in its first month, with more players playing on average each day than in its popular predecessor. Activision Blizzard presently has a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Warner Bros. Interactive’s Gotham Knights, which also released in October, took the second spot, while Electronic Arts’ (EA - Free Report) FIFA 23 held the third sport. EA’s FIFA 23 held the first spot in September. In fact, FIFA 23 has been driving sales for Electronic Arts. EA reported second-quarter fiscal 2023 revenues of $1.9 billion, increasing 4.3% year over year. FIFA 23 played a major role in this. FIFA 23's first four weeks after release showed unit sales up 10% more than last year's edition.
Another game that has been doing well for EA is its NHL 23, which also debuted in October and took the fifth spot for the month.
Among gaming consoles, SONY’s (SONY - Free Report) PlayStation 5 held the top spot both in terms of unit sales and dollar sales. SONY said that it shipped 3.3 million PlayStation 5 units in the third quarter. This takes SONY’s total PlayStation 5 console sales to 5.7 million in the first half of 2022. Understandably, the release of new titles is also driving console sales.
The same has been the case with Microsoft Corporation (MSFT - Free Report) . MSFT’s Xbox Series systems held the second spot both in units and dollar sales. Although several videogame makers have reported a decline in gaming revenues, Microsoft’s gaming division reported its best-ever quarterly revenues for the first quarter for the second consecutive time. MSFT said its Xbox hardware revenues grew 13% in fiscal first-quarter 2023, while gaming revenues grew 4%.
The videogame industry seems to be steadily bouncing back. With more next-generation consoles and new titles slated to release in 2023, demand for software and hardware are both likely to increase.
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Can Videogame Makers Bounce Back From Their 2022 Lows?
The videogame industry, which saw sales reaching record highs during the peak of the pandemic, has so far struggled in 2022. Sales started slowing with the economic reopening and the decline in sales continued in all the first three quarters of this year. However, things seem to be improving, with sales of gaming software picking up in October.
Also, the supply-chain issues have somewhat eased, and the release of a series of new titles from top videogame makers in October bodes well for the industry. Also, a number of new titles are slated to release in 2023, which is likely to boost sales.
Videogame Sales Bouncing Back
After declining in the first three quarters of the year, consumers spent $4.3 billion on videogame software, hardware and accessories in October, which is roughly the same on a year-over-year basis, the NPD Group reported. Hardware sales came in at $424 million, down 2% year over year but software sales jumped 2% to $4 billion.
The videogame industry has been suffering due to multiple reasons. The pandemic helped sales to pick up in 2020. As a result, between 2019 and 2021, the gaming sector expanded by 26%, reaching record-high revenues of $191 billion. Videogame sales have been growing since 2015, and the pandemic provided a further boost.
Experts had predicted that sales would slow and eventually decline with the economic reopening as people would have more options in the form of outdoor entertainment.
However, the predictions didn’t match as 2021 too proved to be a solid year for the gaming industry as multiple title releases kept driving sales. Things started changing at the beginning of this year. Inflation is at multi-year highs and that definitely is behind the steep decline in sales.
Rising prices have posed a serious threat to the sector and consumers are aggressively reducing their spending on discretionary items and cautiously spending on necessities.
Sales have been hampered by a variety of factors. Soaring commodity prices isn’t the only factor. The lack of new platforms and games coming out is one of the numerous reasons behind the decline in sales in 2022.
Videogame Industry Poised to Grow
The jump in sales in October can be attributed to the release of a number of new titles. Also, hardware sales have been picking up lately. Eight new titles were released in October. And that gave enough reason for gamers to spend more on software and hardware.
Activision Blizzard ’s Call of Duty: Modern Warfare 2 (2022) was released in October and emerged the No. 1 game for the month. The title has been boosting ATVI’s revenues lately after it crossed a $1 billion sell-through within 10 days of its debut. Activision Blizzard’s other titles, too, have been giving a boost to its sales.
The worldwide release of ATVI’s Overwatch 2 on Oct 4 is also gaining traction. The game was played by more than 35 million people in its first month, with more players playing on average each day than in its popular predecessor. Activision Blizzard presently has a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Warner Bros. Interactive’s Gotham Knights, which also released in October, took the second spot, while Electronic Arts’ (EA - Free Report) FIFA 23 held the third sport. EA’s FIFA 23 held the first spot in September. In fact, FIFA 23 has been driving sales for Electronic Arts. EA reported second-quarter fiscal 2023 revenues of $1.9 billion, increasing 4.3% year over year. FIFA 23 played a major role in this. FIFA 23's first four weeks after release showed unit sales up 10% more than last year's edition.
Another game that has been doing well for EA is its NHL 23, which also debuted in October and took the fifth spot for the month.
Among gaming consoles, SONY’s (SONY - Free Report) PlayStation 5 held the top spot both in terms of unit sales and dollar sales. SONY said that it shipped 3.3 million PlayStation 5 units in the third quarter. This takes SONY’s total PlayStation 5 console sales to 5.7 million in the first half of 2022. Understandably, the release of new titles is also driving console sales.
The same has been the case with Microsoft Corporation (MSFT - Free Report) . MSFT’s Xbox Series systems held the second spot both in units and dollar sales. Although several videogame makers have reported a decline in gaming revenues, Microsoft’s gaming division reported its best-ever quarterly revenues for the first quarter for the second consecutive time. MSFT said its Xbox hardware revenues grew 13% in fiscal first-quarter 2023, while gaming revenues grew 4%.
The videogame industry seems to be steadily bouncing back. With more next-generation consoles and new titles slated to release in 2023, demand for software and hardware are both likely to increase.