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Can Videogame Makers Stage a Turnaround From the 2022 Lows?
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The U.S. videogame market had a not-so-memorable 2022 as sales declined drastically. A dearth of new title releases coupled with inflationary pressures saw videogame makers suffering almost throughout last year.
However, sales have been rebounding this year, and September proved to be one of the best months as spending is once again gathering pace, with inflation showing signs of decline. Given this situation, investing in videogame stocks would be prudent.
Videogame Sales Jump
Videogames sales jumped in September, driven by multiple new title releases. Gamers spent a solid $4.5 billion on video games, hardware and accessories in September, reflecting an increase of 10% from the year-ago figure of $4.1 billion, according to research group Circana.
Year-to-date videogame sales have totaled $39.4 billion compared to $38.4 billion, or up 2% from the comparable period last year.
September sales were primarily driven by gaming content, which rose 13% to $3.8 billion in September on a year-over-year basis. Sales of accessories grew 11% to $197 million year over year in September.
Six of the top 10 games for September were new releases. Microsoft Corporation’s (MSFT - Free Report) new release, Starfield, was the top-selling title in September. MSFT also posted robust first-quarter fiscal 2024 revenues, driven by Xbox content and services revenues, which jumped 13%. Overall gaming revenues for Microsoft rose 9% for the quarter ending Sep 30 on a year-over-year basis.
Electronic Arts’ (EA - Free Report) EA Sports 24, also a new release, was the third-ranking title in September. EA’s Madden NFL 24 came in at number 4.
Separately, Sensor Tower reported that mobile game spending trends increased more than 4% in September on a year-over-year basis. Microsoft’s Candy Crush Saga and Nintendo’s Pokemon Go were among the top 10 games in September.
Videogame sales hit record highs during the peak of the pandemic in 2020 as people opted for indoor entertainment. Things started changing drastically once the economy reopened as options for outdoor entertainment were back.
This saw sales slowing in 2021. Things took a turn for the worse in 2022 as inflationary pressures compelled people to cut down on spending on discretionary items. The Fed adopted an aggressive monetary tightening policy that saw the central banking hiking interest rates by 525 basis points since March 2022.
Higher borrowing costs and a dearth of new title releases saw sales plummet last year. However, things are looking up now, with inflation having sharply declined over the past year from its peak of 9.1% in June 2022.
Also, personal income has been steadily increasing, allowing people to spend more freely. Moreover, with the holiday season around, videogame sales are expected to get a further boost in the near term.
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Can Videogame Makers Stage a Turnaround From the 2022 Lows?
The U.S. videogame market had a not-so-memorable 2022 as sales declined drastically. A dearth of new title releases coupled with inflationary pressures saw videogame makers suffering almost throughout last year.
However, sales have been rebounding this year, and September proved to be one of the best months as spending is once again gathering pace, with inflation showing signs of decline. Given this situation, investing in videogame stocks would be prudent.
Videogame Sales Jump
Videogames sales jumped in September, driven by multiple new title releases. Gamers spent a solid $4.5 billion on video games, hardware and accessories in September, reflecting an increase of 10% from the year-ago figure of $4.1 billion, according to research group Circana.
Year-to-date videogame sales have totaled $39.4 billion compared to $38.4 billion, or up 2% from the comparable period last year.
September sales were primarily driven by gaming content, which rose 13% to $3.8 billion in September on a year-over-year basis. Sales of accessories grew 11% to $197 million year over year in September.
Six of the top 10 games for September were new releases. Microsoft Corporation’s (MSFT - Free Report) new release, Starfield, was the top-selling title in September. MSFT also posted robust first-quarter fiscal 2024 revenues, driven by Xbox content and services revenues, which jumped 13%. Overall gaming revenues for Microsoft rose 9% for the quarter ending Sep 30 on a year-over-year basis.
Electronic Arts’ (EA - Free Report) EA Sports 24, also a new release, was the third-ranking title in September. EA’s Madden NFL 24 came in at number 4.
Nintendo’s (NTDOY - Free Report) Marlo Kart 8 was ranked number 15. However, hardware sales declined in September, which also saw sales of NTDOY’s Switch taking a hit. Nintendo has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Separately, Sensor Tower reported that mobile game spending trends increased more than 4% in September on a year-over-year basis. Microsoft’s Candy Crush Saga and Nintendo’s Pokemon Go were among the top 10 games in September.
Videogame sales hit record highs during the peak of the pandemic in 2020 as people opted for indoor entertainment. Things started changing drastically once the economy reopened as options for outdoor entertainment were back.
This saw sales slowing in 2021. Things took a turn for the worse in 2022 as inflationary pressures compelled people to cut down on spending on discretionary items. The Fed adopted an aggressive monetary tightening policy that saw the central banking hiking interest rates by 525 basis points since March 2022.
Higher borrowing costs and a dearth of new title releases saw sales plummet last year. However, things are looking up now, with inflation having sharply declined over the past year from its peak of 9.1% in June 2022.
Also, personal income has been steadily increasing, allowing people to spend more freely. Moreover, with the holiday season around, videogame sales are expected to get a further boost in the near term.