Among the top stories this week, Japanese giant, Sony Corp. (SNE - Analyst Report) is gearing up for the launch of its much anticipated PlayStation VR headset. Meanwhile, almost three months into its release, Nintendo’s (NTDOY - Snapshot Report) Pokémon Go has reportedly earns $2.1 million per day.
Recap of the Developments
1. Sony will be launching its PlayStation VR headset next week. Priced at $400, the headset is expected to give serious competition to Facebook’s (FB) Oculus Rift and HTC’s Vive. PS VR has an advantage over both Rift and Vive, which need high end PC configuration to work with while PS VR is compatible with Sony’s gaming console PS4. Per IHS, Sony will sell an estimated 1.4 million units this year and generate $134 million in revenues from VR entertainment content spend. SonyPS4 video game console is the strongest growth driver for the company. Sony has reportedly sold 43.4 million PS4 consoles across the world.
In September, Sony launched two new versions of PS4 in a bid to maintain a competitive edge in the video games console market. It also revealed its plans to unveil a more powerful version of the flagship console this fall. The PS4 upgrade is likely to be a well-timed strategy, positioning Sony to reap the benefits of its huge client base as well as the upcoming holiday season. Sony carries a Zacks Rank #1 (Strong Buy).
2. Pokémon Go is still a rage after almost three months of release. As per research firm Newzoo, the game still earns $2.1 million per day though considerably down from $16 million earned a day during the peak. The game boasts more than half a billion downloads and is yet to release in some major markets like China and South Korea. Pokémon Go was developed by Niantic in association with The Pokémon Company, owned by Nintendo. Niantic has benefited hugely from the success of Pokémon Go, which has netted over $470 million in revenues so far.
However, Nintendo had earlier noted that the success of Pokémon Go will have a “limited impact” on its financials as it “does not make the game.” Though the success of the game doesn’t directly benefit Nintendo’s financials, we believe that it has strengthened the Japanese video game publisher’s position in the lucrative mobile games space, which should help it to sustain the momentum going ahead. Nintendo had so far remained aloof from mobile games. Nintendo carries a Zacks Rank #2 (Buy).
3. Activision Blizzard, Inc. (ATVI) is planning to launch a unique app for its users called Skylanders Creator. This app will allow players to create their own creatures. Apart from this, the video game maker will also roll out a new console game “SkylandersImaginators” on Oct 16.
These apart, the month-long Skylanders celebrations will include a host of contests for kids with custom 3D-printed Imaginator figures and movie tickets for the Middle School: The Worst Years of My Life up for grabs. Activison carries a Zacks Rank #3 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The following table shows the price movement of the major video game companies over both the past five trading days as well as the last six months:
Last 5 Days
Last 6 Months
Over the last five trading sessions, NetEase (NTES - Snapshot Report) was up 3.46% while Take Two Interactive (TTWO - Snapshot Report) was down 1.79%.
Over the last six-month period, NetEase Inc. surged the most, nearly 76.90%. NetEase has been in focus on reports that it will divest its news unit to focus on its gaming business. Plus, recently the company reported strong second-quarter 2016 results. The increasing popularity of mobile-based games and the strength of PC games (licensed & self-developed) continue to keep investors interested in the stock. Moreover, growing mobile advertising revenues were an added incentive.
Glu Mobile (GLUU - Snapshot Report) was down 24.41% over the same time frame due to the underperformance of most of its releases. Also, the company lowered its guidance for 2016. But its significant share repurchase authorization and the much anticipated Taylor Swift game keep hopes alive. It recently purchased Poke Radar. Poke Radar is a community app built by Pokémon Go fans.
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