Industry is showing signs of a rebound
Boosted by a healthier economy and a strong Easter holiday, the videogame industry is showing signs of a rebound ahead of its annual E3 confab, where the biz will tubthump its newest games and hardware next month.
Hardware and software sales hit $961 million in April, up 20% vs. the same period last year, when consumers were keeping a tighter grip on their wallets amidst the recession.
Last month, better-than-expected bows of new titles like Warner Bros. Interactive’s “Mortal Kombat” increased sales of console, handheld and PC games by 26% to $503 million, the best monthly performance for the industry since October 2008, according to NPD Group.
Among top titles, “Mortal Kombat” sold 887,000 units in April, better than the 600,000 that analyst Cowen and Co. had expected. THQ’s “WWE All-Stars” also outperformed expectations during its second month of release, but Electronic Arts and Valve’s “Portal 2” fell below expectations at 556,000.
The shift in the dates for Easter from March to April this year may have added $60 million to the games biz last month, NPD said, signaling just how important the holiday has become for entertainment players across the board — Easter is now the second-biggest-sales period forentertainment behind Christmas, retailers say.
Without Easter, the games biz would be falling behind last year’s tally. So far this year, the industry is up slightly over 2010 at this point, collecting a little more than $5 billion across the board vs. $4.9 billion, with the major publishers getting a boost to their bottom lines for the first three months of the year.
• Microsoft on Wednesday said its upcoming “Gears of War 3,” from Epic Games, has already surpassed 1 million units in pre-orders worldwide. Game doesn’t hit store shelves until September. Previous two games have sold 12 million copies to date.
• The largest publisher, Activision Blizzard, reported its “best first quarter in the company’s history,” according to CEO Robert Kotick, with profits up 32% to $503 million, on an 11% increase in revenue of $1.45 billion, thanks to franchises including “Call of Duty,” “World of Warcraft,” “StarCraft” and “Diablo.” Digital downloads and other online content for mobile devices, consoles and Facebook represented 30% (or $428 million) of its revenue for the period.
• Electronic Arts posted a fivefold increase in profits to $151 million from sequels like “Crysis 2” and “Dragon Age 2” and strong sales of online games. Revenue was up 11% to $1.09 billion. Digital grew to $211 million from $144 million during the quarter.
• Although revenue fell 49% to $80 million over the last year, Atari posted a smaller net loss of $8.8 million, a 68% improvement for the French publisher that was driven by the divestiture of Cryptic Studios (behind “Star Trek Online” and “Champions Online”), as well as a renewed focus on its core franchises, including “Centipede,” “Dungeons and Dragons,” “Ghostbusters” and “Rollercoaster Tycoon,” more mobile and downloadable games and distributing fewer titles for other developers.
• Sony, despite having to shut down its PlayStation Network because of a hack that compromised users’ account information, still sold 204,000 PlayStation 3 consoles in the U.S. in April, up from 180,800 during the same month last year. Microsoft, however, moved 297,000 units of its Xbox 360, up 60% over the previous year.
Rival Nintendo led a round of negative results among some gamemakers.
Company ended its fiscal year in March with revenue down 29% to $12.3 billion, with slower sales for its aging Wii console causing profits to fall 66% to $947 million. Company will use E3 to launch its next console to battle the Xbox 360 and PlayStation 3.
And while THQ launched a hit with “Homefront,” moving 2.6 million units of the “Red Dawn”-like game since March, publisher still posted a fourth quarter loss of $44 million (widened from a loss of $10 million for the same quarter last year) on $124 million in sales (down from $198 million) during the period that wrapped March 31.
Take-Two Interactive reports its fourth quarter results next week.
While NPD Group has the games biz up in 2011 compared with 2010, Cowen’s estimates has overall sales down 3.9%, still the best performance since October 2009, the company said. Sales in May are expected to dip before bouncing back again by at least 10% in June.
As a result, “Expect 2011 retail videogame sales to finish up slightly,” Cowen analyst Doug Creutz said in a report.