Multiple facets of the video game industry struggled in April, according to a report from industry-tracking firm NPD Group. But video game software companies Electronic Arts (EA) and Activision Blizzard (ATVI) are proving to be immune to the report today.
Gamers spent $509.5 million on video game hardware and software-related products in the U.S. in April, a 15% year-over-year decline from the $598.1 million they spent last year. Hardware sales fell 23% to $142.1 million from $183.7 million, while software sales declined 21% to $203.9 million from $256.7 million.
Game and console accessory sales were a bright spot in an otherwise bleak April, rising 4% to $157.6 million.
"New physical software declined in April 2016 due to a few factors: poor comparisons to last year's new releases, and the poor performance of March launches in April compared to last year," said NPD analyst Liam Callahan. "Despite some record-breaking new launches, there were poor comparisons to the release of Mortal Kombat X in April 2015. Mortal Kombat X was a strong launch last year -- its April 2015 sales exceeded that of the entirety of all April 2016 new launches by 18 percent."
The decline in hardware sales is understandable as the latest gaming consoles -- Xbox One, PS4, Nintendo Wii U, etc. -- grow older and the next generation of consoles gets closer to their respective release dates. Several other factors could explain the decline in hardware sales, including Microsoft (MSFT) discounting the Xbox One for the entire month of April to $300 from its normal $350 price point. While the move was designed to help the console outsell Sony's (SNE) PS4, the latter remained the top-selling console in the U.S.
Despite the disappointing April numbers, publicly traded video game companies EA and Activision continued their impressive run Friday. EA was rising 0.7% while Activision gained more than 2% on heavy volume. EA has gained over 16% in the past month while Activision is up 10% over the same period.
However, video game retailer GameStop (GME) was feeling the effects of the report, spending most of the morning session in the red before breaking even midday.
On the bright side, a couple of long-standing titles had record launch success in April.
"Ratchet & Clank had the best launch of any game in the Ratchet & Clank franchise when adjusting for the number of days sold in the data month, with sales recapturing success not seen for the franchise since the height of the PlayStation 2 era," said Callahan.
Ratchet & Clank, which is published by Sony, was the second-highest-selling video game in April, behind another new launch, Dark Souls 3. "The launch of Dark Souls 3 marked the strongest launch in the franchise's history. Sales for Dark Souls 3 nearly doubled that of its predecessor, Dark Souls 2, when adjusted for days in the market," said Callahan.