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Can Videogame Makers Bounce Back From Previous Lows?
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The videogame industry, which reached unprecedented heights during the peak of the pandemic saw a steep decline in sales in 2022. Videogame sales slowed and then plummeted as the economy reopened and life got back to normal.
However, the economic reopening wasn’t the only reason that adversely impacted sales. A dearth of new title releases is also to blame for the sudden decline in sales of videogames. However, the industry is finally rebounding as videogame makers have started releasing new titles and console games.
Videogame Sales Rebounding
After taking a massive hit last year, videogame sales have had a good 2023. According to the latest data from Circana, spending on videogames and accessories hit $4.6 billion in February, increasing 6% on a year-over-year basis. This is the highest year-over-year percentage growth since October 2021, after which the market started suffering.
The report further mentions that gamers spent $3.89 billion on videogame content, up 1% on a year-over-year basis. “Growth in digital content across Console and PC platforms, as well as non-mobile subscription spending, offset a decline in mobile,” Circana executive director Mat Piscatella said.
As people spent aggressively on new games, hardware sales also skyrocketed, hitting a 14-year high. Hardware sales increased 68% year over year to record $495 million, reaching its highest level since February 2009, when sales reached $534 million.
There are a number of factors behind the decline in videogame sales over the past year. Sales in 2020 were boosted by the pandemic. As a result, the gaming industry grew by 26% between 2019 and 2021, hitting record-high sales of $191 billion. Videogame sales have been on the rise since 2015, and the epidemic gave them a further boost.
Experts had predicted that sales would plummet with the economy reopening as consumers would have more options for outdoor entertainment.
Big Players Drive Sales
However, the predictions didn’t match, and sales continued to grow even in 2021 as spending shot up on multiple title releases.
The gaming industry can come up with yet another impressive show, with sales of both content and hardware once again rebounding at a fast pace. February’s sales were driven by SONY’s (SONY - Free Report) PlayStation 5, which held the top spot both in terms of console and dollar sales.
Sony also reported solid third-quarter fiscal 2023 revenues. The company reported 53% growth in revenues in its Game & Network Services (G&NS) segment, hitting $9.6 billion year over year.
Microsoft Corporation (MSFT - Free Report) didn’t have a great quarter. MSFT reported a decline in revenues in almost all segments during its second-quarter fiscal 2023 earnings call. However, the only good thing Microsoft said is that the company saw success in its Xbox Game Pass subscriber base. MST also reported that subscribers are spending more time gaming on the service because of the wide array of games and ease of playing on multiple devices like Xbox consoles, PCs and mobile devices.
Among the best-selling titles, Activision Blizzard’s Call of Duty: Modern Warfare II was dethroned from the No.1 spot by Warner Bros. Interactive’s Hogwarts Legacy. However, Call of Duty: Modern Warfare II still managed to secure the second spot. ATVI reported a solid jump in its gaming revenues in the fourth quarter of 2022. Activision Blizzard reported revenues of $2.334 billion, increasing significantly from $1.232 billion from the year-ago period.
The robust performance was driven by revenues from mobile gaming. ATVI earned $948 million, or 41%, of its overall revenues from mobile and auxiliary platforms. Activision Blizzard presently has a Zacks #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Electronic Arts (EA - Free Report) held the third and fourth spot for title sales with Dead Space (2023) and Madden NFL 23, respectively. EA reported quarterly earnings of $2.71 per share, missing the Zacks Consensus Estimate of $3.05 per share. The company’s overall revenues were also down 9.1% year over year.
However, Electronic Arts is hopeful about 2023 as it plans to revamp existing brands and come up with new titles.
The videogame market appears to be aggressively rebounding. Demand for both software and hardware is projected to rise in 2023 as more next-generation consoles and new games go on sale.
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Can Videogame Makers Bounce Back From Previous Lows?
The videogame industry, which reached unprecedented heights during the peak of the pandemic saw a steep decline in sales in 2022. Videogame sales slowed and then plummeted as the economy reopened and life got back to normal.
However, the economic reopening wasn’t the only reason that adversely impacted sales. A dearth of new title releases is also to blame for the sudden decline in sales of videogames. However, the industry is finally rebounding as videogame makers have started releasing new titles and console games.
Videogame Sales Rebounding
After taking a massive hit last year, videogame sales have had a good 2023. According to the latest data from Circana, spending on videogames and accessories hit $4.6 billion in February, increasing 6% on a year-over-year basis. This is the highest year-over-year percentage growth since October 2021, after which the market started suffering.
The report further mentions that gamers spent $3.89 billion on videogame content, up 1% on a year-over-year basis. “Growth in digital content across Console and PC platforms, as well as non-mobile subscription spending, offset a decline in mobile,” Circana executive director Mat Piscatella said.
As people spent aggressively on new games, hardware sales also skyrocketed, hitting a 14-year high. Hardware sales increased 68% year over year to record $495 million, reaching its highest level since February 2009, when sales reached $534 million.
There are a number of factors behind the decline in videogame sales over the past year. Sales in 2020 were boosted by the pandemic. As a result, the gaming industry grew by 26% between 2019 and 2021, hitting record-high sales of $191 billion. Videogame sales have been on the rise since 2015, and the epidemic gave them a further boost.
Experts had predicted that sales would plummet with the economy reopening as consumers would have more options for outdoor entertainment.
Big Players Drive Sales
However, the predictions didn’t match, and sales continued to grow even in 2021 as spending shot up on multiple title releases.
The gaming industry can come up with yet another impressive show, with sales of both content and hardware once again rebounding at a fast pace. February’s sales were driven by SONY’s (SONY - Free Report) PlayStation 5, which held the top spot both in terms of console and dollar sales.
Sony also reported solid third-quarter fiscal 2023 revenues. The company reported 53% growth in revenues in its Game & Network Services (G&NS) segment, hitting $9.6 billion year over year.
Microsoft Corporation (MSFT - Free Report) didn’t have a great quarter. MSFT reported a decline in revenues in almost all segments during its second-quarter fiscal 2023 earnings call. However, the only good thing Microsoft said is that the company saw success in its Xbox Game Pass subscriber base. MST also reported that subscribers are spending more time gaming on the service because of the wide array of games and ease of playing on multiple devices like Xbox consoles, PCs and mobile devices.
Among the best-selling titles, Activision Blizzard’s Call of Duty: Modern Warfare II was dethroned from the No.1 spot by Warner Bros. Interactive’s Hogwarts Legacy. However, Call of Duty: Modern Warfare II still managed to secure the second spot. ATVI reported a solid jump in its gaming revenues in the fourth quarter of 2022. Activision Blizzard reported revenues of $2.334 billion, increasing significantly from $1.232 billion from the year-ago period.
The robust performance was driven by revenues from mobile gaming. ATVI earned $948 million, or 41%, of its overall revenues from mobile and auxiliary platforms. Activision Blizzard presently has a Zacks #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Electronic Arts (EA - Free Report) held the third and fourth spot for title sales with Dead Space (2023) and Madden NFL 23, respectively. EA reported quarterly earnings of $2.71 per share, missing the Zacks Consensus Estimate of $3.05 per share. The company’s overall revenues were also down 9.1% year over year.
However, Electronic Arts is hopeful about 2023 as it plans to revamp existing brands and come up with new titles.
The videogame market appears to be aggressively rebounding. Demand for both software and hardware is projected to rise in 2023 as more next-generation consoles and new games go on sale.