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Retail sales for the videogame industry plunged 21% in December, hurt by an aging console lineup and an unexpected slowdown in software sales.
Overall, industry sales of new videogames, consoles and accessories in U.S. stores tumbled to $3.99 billion last month from $5.07 billion a year earlier, according to surveys by data tracker NPD Group.
The results are the latest sign of weak consumer electronics spending during the holidays as U.S. economic growth remains tepid. Videogame industry competition also has mounted in the form of used and mobile games, which aren't included in NPD's monthly survey release.
The results were "not entirely surprising given that we are on the back end of the current console lifecycle, combined with the continued digital evolution of gaming," NPD analyst Anita Frazier said. Cheaper casual games found on smartphones and social-networking websites such as Facebook have drawn some consumers away from traditional games.
NPD acknowledged the exclusion of products such as used games and online-game subscriptions limits the precision of its data. Including all types of videogame sales, the total spend in the U.S. was between $16.3 billion and $16.6 billion for 2011, down about 2% from 2010.
"Our overall estimate of the market continues to point toward the increased imperative for deeper visibility into digital distribution than is available today, not only in the U.S. but globally," said David McQuillan, president, Games at The NPD Group.
Nonetheless, the industry continues to prove that it can draw large demand for a hit.
Activision Blizzard Inc.'s (ATVI) Call of Duty: Modern Warfare 3 remained the top selling game, as some analysts expected. Ubisoft Entertainment SA's (UBI.FR) Just Dance 3, which was released for Sony Corp.'s (SNY, 6758.TO) PlayStation 3 in December, jumped to the No. 2 spot from No. 5 the previous month, outselling Bethesda Softworks's Elder Scrolls V: Skyrim.
Overall, sales of new games at brick-and-mortar stores fell 14% to $2.04 billion from the same month a year in 2010, falling far short of the estimates of some analysts. For example, Wedbush Securities analyst Michael Pachter on Monday forecast software sales growth of 2% to $2.41 billion.
December retail sales of videogame hardware fell 28% to $1.32 billion, NPD said. The Nintendo Co. (NTDOY) Wii and Sony PlayStation 3 are both 5 years old, while Microsoft Corp.'s (MSFT) Xbox 360 is a year older.
The monthly survey release also said videogame accessories sales, such as prepaid cards used to purchase digital content within games, dropped 27% to $628.7 million.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; firstname.lastname@example.org