Videogames are heading for a U.S. sales decline in 2022, but a looming recession and new releases may turbocharge a rebound in 2023, in keeping with one analyst.
Stifel analyst Drew Crum stated he estimates U.S. videogame sales to decline 6% to $57 billion in 2022, benchmarked in opposition to records from NPD Group. That contrasts with videogame data-research company Newzoo’s estimate of two% enlargement, Crum stated.
2022 was once all the time anticipated to be a susceptible yr, when compared with 2021’s pandemic-driven sales. That now not simplest makes 2023 comps rather higher, but Crum stated that videogames even have an edge in that all the way through a recession they change into extra of a go-to type of leisure.
“We view videogames as an inexpensive form of entertainment that should ‘hold up’ in a period of macro weakness, and companies that develop and launch compelling content have a better chance of engaging with and monetizing across their respective player communities,” Crum stated.
Crum thinks sector profits can develop in 2023, with U.S.-based third-party console publishers seeing 40% or extra enlargement.
That displays “a stronger slate and easier comps from Activision Blizzard Inc., and a stronger slate and full year of contributions from Zynga for Take-Two Interactive Inc.,” stated Crum, who considers Take-Two
one of his most sensible alternatives as a result of 24 immersive core titles are deliberate for unencumber between 2023 and 2025.
The Stifel analyst thinks Electronic Arts Inc.
will have to additionally grasp up neatly on account of the composition of its portfolio, “with sports representing more than 60% of the company’s net bookings, a genre that’s perennial in nature and hence may offer greater consistency in what can be a ‘hit-driven biz.’” Crum has a purchase ranking on EA, and stated his purchase ranking on Activision
assumes its acquisition by Microsoft Corp.
is a completed deal.
Crum additionally downgraded Ubisoft Entertainment SA
stocks to a grasp ranking as a result of he expects the corporate’s outlook to be “overly ambitious,” and that a just lately increased ownership stake via Tencent Entertainment Co. Ltd.
lessens the possibility of it being got anytime quickly.
Year to this point, Take-Two stocks are down 35% and EA stocks are down 11%, whilst Activision stocks, that have spent maximum of that point watching for closure of the Microsoft acquisition, are up 16%. Ubisoft stocks buying and selling at the Paris Stock Exchange are down 29%. In comparability, the S&P 500 index
is down 21%, and the tech-heavy Nasdaq Composite Index
is down 29% this yr.