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3 Stocks to Watch as Videogame Sales Make Steady Rebound
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The U.S. videogame industry has been trying to stage a rebound that saw sales rise in 2023, and the momentum continues this year. Cooling inflation and easing price pressure are helping consumers spend more on discretionary items lately, giving a boost to videogame sales.
According to a report from the Entertainment Software Association and Circana, spending on videogames in the United States totaled $57.2 billion in 2023, up from $56.6 billion in 2022. This included sales across all categories including physical and digital full-game, downloadable content, portable PC, subscription spending across consoles and virtual reality platforms.
Spending on content totaled $48 billion last year, up from $47.5 billion in 2022. This was primarily driven by a 13% jump in digital download spending across console games.
Hardware sales were steady, totaling $6.6 billion in 2023, while accessories sales rose 4% to $2.6 billion from $2.5 billion in 2022.
Videogame sales hit record highs during the peak of the pandemic, as consumers invested more in indoor entertainment. However, the situation changed fast once the pandemic-led restrictions were lifted and the economy reopened. Options for outdoor entertainment were back.
This saw videogame sales decline in 2021, and take a turn for the worse in 2022 as inflationary pressures started hitting consumer spending. The Federal Reserve adopted a strict monetary tightening campaign and hiked interest rates by 525 basis points since March 2022.
Higher prices made consumers cut down on spending on discretionary goods. Also, a dearth of good title releases in 2022 further impacted sales.
However, inflation started easing from its peak of 9.1% in June 2022 and is now hovering around 3.1%. Easing prices have been helping people spend more freely. Also, last year saw a spate of new title releases, which started attracting gamers to the market.
The industry is poised to grow in the near term as the Federal Reserve gears up to start rate cuts this year, which will further ease price pressures.
Stocks to Watch
Microsoft Corporation (MSFT - Free Report) is one of the leading videogame makers and manufacturers of hardware and accessories. MSFT has been expanding its footprint in the industry and is a pioneer in consoles.
For the current year, Microsoft’s expected earnings growth rate is 18.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. MSFT has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Light & Wonder, Inc. (LNW - Free Report) is a leading developer of technology-based products and services and associated content for the gaming, social and digital gaming industries globally. LNW operates under three operating segments — Gaming, SciPlay and iGaming.
Light & Wonder’s expected earnings growth rate for the current year is 113.7%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. LNW presently carries a Zacks Rank 3 (Hold).
Electronic Arts (EA - Free Report) is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). EA distributes gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals. EA’s games can be played on video consoles, personal computers, mobile devices, tablets and electronic readers.
Electronic Arts’ expected earnings growth rate for the current year is 29.7%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. Currently, EA holds a Zacks Rank 3.
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3 Stocks to Watch as Videogame Sales Make Steady Rebound
The U.S. videogame industry has been trying to stage a rebound that saw sales rise in 2023, and the momentum continues this year. Cooling inflation and easing price pressure are helping consumers spend more on discretionary items lately, giving a boost to videogame sales.
According to a report from the Entertainment Software Association and Circana, spending on videogames in the United States totaled $57.2 billion in 2023, up from $56.6 billion in 2022. This included sales across all categories including physical and digital full-game, downloadable content, portable PC, subscription spending across consoles and virtual reality platforms.
Spending on content totaled $48 billion last year, up from $47.5 billion in 2022. This was primarily driven by a 13% jump in digital download spending across console games.
Hardware sales were steady, totaling $6.6 billion in 2023, while accessories sales rose 4% to $2.6 billion from $2.5 billion in 2022.
Videogame sales hit record highs during the peak of the pandemic, as consumers invested more in indoor entertainment. However, the situation changed fast once the pandemic-led restrictions were lifted and the economy reopened. Options for outdoor entertainment were back.
This saw videogame sales decline in 2021, and take a turn for the worse in 2022 as inflationary pressures started hitting consumer spending. The Federal Reserve adopted a strict monetary tightening campaign and hiked interest rates by 525 basis points since March 2022.
Higher prices made consumers cut down on spending on discretionary goods. Also, a dearth of good title releases in 2022 further impacted sales.
However, inflation started easing from its peak of 9.1% in June 2022 and is now hovering around 3.1%. Easing prices have been helping people spend more freely. Also, last year saw a spate of new title releases, which started attracting gamers to the market.
The industry is poised to grow in the near term as the Federal Reserve gears up to start rate cuts this year, which will further ease price pressures.
Stocks to Watch
Microsoft Corporation (MSFT - Free Report) is one of the leading videogame makers and manufacturers of hardware and accessories. MSFT has been expanding its footprint in the industry and is a pioneer in consoles.
For the current year, Microsoft’s expected earnings growth rate is 18.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. MSFT has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Light & Wonder, Inc. (LNW - Free Report) is a leading developer of technology-based products and services and associated content for the gaming, social and digital gaming industries globally. LNW operates under three operating segments — Gaming, SciPlay and iGaming.
Light & Wonder’s expected earnings growth rate for the current year is 113.7%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. LNW presently carries a Zacks Rank 3 (Hold).
Electronic Arts (EA - Free Report) is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). EA distributes gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals. EA’s games can be played on video consoles, personal computers, mobile devices, tablets and electronic readers.
Electronic Arts’ expected earnings growth rate for the current year is 29.7%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. Currently, EA holds a Zacks Rank 3.