Video game publisher Activision Blizzard, Inc. ATVI dominated headlines last week following the acquisition of Major League Gaming (MLG) for an estimated $46 million. Also, Sony Corp. SNE announced that its PS4 had a fabulous holiday season wherein its sales touched 6 million units.
Among other stories, Zynga, Inc. ZNGA collaborated with Rubicon to develop customized mobile advertising products for political campaigns. Facebook, Inc FB also had some good news for hardcore gamers as it started taking pre-orders for Oculus Rift, though at an enormous price of $599.
Top Stories This Past Week
1. Activision Blizzard has long been eyeing the lucrative e-sports market. After having formed an exclusive e-sports unit last year, the company on Tuesday announced the acquisition of MLG, a leading e-sports player for estimated $46 million. The MLG brand will continue following the acquisition.
E-sports refer to live video game tournaments. Like traditional sports, even these are held at stadiums and are televised or broadcast online. Importantly, these tournaments have alluring prize money. Founded in 2002, MLG is one of the biggest names in the e-sports arena. Per research firm Newzoo, it is estimated that the number of e-sports fans will cross 323 million by 2018 from 226 million currently.
With the MLG acquisition, Activision has positioned itself strongly to grab a huge share of the fast-growing e-sports market. However, will MLG provide the desired results? It’s a wait-and-see story.
2. Sony’s PS4 had a fabulous holiday season. PS4 sold 5.7 million units, up 39% year over year, through the 2015 holiday season (Nov 22 to Jan 3). Even more impressive is the console’s existing lifetime sales. At 35.9 million units, PS4 sales have already topped those of its predecessor. By this point in PS3's lifespan, Sony had sold only about 20 million units globally.
Though Sony’s gaming business is in good shape, the same can’t be said about its mobile business. Add to it the concerns surrounding falling sales of Apple Inc’s AAPL iPhone 6 and iPhone 6s, Sony’s mobile business looks more troubled. Sony supplies digital camera sensors for iPhone.
3. Facebook had some very good news for hardcore gamers. Beginning Jan 6, the company started to take pre orders for its highly anticipated VR headset Oculus Rift, though at a massive price of $599. Shipping (in over 20 countries) will begin by the end of the first quarter of 2016. The hefty price tag however didn’t deter excited buyers who logged on to the online store in large numbers causing it to crash soon thereafter.
Rift has the first mover’s advantage in this space. HTC’s much anticipated headset Vive and Sony’s Playstation VR aren’t going to be launched any time before Apr 2016. However, a few analysts argue that Sony’s headset is likely to topple Rift sales because the latter needs a high end PC configuration, which as per chipmaker NVIDIA Corporation NVDA less than 1% of the currently used PCs have. In contrast, Sony’s headset is compatible with PS4.
4. Zynga has partnered with the Rubicon Project, Inc. RUBI to make customized mobile advertising products for political campaigns. Rubicon facilitates automated buying and selling of advertising. The collaboration is likely to benefit from the upcoming 2016 presidential election in the U.S. Reportedly, advertising spending for political campaigns is expected to cross $11 billion with $1 billion spent on digital advertising alone.
Performance
The following table shows the price movements 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 |
-6.81% |
44.79% |
|
EA |
-9.41% |
-10.63% |
|
GLUU |
-12.40% |
-63.38% |
|
MSFT |
-6.29% |
17.77% |
|
NTES |
-10.05% |
27.42% |
|
TTWO |
-9.30% |
17.42% |
|
ZNGA |
-8.49% |
-12.68% |
Over the last five trading sessions, the above listed video game stocks performed dismally. All ended in the red. However, with a 12.40% drop, Gluu Mobile, Inc GLUU disappointed the most.
Over the last 6-month period, Activision Blizzard surged the most — nearly 44.79%. We believe that Activision’s huge library of content along with a host of other developments, the latest being the acquisition of MLG, will continue to fuel its rise. Notable developments include buyout of King Digital for $5.9 billion, strong third quarter 2015 results and the launch of a film and television unit.
However, Glu Mobile was down 63.38% over the same time frame due to underperformance of most of its releases this year. Moreover, in the third quarter of 2015, GAAP revenues were down over 2.37% while non GAAP revenues fell 23%. Also, the company gave a cautious guidance for the fourth quarter of 2015.
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