Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Gaming industry's fortunes fade as spending squeeze follows pandemic bump

Stock Markets Aug 11, 2022 05:56AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Convention attendees play the Street Fighter 6 video game demo on arcade cabinets at the Capcom booth at Comic-Con International in San Diego, California, U.S., July 23, 2022. REUTERS/Bing Guan 2/2
 
MSFT
-1.75%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ATVI
-1.24%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EA
-1.45%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NVDA
-3.99%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SONY
-2.07%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMD
-4.87%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(This Aug 10 story corrects typo in first paragraph. A previous version was corrected to change the name of the research firm in paragraph 5)

By Tiyashi Datta

(Reuters) - Gaming companies are facing a slowdown in demand for video games from pandemic highs, raising doubts about their ability to weather an economic downturn.

Rising prices and a lack of hit titles have added to problems for video game publishers Activision Blizzard Inc (NASDAQ:ATVI) and Electronic Arts (NASDAQ:EA) that are also battling supply-chain delays and a shift in consumer choices due to easing lockdowns.

The latest proof of that came on Tuesday from gaming platform Roblox whose revenue growth eased to just 30% from 83% two quarters ago.

U.S. consumer spending on video games fell 11% in June and is expected to decline 8.7% this year, data from analytics firm NPD showed.

"The job market is still hot, there is plenty of froth on the economy causing aggressive inflation and the relaxation of COVID restrictions are leading consumers to consider spending on more experiences outside of the home," said Jesse Divnich, senior vice president at Interpret, a video game market research firm.

Activision Blizzard reported smaller-than-expected quarterly profit, while rival Electronic Arts and Take-Two (NASDAQ:TTWO) Interactive warned of disappointing sales ahead.

"When you have 50% of big bank economists saying we might be in a recession in the next quarter or two, my attitude is... we're in a recession and... we are seeing some softness," Take-Two top boss Strauss Zelnick told analysts.

Console makers too have taken a hit as gaming revenue dropped for Xbox-maker Microsoft (NASDAQ:MSFT), while PlayStation-maker Sony (NYSE:SONY) cut its forecast and Nintendo posted lower sales.

The weak demand comes as double whammy for these firms that are struggling with component shortages.

Gaming chipmakers are seeing a knock-on effect of the cooling demand. Advanced Micro Devices (NASDAQ:AMD) Inc said sales of its sales of graphic gaming cards fell, while Nvidia (NASDAQ:NVDA) flagged a 19% sequential drop in revenue.

Analysts and company executives, however, expect the industry to grow above pre-pandemic levels, leaning on the launch of delayed titles and an easing of parts shortages.

Data firm Newzoo showed the global games market will generate $196.8 billion in 2022, gaining 2.1% compared to a 7.6% jump in 2021.

"Video games aren't bulletproof, but they do tend to fare well during challenging times," Steven Bailey, an analyst at research firm Omdia said.

Gaming industry's fortunes fade as spending squeeze follows pandemic bump
 

Related Articles

FIS Risk-Reward is Highly Favorable - Goldman Sachs
FIS Risk-Reward is Highly Favorable - Goldman Sachs By Investing.com - Oct 05, 2022

By Sam Boughedda In a wide-ranging note on payment technology stocks Wednesday, Goldman Sachs analysts told investors the risk-reward is highly favorable on FIS (NYSE:FIS). The...

U.S. Stocks Fell as Growth-Charged Rally Fades
U.S. Stocks Fell as Growth-Charged Rally Fades By Investing.com - Oct 05, 2022 4

By Liz Moyer Investing.com -- U.S. stocks were falling after data about private payrolls showed strong demand for labor despite rising interest rates. At 10:21 ET (14:21 GMT), the...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email