With Black Friday behind us and businesses reporting November sales, investors are closely watching to see if this will be another holiday season haunted by low expectations and weak consumer spending or if there is hope for higher sales. And of all consumer industries, the retailers, publishers and manufacturers of video games have been perhaps the most anxious to see sales numbers improve.
It looks like video game retailers and publishers got their holiday wish. Based on sales results reported by NPD Group as well analysts and reports from game hardware manufactures and publishers, total industry sales in November came to $2.99 billion, up from $2.76 billion during the month last year.
Video game sales have seen monthly declines in year-on-year revenue since last March. But there were signs of life in November thanks to successes with Activision Blizzard (NASDAQ: ATVI) Call of Duty: Black Ops and the Microsoft (NASDAQ: MSFT) Kinect motion control device. Now that the formal numbers are in, November 2010 appears not just to be an improvement over previous months this year but the best holiday kick-off the industry has ever seen.
NPD Group analyst Anita Frazier told website Gamasutra that the industry outperformed November 2008 by some $30 million, impressive considering that the holiday 2008 period is seen as the best in industry history thanks to the then-flourishing music game market headed by Electronic Arts (NASDAQ: ERTS) music game Rock Band and ATVI’s Guitar Hero that became pop-culture phenomenons.
Game hardware was particularly strong in November, which is a big reason for the surge in sales. Microsoft sold 1.37 million Xbox 360 consoles—growth of 68% over November ’09—fueled by the popularity of the hands-free control device Kinect. Released on November 4, the Kinect has already sold 2.5 million units, accounting for 60% of dollar sales in the overall accessories category according to NPD Group.
Nintendo (PINK: NTDOY) also had a strong showing after a year of declines for sales of both its Wii home console and Nintendo DS portable gaming device. Bloomberg is reporting 1.27 million Wii sales for the month (flat with last November’s 1.26 million Wii sales) and 1.5 million Nintendo DSs. The DS was down compared to November ’09’s 1.7 million unit sales, so despite being the hardware sales leader for the month, it’s clear that holiday 2010 represents the last vital push for the device. (Nintendo and its shareholders are undoubtedly hoping that the new glasses-free, stereoscopic 3D successor to the Nintendo DS, the Nintendo 3DS, will reignite the portable game sector when it releases next spring. At the moment, though, it would appear that Apple Inc. (NASDAQ: AAPL) and its iPod Touch continues to erode Nintendo’s monopoly on portable hardware, even if NPD Group does not report on that device’s sales.)
Sony (NYSE: SNE) shareholders have less to be excited about at the end of November, despite the company’s game business being healthy overall. According to Bloomberg, Sony sold 530,000 Playstation 3 consoles, a dramatic drop of -25% from November 2009, but still enough to keep the company up 5% year-on-year in total annual hardware sales. More troubling for Sony is that their flagging portable system, the Playstation Portable, wasn’t even mentioned in NPD Group’s report. The rumored high tech Playstation Portable 2, expected next fall, can’t come soon enough for Sony (even if Wedbush Morgan analyst Michael Pachter claims the PSP2 will release “dead in the water,” due to the popularity of Apple’s portable devices.) Good news for Sony, however, is that their Playstation Move motion controller is said to be fueling the game accessories market, which was up 69% over 2009 and accounting for $413.3 million sales in Novemben ’10, but even though Sony is reporting 4.1 million Move units shipped, it is still generating as much revenue as Kinect. Sony did have at least one significant success on the software side of the industry. The long awaited driving simulator for the Playstation 3 Gran Turismo 5 released on November 24th, selling 400,000 units in just six days on the market and has shipped a reported 5.5 million units worldwide.
Still, Gran Turismo 5 only made number eight in NPD Group’s top ten. The best selling software for the month was, unsurprisingly, Activision Blizzard’s Call of Duty: Black Ops, which according to USA Today sold a total of 8.4 million units across the Xbox 360, Playstation 3, Wii, PC, and Nintendo DS. Electronic Arts also had a strong month with Madden NFL 11 returning to the charts, taking the number four spot in NPD Group’s top ten, though precise sales numbers haven’t been released. EA’s new release for November, Need for Speed: Hot Pursuit, sold a respectable 417,000 units, taking number seven on the top ten, but falling short of previous releases in the series. Other notables were Ubisoft’s Assassin’s Creed: Brotherhood, selling 1.14 million across Xbox 360 and Playstation 3, taking the number two spot and their Wii dancing game Just Dance 2 taking number three. (Dance Central from MTV Games (NYSE: VIA), despite being beaten out by Just Dance 2, just missed the top ten, coming in at number eleven on NPD’s chart to be the best selling software for the Kinect device.) Microsoft’s Fable III role-playing game for Xbox 360 returned to the charts this month, selling more than 430,500 units and taking the number five spot on NPD’s chart. Nintendo also had a solid software month with new release Donkey Kong Country Returns selling 430,500 units to take the number six spot while fitness game Wii Fit Plus returned to the charts after a long absence taking the tenth spot on the chart. Take-Two Interactive (NASDAQ: TTWO) took number nine with basketball game NBA 2K11.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
