The video game industry is going to have a very happy holiday season - these 6 charts show why
- Video game sales should be robust this holiday season, UBS analyst Eric Sheridan predicts in a new report.
- More consumers say they plan to buy this year's versions of top game franchises than previous iterations, according to the report.
- Significant portions of consumers plan to spend on extras, such as premium version of the games, UBS said.
These holiday season is shaping up to be a merry one for video game makers, particularly for industry giants Activision Blizzard and Electronic Arts.
Sales of this year's versions of top games look set to exceed last year's, UBS financial analyst Eric Sheridan, who covers the game industry, said in a new report. And significant numbers of gamers polled by the financial firm say they're intent on spending extra money for premium editions of particularly titles or on downloadable content, Sheridan said.
The "data points to a strong holiday season for video games," he said.
Part of what's driving Sheridan's bullishness is the large portions of consumers who say they've either purchased or plan to buy some of the top titles this holiday season. A whopping 40% of gamers surveyed said they're at least "somewhat likely to buy" "Call of Duty: Black Ops 4," the latest title in Activision's long-running franchise. Some 37% plan to buy Ubisoft's "Assassins Creed: Odyssey," and 36% "Red Dead Redemption 2" from Take-Two Interactive's Rockstar Studios.
Sheridan's report was based on UBS's surveys of more than 5,000 consumers in five key markets - the United States, the United Kingdom, Germany, Japan, and China. Those surveyed all ranged in age from 18 to 44; play games on consoles, dedicated handheld gaming devices, or PCs; and have played at least one game in the last six months.
In many cases, more gamers are saying they plan to buy this year's installment of particular game franchises than previous ones. Just 23% of gamers said last year they planned to buy "Call of Duty: WWII" - 17 percentage points less than this year's version. Some 34% of gamers said they plan to buy EA's "FIFA 19;" last year, just 22% said last year that they planned to buy "FIFA 18." And 23% say they'll pick up a copy of the company's "Madden 19," while just 13% said a year ago they planned to buy "Madden 18."
Gamers say they'll spend more for downloadable content
What's also spurring Sheridan's optimism is consumer's willingness to spend extra on games.
On average, more than half of the gamers who said they've already bought or planned to buy at least one of 15 top games this year planned to purchase downloadable content for the game. Downloadable content can range from inexpensive virtual items like new clothes for a character to more expensive things such as expansion packs.
With some games, the vast majority of their players intend to buy such extras. Some 76% who said they play or plan to play "PlayerUnknown's Battlegrounds" said they've already purchased or plan to buy downloadable content for it.
Meanwhile, on average more than a third of consumers who said they planned to buy one of those 15 games said they expected to pay extra for a premium version of that title. For example, some 39% of gamers who plan to get "NHL 19," say they'll spend up for one of the more expensive versions of the title.
It could be a big year for "Call of Duty"
Taking into account such data, Sheridan forecast that several of this year's top games will see stronger sales than previous installments.
Activision should sell about 24 million copies of "Call of Duty: Black Ops 4," compared to about 20 to 21 million copies it sold of last year's "Call of Duty: WWII," he said. Sales of the company's "World of Warcraft: The Battle for Azeroth" should hit 10 million copies; Activision sold about 8 million copies of 2016's "World of Warcraft: Legion," he said.
EA should similar similar gains with its biggest titles, Sheridan said. Sales of its "FIFA 19" are likely to hit 22 million copies, up from around 20 million for "FIFA 18," he said.
As part of his report, Sheridan reiterated his "buy" rating and price targets on Activision and EA. His price target for Activision is $88 a share; for EA, it's $166 a share.
Activision closed regular trading Thursday down $6.49, or 8.3%, to $71.81. EA was off $2.99, or 2.8%, to $105.80.