by Anthony John Agnello | April 15, 2011 1:35 pm
After a strong February, the video game industry had a decidedly mixed March. Video game sales proper were down 4% while hardware and accessories were up. Overall, the industry at the end of the first quarter mirrors the same period in 2010. Considering the relatively bleak year that 2010 was for software stocks and video game sellers, that’s not exactly promising news.
For investors though, March’s action has left hints at who will prove strong this earnings season. Nintendo (PINK: NTDOY) made headlines this month, but canny investors should look at Electronic Arts (NASDAQ: ERTS) rather than the struggling house of Mario.
Nintendo released its new portable gaming device, the Nintendo 3DS, on March 27. According to USA Today Nintendo sold just under 400,000 3DSs in the U.S. None too shabby for a machine that was only on sale for part of one week in the reporting period. But With no 3D titles in the video game sales top ten from NPD, however, Nintendo should be concerned the gadget may not have staying power or mass appeal. Also, Nintendo sold just 290,000 Wii home consoles, a year-on-year drop of 48%. That’s a continuing trend, and part of the reason Nintendo’s share price has fallen 21% since February.
On the plus side, Nintendo sold 460,000 DS machines along with 2.5 million copies of its new Pokemon Black and Pokemon White games for the #1 and #2 video game titles on the month. Unfortunately, that may not be enough to right the ship for NTDOY.
March video game sales were promising for some companies though. Electronic Arts continued to enjoy an impressive 2011. Its new role-playing game Dragon Age II was the fourth-best seller on the month, while its new shooting game Crysis II took #7 and its boxing simulator Fight Night Champion took #10. Electronic Arts has also said that its other 2011 titles Dead Space 2 and Buletstorm continue to sell well. April should also prove strong for EA—Tiger Woods PGA Tour 12, released on Mar. 29—saw better first week sales than any previous entry in the series according to GamesIndustry.biz. The stock has been hovering near its 52-week-high at $20. Continued strong sales of these titles could push ERTS higher.
Other stocks had a decent month as well. Activision Blizzard (NASDAQ: ATVI) and its Call of Duty: Black Ops took #5 on the chart, but has little other good news until it announces new products at the E3 expo in June. THQ (NASDAQ: THQI) had a major victory with its shooting game Homefront coming in at #3 behind Nintedo’s Pokemon titles, but strong sales didn’t help the stock recover from its March nose dive to $4.50 per share. THQ has been purely a day trading proposition since the 2008 crash. Homefront‘s performance could turn that around, but investors should wait and see.
Take-Two (NASDAQ: TTWO) is the other stock to watch coming out of March. Its basketball game NBA 2K11 came in at number eight on NPD’s chart, its six month in the top 10. The stock is up 5% since Thursday, trading at $15.80 at the time of writing. The company will likely dominate video game sales going into the third quarter when it releases Rockstar Games’ (Grand Theft Auto) L.A. Noire on May 17, much as it did with Red Dead Redemption in 2010.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
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