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Videogame Stock Roundup: Sony's PS4 Tops 50M Units, Glu Releases Nicki Minaj Game Ahead of Holidays

Zacks Equity Research
Updated

Sony Corp.’s SNE PlayStation 4 continues to be a hot favorite with gamers. Reportedly, the console has sold 50 million units since its release in Nov 2013. Plus, the Japanese giant is also making an effort to expand its presence in the lucrative mobile gaming space. Also, Glu Mobile GLUU released the Nicki Minaj game to cash in on the holiday fervor.

Recap of the Developments

1. Reportedly, Sony’s PS4 has sold 50 million units since its launch in Nov 2013, way ahead of 30 million units of Microsoft’s MSFT Xbox One sold so far. In fact, media reports add that PS4 has been the “fastest selling PS console” with over 10 million units sold from May 2016 to Dec 6, 2016. Sony is facing troubles in a number of its business segments, but it has been leveraging its games business that has consistently performed well on robust sales of consoles. PS4 leads the way for Sony’s gaming division.

A few days back, Sony launched two new versions of PS4 in a bid to maintain a competitive edge in the video games console market. The newly launched PS4 Pro, an upgraded version of the 3-year old PS4 hardware, now boasts a more powerful central and graphics processing chip and enhanced image-processing capability. It offers additional storage and supports 4K resolution.

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PS4 is designed to support Sony's PlayStation VR virtual reality headset. Sony also unveiled a sleeker and more energy-efficient PS4 to replace the original fourth-generation PlayStation machine. At present, Sony carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Sony is also rapidly making inroads into the lucrative mobile gaming space. Reportedly, the company is planning to launch as many as six mobile games based on its popular Playstation franchises. However, in the beginning, the availability of games will be limited to Japan. Details of the rollout in other countries are not yet available. Mobile games started emerging as a lucrative business option as titles like Candy Crush and Angry Birds caught the imagination of the world.

As per an Apr 2016 report, research from Newzoo estimates the global games market to grow 6.6% to $118.6 billion in 2019, of which $52.5 billion will come from mobile games. Most video game companies are now focused on expanding their presence in mobile gaming.

Most video games are now striving to expand their presence in this space. Activision Blizzard ATVI, which had a limited presence in mobile gaming, snapped up leading mobile games maker King Digital Entertainment for a hefty $5.8 billion price tag. Recently, Nintendo NTDOY, Sony’s rival, tasted tremendous success with the launch of Pokémon Go.

Pokémon Go solidified Nintendo’s position in the lucrative mobile games space, which should help it to sustain the momentum going ahead. Nintendo will launch its highly anticipated title Super Mario Run for iOS on Dec 15.

Computer and Technology Sector Price Index

Computer and Technology Sector Price Index

3. Generally video game companies reserve their best titles for release during the holiday season. Recently, Glu Mobile Inc GLUU released its much anticipated celebrity lifestyle game, Nicki Minaj: The Empire. The company’s roster of celebrity games is one of its biggest positives.

The company is still best known for Kim Kardashian: Hollywood, a freemium game that was released in 2014. Kardashian continues to be a top contributor to Glu’s revenues with reportedly $100 million in revenues earned since its release. However, not all celebrity games have been blockbuster successes. For instance, the Katy Perry game bombed badly. So will Nicki Minaj be as successful as Kardashian? Only time can tell.  Glu Mobile carries a Zacks Rank #3 (Hold)

Performance

The following table shows the price movement of the major video game companies over both the past five trading days as well as the last six months:

Company

Last 5 Days

Last 6 Months

ATVI

5.09%

-1.92%

EA

-1.76%

1.97%

GLUU

3.14%

-1.29%

MSFT

0.79%

17.24%

NTES

-0.83%

28.82%

TTWO

1.74%

25.21%

ZNGA

4.51%

15.33%

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the last five trading sessions, Activision was up 5.09% while Electronic Arts was down EA 1.76%.

Over the last six-month period, NetEase NTES surged the most (28.82%). Recently, NetEase reported solid third-quarter 2016 results. The increasing popularity of mobile-based games and the strength of PC games (licensed & self-developed) continue to keep investors interested in the stock.

Moreover, higher mobile advertising revenues were an added incentive. NetEase has announced a new $1 billion buyback program for its ADRs over a one-year time frame. The development comes close on the heels of NetEase launching its first VR game, Twilight Pioneers on Google’s VR platform, Daydream.

Activision was down 1.92% over the same time frame. However, we believe that the increasing digital revenues, strength in Call of Duty title and the super success of its latest franchise, Overwatch should help it in the long run. Plus, the company’s efforts at becoming a broad-based media entertainment giant and expansion into e-sports bode well for the future.

Want to learn more about video game stocks? Make sure to check out our podcast below!

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NETEASE INC (NTES): Free Stock Analysis Report
 
SONY CORP ADR (SNE): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
ACTIVISION BLZD (ATVI): Free Stock Analysis Report
 
NINTENDO LTD (NTDOY): Free Stock Analysis Report
 
GLU MOBILE INC (GLUU): Free Stock Analysis Report
 
ELECTR ARTS INC (EA): Free Stock Analysis Report
 
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