Weekly Notes On Gaming Industry: Electronic Arts & Activision Blizzard

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Activision Blizzard

The gaming industry is showing some signs of improvement in terms of software title sales in 2015. Top video game developers such as Electronic Arts (NASDAQ:EA), Activision Blizzard (NASDAQ: ATVI), and Take-Two Interactive released several popular game titles just before the holiday season of 2014. These titles, coupled with new releases of 2015, attracted many gamers in January and February, leading to an increase in software sales in these two months. According to a NPD report, gamers spent nearly $950 million on new game software and hardware in February, up 8% year-over-year (y-o-y). However, March turned out to be a dull period in terms of software and hardware sales in the U.S. According to NPD, gamers spent $963 million on all game accessories, including hardware consoles and software titles, down 6% year-over-year (y-o-y). However, the majority of the drop in sales was contributed by a 21% y-o-y fall in hardware sales. On the other hand, software sales were down 3% y-o-y to $394 million in March, whereas physical software sales were down 6% y-o-y. [1]

Here’s a quick round-up of some news related to the gaming industry covered by Trefis.

Electronic Arts

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In March 2015, Electronic Arts (NASDAQ:EA) launched its much awaited Battlefield Hardline in all the geographical segments. [2] Battlefield Hardline topped the charts as the highest selling game in the U.S. in March. However, it couldn’t match the last year’s release of Titanfall. On March 31, the company announced the release of the first expansion pack for The Sims 4 (The Sims 4 Get To Work), on PC and Mac in North America. [3] Moreover, On April 7, EA, Illumination Entertainment, and Universal Partnerships & Licensing announced a new multi-tile deal to bring Minions and other characters from Illumination films upcoming movie to life in all-new mobile games. [4] The company is slated to announce its fourth fiscal quarter report on May 5, 2015.

EA’s stock traded higher from $56 and $60 during this week. Our price estimate for the company’s stock is $54, implying a market cap of $17 billion, which is nearly 10% below the current market price.

See our complete analysis of Electronic Arts stock here

Activision Blizzard

Activision Blizzard’s (NASDAQ: ATVI) Call of Duty: Advanced Warfare slipped down to #5 in the charts of the highest selling titles for March. On March 31, the company released the second expansion pack for Call of Duty: Advanced Warfare named ‘Ascendance’ for Xbox Live Online entertainment network. It includes 4 new multiplayer maps, new weapons, and other new exciting features. [5] Moreover, on April 20, the company announced that Heroes of The Storm will be officially launched on June 2, with its open beta testing period starting from May 19. [6]

Activision’s stock rose from $22.76 to $23.75 during this week. Our price estimate for Activision is $20.68, which is more than 10% below the current market price.

See our complete analysis of Activision’s stock here

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Notes:
  1. March 2015 NPD games data []
  2. EA and Visceral games announce Battlefield Hardline is available now []
  3. The Sims 4 Get to Work is now available []
  4. EA, Illumination Entertainment, and Universal Partnerships & Licensing announce multi-title mobile game collaboration []
  5. Call of Duty: Advanced Warfare ascendance DLC pack available now []
  6. Blizzard’s worlds collide when Heroes of the Storm launches June 2 []