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Video Game Industry Update for December
This is an excerpt from our free Sunday newsletter over at Chit Chat Money
"This week, the NPD Group released its December update for the video game market. As someone who follows the industry closely, it is always fascinating to see how the trends are playing out each month.
Here are a few takeaways for investors.
First, the industry is back to consistent growth, with spending in the last months of the year above 2021 levels:
This is also with supply shortages hurting Playstation unit sales, the most important metric for driving industry growth in 2023 and 2024. If people don’t have consoles they can’t play new games, so they won’t buy them. Plain and simple.
Second, game sales have become fairly predictable. Call of Duty led the way as it does almost every year with its commercial blockbuster Modern Warfare II. Then, the rest of the chart is dominated by sports titles that have consistent sales each year and Nintendo evergreen titles. If a new Pokemon game is released like this year, it will be near the top as well (remember when looking at Nintendo sales they do not give out digital data, which is half of its unit sales). Yes, there will be a few new entrants each year like Elden Ring, but the charts have gotten very monotonous in recent years. This is great if you care about buying stocks with durable, predictable earnings streams in my opinion.
Third, people still want to buy Nintendo Switches. The console was the highest seller in unit sales even though it is much older than the PS5 or new Xbox generations. Apparently, the company is even looking to grow its inventory for the upcoming Zelda launch.
All and all, the video game market looks to be in great shape. If console shortages finally go away in 2023 and the new Grand Theft Auto is launched, industry spending should be up significantly from 2022."
GameSpot
Nintendo Is Increasing Switch Production To Prepare For The Legend Of Zelda: Tears Of The Kingdom Launch
With the global semiconductor shortage behind it, Nintendo is preparing for a potential spike in console sales when Tears of the Kingdom arrives in May.
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