After enduring two months of sluggish video game sales and releasing a number of titles from video game stocks such as Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS) that failed to gain any significant traction, the video game industry has been on the outs. But a few video game stocks finally had a decent month this summer, according the July video game sales numbers.
Electronic Arts, for one, finally got to the mid-summer release window for their major football titles. One half of their pigskin empire, NCAA 2011, was released on July 13tand that game managed to take both the first and second spots of the top ten in software sales according to data compiled by the NPD Group. ERTS sold some 368,000 copies of NCAA 2011 on the Microsoft (NASDAQ: MSFT) Xbox 360 console, 298,000 on the Sony (NYSE: SNE) PlayStation 3, and even 25,000 copies on Sony’s decade-old PS2 console.
While PC and Mac games aren’t included in NPD Group’s top ten rankings, Activision Blizzard had the best selling game of the month in its Starcraft II title. The long-awaited sequel to 1998’s Starcraft sold approximately 721,000 copies between its release on July 27 and the end of the month – a stunning feat for just a few days. According to Wedbush Morgan analyst Michael Pachter, ATVI sold an additional 300,000 copies of Starcraft II through direct downloads from the company’s website. On the hardware front, Microsft enjoyed its second month of success with its newly redesigned Xbox 360. MSFT trounced the competition by selling 443,500 Xbox 360s, outselling even Nintendo (PINK: NTDOY) and its ever-popular Nintendo DS handheld gaming system.
Despite these successes, however, July’s sales numbers represent continued trends of low sales and consumer disinterest. Summer is typically a sluggish period for the video game market, but summer 2010 has been disastrous overall. By July 2009, the gaming industry had generated $33.7 billion in revenue in the calendar year. In 2010, the figure is $25.8 billion, a -23% loss in total revenue industry wide. Hardware sales are down -13% and software is down -8.4% year to date.
While the next few months have a number of significant releases, its questionable whether or not they will help turn around 2010. ERTS released their other football pillar last week, Madden Football 2011, which should perform well in August but sales will drop off immediately in September. ATVI will release new entries in their most popular properties, World of Warcraft, Call of Duty, and Guitar Hero, between now and December but with Guitar Hero sales a fraction of what they were n 2007 and continued consumer interest in last year’s Call of Duty, Modern Warfare 2, ATVI’s greatest hope lies in Warcraft expansion Cataclysm, a game with limited audience crossover appeal. Will the new, expensive motion controllers from Sony and Microsoft revitalize a struggling sector this fall?
With consumers trying to save money rather than spend on luxury items, it looks like we have yet to see the worst from 2010 game sales.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
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