Videogame Business Holding Up Even as Pandemic Wanes
NPD reported that U.S. consumer spending on videogames increased 7% in the third quarter to a record $13.3 billion as the business showed a resilience that allayed concerns of a slowdown in a post-pandemic world.
Activision Blizzard and Electronic Arts said net bookings – the amount of products and services sold – in the quarter ended at the end of September were slightly above what they’d projected as recently as August. Similarly, Take-Two Interactive Software said recurring spending by consumers on in-game content rose 7% in that quarter, turning around an earlier forecast of an 11% decline. As a result, Take-Two raised sales projections for the year by about $100 million to $3.3-$3.4 billion.
Strong licensed sports titles
Much of the increase for these companies was tied to licensed sports titles, including FIFA 22, Madden NFL 22 and NHL 22 (Electronic Arts) and NBA 2K22 (Take-Two). At the same, Activision reported a decline in revenue from its Call of Duty series – which has a significant outbound licensing program – in advance of software updates this month and next.
Mat Piscatella, games industry analyst at The NPD Group, said the industry’s gains were built on more intensive engagement with existing players, rather than an expansion of the universe. “While the market has seen a slight decline in the overall number of people playing video games, those that are playing are doing so for more hours, and spending more, than they did a year ago,” he said.
The videogame business, which benefitted last year from the launch of next-generation consoles from Sony (PlayStation 5) and Microsoft (Xbox Series X), also has been hampered by delays in the launch of high profile titles with licensing programs, in some cases tied to the interruption of production caused by lengthy pandemic-related shutdowns.
Activision postponed the release of Overwatch 2 indefinitely, but also plans to release an “early build” of the title for eSports team players to use at the start of the Overwatch League in April 2022, which it hopes will heighten interest in the title for its consumer launch. Halo Infinite, which was originally due last fall, is now being released on Dec. 8. And the release of Marvel Midnight Suns, developed for Take-Two by Firaxis Games, has been postponed to second half 2022 from the spring.
Among recent developments:
- Videogame publishers, like most every other brand, are bringing NFTs into their business. Electronic Arts expects collectible digital content to be a “meaningful part” of its future, CEO Andrew Wilson told analysts, though he didn’t give any hint of how that might develop.
In response to a question, Wilson also spoke broadly about negotiations to renew its lucrative (for both sides) license with soccer’s world governing body FIFA, which ends next year. “I would say we have great relations with all of our partners, including FIFA, and we think the future of football [soccer] is very bright.” But perhaps it’s noteworthy that in his earlier prepared remarks about soccer, he listed several major league licenses EA holds – but didn’t mention FIFA.
- Videogames with licensed IP remain a key ingredient for publishers. Take-Two’s WWE SuperCard mobile game has been downloaded 24 million times since launch in 2014 and the WWE 2K 22 console title will be released in March following a “major reveal” in January, CEO Strauss Zelnick Meanwhile, NBA 2K 22 has sold 5 million units since its September 10 launch. And the Star Wars Galaxy of Heroes, mobile game, which was released in 2015, has passed the 100 million player mark and is expected to benefit from EA’s recent acquisitions of Playdemic and Glu Mobile.
- Leagues and tournaments are increasingly on the must-have checklist for titles. King Digital launched on Sept. 23 a four-week Candy Crush All-Star online tournament that’s hosted by Khole Kardashian. And the NBA 2K League completed its fourth season on 22 that included an all-star tourney at Brooklyn Steel in Brooklyn, NY.
- Nintendo is discussing a next generation Switch device, but the question is when it will be available. The company listed a “20xx next gen device” in a presentation accompanying its earnings release on Thursday (Nov. 4) But executives also said the company was in the “middle phase” of the current Switch and is having “internal discussions” on concept and timing of a next generation product. Indeed a Switch with a seven-inch OLED display was introduced in October.