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http://yahoo.businessweek.com/technology/content/aug2004/tc20040823_0906_tc024.htm
While console sales sag, new titles for the Madden NFL, Pokemon, and Grand Theft Auto franchises are roaring
Forget the Olympics. The real competition will take place this fall -- in the knock-down, drag-out world of gaming. While sales of long-in-the-tooth video-game consoles continue to decline, many of the industry's top publishers are rolling out key titles in the race for profits that could hit record highs.
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The software industry is putting an end to the doom-and-gloom scenarios that have bedeviled the gaming industry this year. Sure, overall hardware sales fell nearly 11% in July, vs. a year ago, despite recent prices cuts to Microsoft's (MSFT ) Xbox and Sony's (SNE ) PlayStation 2 consoles. But software sales jumped 27.5% in the same period, as publishers began rolling out an impressive lineup of titles for the key back-to-school and holiday periods.
TOUCHDOWN! "It's reassuring to see the beginning of what we expect should be positive software sales [comparables] through the end of the year," says Stewart Halpern, managing director of RBC Capital Markets' digital entertainment equity research group in a research note.
For an easy-money bet on a clear winner, investors probably need look no further than top publisher Electronic Arts (ERTS ). The latest iteration of its Madden NFL football franchise hit store shelves on Aug. 10 and sold 1.35 million copies in a week -- the quickest any title in the series has passed the 1 million-unit mark. Sports games accounted for about 20% of the $5.8 billion that video-game software brought in last year, and the Madden games have come out on top nearly every year since the first one hit the market in 1989.
The latest entry from the Madden juggernaut quickly muted any idea it could be threatened by competition from ESPN NFL2k5, co-published by Take-Two Interactive (TTWO ) and Sega. ESPN NFL2k5 debuted on July 20, but even the low price of just $20, vs. $50 for Madden, couldn't give it enough of a boost. Electronic Arts' NHL and NBA franchise titles will be released in September and October, respectively. EA is trading near its 52-week high of $55.91. It finished up 2%, to $50.09, on Aug. 20.
MAN OF STEEL RETURNS. EA's dominance is so great that on Aug. 20, Microsoft announced it was laying off 76 game developers and would permanently cease making team-sports games for its Xbox console. That comes three months after Microsoft finally convinced EA to publish it games for Xbox online play. The deal allowed EA to retain control over customer interaction, a sticking point in the past.
Another likely winner is Activision (ATVI ), whose year-to-date sales are up 51%. It has struck gold with its movie-franchise business, including Superman 2, which has sold more than 1 million units in its first two months. The more family-friendly Shrek 2, released in May, is closing in on 800,000 units sold. Activision this month also released its much-anticipated Doom 3, the latest in that franchise. The company's stock price was up 1.5%, to $14.16, on Aug. 20.
Plenty of other hotly awaited releases could help publishers post record overall sales this year -- and might encourage investors to plump up their portfolios. Nintendo is launching two new Pokemon titles for its Game Boy platform this September, while Take-Two will follow up with another installment of its Grand Theft Auto franchise on Oct. 19.
CHEAPER CONSOLES? Even Microsoft might be worth picking up, despite being a more pricey -- and conservative -- stock choice. Microsoft Game Studios on Nov. 9 releases Halo 2, the sequel to the massive hit that first gave the Xbox credibility in gamers' eyes.
Another point: To get an idea of where software sales might be headed, keep an eye on what's happening in hardware. If console makers again lower prices this fall, as some analysts expect, game sales should show yet another big jump. The thinking is that more casual gamers might be tempted to buy a console, and they in turn would buy more software. That's a good thing for some of the top publishers -- and for investors.
While console sales sag, new titles for the Madden NFL, Pokemon, and Grand Theft Auto franchises are roaring
Forget the Olympics. The real competition will take place this fall -- in the knock-down, drag-out world of gaming. While sales of long-in-the-tooth video-game consoles continue to decline, many of the industry's top publishers are rolling out key titles in the race for profits that could hit record highs.
Advertisement
The software industry is putting an end to the doom-and-gloom scenarios that have bedeviled the gaming industry this year. Sure, overall hardware sales fell nearly 11% in July, vs. a year ago, despite recent prices cuts to Microsoft's (MSFT ) Xbox and Sony's (SNE ) PlayStation 2 consoles. But software sales jumped 27.5% in the same period, as publishers began rolling out an impressive lineup of titles for the key back-to-school and holiday periods.
TOUCHDOWN! "It's reassuring to see the beginning of what we expect should be positive software sales [comparables] through the end of the year," says Stewart Halpern, managing director of RBC Capital Markets' digital entertainment equity research group in a research note.
For an easy-money bet on a clear winner, investors probably need look no further than top publisher Electronic Arts (ERTS ). The latest iteration of its Madden NFL football franchise hit store shelves on Aug. 10 and sold 1.35 million copies in a week -- the quickest any title in the series has passed the 1 million-unit mark. Sports games accounted for about 20% of the $5.8 billion that video-game software brought in last year, and the Madden games have come out on top nearly every year since the first one hit the market in 1989.
The latest entry from the Madden juggernaut quickly muted any idea it could be threatened by competition from ESPN NFL2k5, co-published by Take-Two Interactive (TTWO ) and Sega. ESPN NFL2k5 debuted on July 20, but even the low price of just $20, vs. $50 for Madden, couldn't give it enough of a boost. Electronic Arts' NHL and NBA franchise titles will be released in September and October, respectively. EA is trading near its 52-week high of $55.91. It finished up 2%, to $50.09, on Aug. 20.
MAN OF STEEL RETURNS. EA's dominance is so great that on Aug. 20, Microsoft announced it was laying off 76 game developers and would permanently cease making team-sports games for its Xbox console. That comes three months after Microsoft finally convinced EA to publish it games for Xbox online play. The deal allowed EA to retain control over customer interaction, a sticking point in the past.
Another likely winner is Activision (ATVI ), whose year-to-date sales are up 51%. It has struck gold with its movie-franchise business, including Superman 2, which has sold more than 1 million units in its first two months. The more family-friendly Shrek 2, released in May, is closing in on 800,000 units sold. Activision this month also released its much-anticipated Doom 3, the latest in that franchise. The company's stock price was up 1.5%, to $14.16, on Aug. 20.
Plenty of other hotly awaited releases could help publishers post record overall sales this year -- and might encourage investors to plump up their portfolios. Nintendo is launching two new Pokemon titles for its Game Boy platform this September, while Take-Two will follow up with another installment of its Grand Theft Auto franchise on Oct. 19.
CHEAPER CONSOLES? Even Microsoft might be worth picking up, despite being a more pricey -- and conservative -- stock choice. Microsoft Game Studios on Nov. 9 releases Halo 2, the sequel to the massive hit that first gave the Xbox credibility in gamers' eyes.
Another point: To get an idea of where software sales might be headed, keep an eye on what's happening in hardware. If console makers again lower prices this fall, as some analysts expect, game sales should show yet another big jump. The thinking is that more casual gamers might be tempted to buy a console, and they in turn would buy more software. That's a good thing for some of the top publishers -- and for investors.