The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
This newsletter lists the key events (including key game releases and financial news) in February, previews our expectations for March, and provides our views of the current state of the video game industry.
In February, Activision Blizzard (NASDAQ:ATVI), Take-Two (NASDAQ:TTWO), Ubisoft (EPA:UBI) sales only, and Zynga (NASDAQ:ZNGA) reported better-than-expected quarterly results. In addition, Sony reported quarterly results.
The Wedbush Video Game Index—our market cap-weighted index of video game companies—was up 12% in February, and significantly outperformed the broader market averages due to the introduction of the Sony PlayStation 4, a string of strong quarterly results, and some speculation about a potential Activision Blizzard recapitalization. The Russell 2000 and the S&P 500 were both up 1% for the month as positive momentum from strong corporate results and increased M&A activity was offset by sequestration fears. Among the covered publishers, Activision Blizzard had the strongest month (up 25%) after reporting better-than-expected quarterly results and mentioning in its earnings press release that a number of financial transactions were being considered in 2013. Take-Two (up 20%) and Ubisoft (up 18%) also benefitted from strong results and the new console. Majesco (NASDAQ:COOL) was the only covered publisher that declined in February, down 14% from concerns around the company’s dependence on the Zumba Fitness games. On a constant f/x basis, the index increased 10%. Excluding Nintendo (TYO:7974), the index increased 19% (on a constant f/x basis as well).
January U.S. console software sales were $373 million, up 1% from last year’s sales and our estimate of $370 million. The small sales increase was due to an extra week in the measurement period this year, so sales actually comped down on a like-for-like basis. Software sales growth In the Xbox 360 and PS3 offset the combined decline In Nintendo devices despite the November introduction of the Wii U, with the weak PS Vita netting out the PSP decline and accounting for the overall growth. Software units were down 2%, with ASPs up 3%. PC software sales were down 20% largely due to EA’s (NASDAQ:EA) Star Wars: The Old Republic last year. Hardware sales were $205 million, up 4% compared with last year’s $198 million, and above our estimate of $178 million largely due to the performances of Xbox 360 and PS3, which more than offset the disappointing Wii U. Combined hardware and software (including PC) sales for January were up 1% y-o-y.
We expect February console software sales to be…