Stifel Financial Corp. provided a detailed overview of the 2024 slate for console and PC video games and its potential impact on the broader gaming industry.
One of the pivotal observations highlighted in the financial firm's latest report is the comparative assessment between 2024's and 2023's gaming lineups.
The upcoming slate for 2024 appears weaker in comparison to the remarkable array of new game releases witnessed in 2023, the analysts asset.
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This comparative analysis underscores the potential challenge in surpassing or even replicating the sales performance of the previous year, signaling a shift towards the monetization of existing franchises.
"While '24 will be the fourth full year of this console cycle which typically features a higher title count vs. the first few years, when it's all said and done, we think '23 could go down as one of the best years for new games, particularly the number of "mega hits" the slate produced, including Hogwarts Legacy, The Legend of Zelda: Tears of the Kingdom, Diablo IV, Baldur's Gate 3, Starfield, and Marvel's Spider-Man 2, among others, which creates a difficult comparison," Stifel analyst Drew E. Crum said.
He added: "Additionally, '23 benefited from games that were originally scheduled to be released in prior years, but delayed for various reasons, including complications from COVID-19."
Moreover, projections regarding consumer spending within the global gaming market indicate a probable stagnation or slight uptick.
Forecasts suggest a projected decline in consumer spending on new console and PC games by a low double-digit percentage, estimating a value of approximately $40 billion. This segment represents roughly 20% of the total global gaming industry, which is anticipated to remain stable or show marginal growth.
The report identifies Take-Two Interactive Software Inc TTWO and Electronic Arts Inc EA as relatively favorable prospects amid the forecasted market landscape. Take-Two's anticipation for the imminent launch of GTA VI is perceived as a potential catalyst for growth, while Electronic Arts demonstrates resilience through its strong base in live services, contributing significantly to net bookings.
Regarding the launch of the anticipated GTA VI, Crum suggests that its arrival could influence the lineup not only for the upcoming year but also for the following one.
"Its release date could help shape both next year's and the year after's line-up, as we believe publishers will opt to avoid launching an AAA game in proximity to GTA VI," the analyst highlighted.
"With GTA V (Sep '13) annihilating most everything in its path following its street date, developers were hesitant to launch games around Red Dead Redemption 2 in late '18. And given the extraordinary pent-up demand across the gaming universe, we think a similar phenomenon is likely to occur with GTA VI," Crum continued.
Meanwhile, the report maintains a neutral stance on third-party console publishers tied to the upcoming gaming slate, including CD PROJEKT ADR OTGLY and Ubisoft Entertainment SA UBSFF. Factors influencing these assessments range from CD PROJEKT's updates on "long-term projects" to Ubisoft's necessity for precise execution of the Star Wars Outlaws release.
Furthermore, the document highlights alternative investment opportunities among entities with limited or no exposure to the frontline release schedule.
Companies such as Corsair Gaming Inc CRSR, Turtle Beach Corp. HEAR, and Roblox Corp. RBLX are identified as potential opportunities due to their positioning in accessories, live services, virtual currency, or other related segments.
The report concludes by acknowledging positive indicators in software development costs and developer headcount. However, it notes that their substantial impact on the industry's slate might not be immediately evident.
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