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What Gaming Investors Need To See Before Earnings

What Gaming Investors Need To See Before Earnings
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In a report rolled out Sunday, analysts at Wedbush provided a preview of the March 2015 results for the entertainment software industry. The analysts are expecting another month of console/handheld software sales growth (same as January and February), driven by "new releases and a manageable comp."

Wedbush's note comes in anticipation of NPD's release of its March 2015 U.S. retail video game software sales report on Thursday. The analysts expect console/handheld software sales growth of 2 percent year-over-year to $415 million, driven by a several recently released high-profile games such as:

  • Electronic Arts Inc. (NASDAQ: EA)'s "Battlefield Hardline"
  • Sony Corp (ADR) (NYSE: SNE)'s "Bloodborne"
  • Take-Two Interactive Software, Inc. (NASDAQ: TTWO)'s "Borderlands: The Handsome Collection"
  • Activision Blizzard, Inc. (NASDAQ: ATVI)'s "Call of Duty: Advanced Warfare"
  • Nintendo Co., Ltd (ADR) (OTC: NTDOY)'s "The Legend of Zelda: Majora's Mask 3D."

Other growth drivers mentioned are next-gen strength, "a manageable comparison of down 7%," and an early Easter.

Related Link: Wedbush's Michael Pachter Offers April '15 Video Game Industry Update

The positive factors "should offset a solid release slate last year (…) and the sustained decline of current-gen. The shift to digital downloads and the popularity of bundles should also negatively impact stand-alone packaged goods software demand." The analysts assume that "full game digital downloads were 10% of total March demand for each high-profile game on next-gen consoles, meaning total console software sales were likely up 10% or more when factoring in full game digital downloads. Sales should be up m-o-m due to an extra week in the March retail month."

Hardware sales are also expected to increase to "350,000 Xbox One units (up 12% y-o-y), 400,000 PS4 units (up 8%), and 100,000 Wii U units (up 45%)."

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