Monthly Notes On Gaming Industry: Electronic Arts & GameStop

The U.S. gaming industry witnessed a shift in trend over the last 4 months, as the software sales picked up pace, whereas on the other hand, declining demand for the previous generation consoles resulted in a decline in hardware sales year-over-year (y-o-y). Despite the lack of major titles, gamers are spending more on software titles. According to the research group NPD, gamers spent $595 million on new physical software, hardware, and other accessories, up 3% year-over-year (y-o-y) in April 2015. ((April 2015 NPD games data)) For the first trimester of 2015, hardware sales were down 10% y-o-y, whereas the software sales strengthened by roughly 5%. Some famous titles, such as Battlefield: Hardline, Mortal Kombat X, and MLB 15, drove the title sales over the last few months.

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

Electronic Arts

Electronic Arts (NASDAQ:EA) finished its fiscal 2015 with strong revenue figures in its Q4 earnings report released on May 5, driven by core sports titles and the new releases: Dragon Age: Inquisition and Battlefield: Hardline. On May 21, EA released the teaser trailer for one of the most awaited racing titles this year: Need For Speed, which will be launched in the fall of 2015 for PC, PS4, and Xbox One. ^[1] Moreover, on May 28, EA announced that FIFA 16 will feature 12 women’s national teams for the first time in the franchise history, and it will be launched in the last week of September. ^[2]

EA’s stock rose from $58 and $64 during the month of May. Our price estimate for the company’s stock is $65, implying a market cap of $20 billion, which is slightly above the current market price.

See our complete analysis of Electronic Arts stock here

GameStop

GameStop (NYSE:GME) had an impressive first quarter earnings report for the fiscal 2015, with same store sales growth of 8.6%, compared to 5.8% growth in the same period last year. The company’s net revenues rose 3.2% year-over-year (y-o-y) to $2.06 billion, driven by robust growth in new video game software sales, technology brands, as well as in the digital segment. ^[3] Revenues from mobile and consumer electronics grew 34% y-o-y to $137 million, owing to 70% growth in the Technology brands revenues ($102.2 million). As a result, diluted EPS grew 15% y-o-y to $0.68.

GameStop’s stock rose from $38 to $44 during the month of May. Our price estimate for GameStop is $44, which is roughly the same as the current market price.

See our complete analysis of Activision’s stock here

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More Trefis Research

1. Need For Speed returns in an action driving experience that unites the culture of speed [↩]
2. Women’s National Team take the pitch in EA Sports FIFA 16 [↩]
3. GameStop, Q1 2015 earnings call transcript [↩]