CHICAGO, Aug. 15, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: Electronic Arts Inc. (Nasdaq:
ERTS), Activision Blizzard Inc. (Nasdaq: ATVI),
Take-Two Interactive Software Inc. (Nasdaq: TTWO),
Microsoft Corp. ( Nasdaq: MSFT) and Sony Corp. (NYSE:
SNE).
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Here are highlights from Friday's Analyst Blog:
Gaming Industry Outlook Gets Murkier
Amid the economic turmoil that has shrouded the U.S. for the
last couple of weeks, the gaming industry seems to be the latest
victim as figures released by The NPD Group, a market research
firm, reported that the gaming industry has shrunk 26.0% in
July from the comparable-previous year. It was the sharpest fall
since October 2006.
July's decline was the industry's third-straight month when U.S.
sales of video games' hardware, software and accessories contracted
in double digits. Earlier, sales during May and July declined 14%
and 10%, respectively.
The major factors that resulted in the decline were weak
schedule of new title releases and seasonally lower sales. Adding
to the woes was the uncertainty about the economy and the
disappointing growth in the jobs market that ultimately affected
the consumer sentiment.
In July 2011, US sales were
$707 million, down from $961.3 million in the prior-year period. Software
sales including PC games and console games were down 30% to
$356.9 million. Only 17 new titles
were released in July 2011 compared
with 29 in July 2010.
Amid this grim picture, the games that stood out were
Electronic Arts Inc.'s (Nasdaq: ERTS) NCAA Football
12 and Disney Interactive Studios' Cars 2,which took the
first and second spot, respectively.
Activision Blizzard Inc.'s (Nasdaq: ATVI) all time
favorite Call of Duty Black Ops followed next. The fourth,
fifth and sixth positions were taken by Disney Interactive
Studios' Lego Pirates of the Caribbean: The Video Game,
Ubisoft's Just Dance 2 and
Take-Two Interactive Software Inc.'s (Nasdaq: TTWO) Major
League Baseball 2K11, respectively.
Hardware sales were down by a whopping 29% year on year to
$223 million. The decline was
primarily led by a 37.6% drop in the sales of Microsoft
Corp.'s (Nasdaq: MSFT) Xbox 360 gaming console. For the month,
277,000 units of console were sold. This was Xbox's first
decline in sales since December 2009.
Additionally, Nintendo's sales of DS and 3DS handheld players were
flat on a year-over-year basis.
However, the motion-sensing Move peripheral for Sony
Corp.'s (NYSE: SNE) PlayStation3 jumped 18% from the prior-year
period.
Sales of videogame accessories were down 8% from the previous
year to $127.8 million.
In the present scenario, with the changing dynamics of the
gaming industry, consumer spending on mobile games and social
networking games are gaining tremendous popularity. We believe
publishing companies having an exposure in these segments would be
benefited in the long run. We also believe that digitalization of
the games would be a major revenue earner for the publishing
companies.
However, the overall video game market remains highly
fragmented, graced by a large number of companies, including
Activision, Electronic Arts, Take Two Interactive Software Inc.,
Capcom, Koei, Konami, LucasArts, Midway, Namco, Sega, THQ and
Ubisoft. This has increased competitive pressures that have kept
the lid on prices.
Moreover, analysts are not projecting any positive picture for
the monthly sales figures of August as no major releases are
scheduled for the month. Analysts from Cowen are particularly
negative, anticipating a 30% or more decline in August
sales.
To conclude, the economic slowdown has taken its toll. Consumer
spending remains weak to date and the lack of new game releases has
not helped.
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