Coronavirus Isn’t Hurting All Discretionary Sales: April Video Game Sales Hit A Record High - Forbes

Stay at home consumers have delivered a record April video-game industry sales, a rare bright spot ... [+] in battered discretionary sales. (Photo by WILLIAM WEST/AFP via Getty Images)

AFP via Getty Images

Coronavirus has dented clothing and many other non-essential sales, but stay-at-home consumers seeking distraction and escape are helping to not only reverse lower video game sales, but also give them a big new jolt.

Spending in April on video game hardware, software, accessories and game cards surged 73% to $1.5 billion from a year earlier, reaching a record high in April and beating the previous record of $1.2 billion set in April 2008, according to a Friday report from market research firm NPD Group. 

Software sales rose 55%, driven by top-selling games including “Final Fantasy VII: Remake,” “Call of Duty: Modern Warfare” and “Animal Crossing: New Horizons.” 

Hardware spending surged 163% to also its highest April demand in 12 years, as sales of Nintendo Switch, PlayStation 4 and Xbox One each increased by more than 160%.

April’s blockbuster sales followed a 9% increase in first-quarter sales to a record $10.9 billion, according to NPD.

“Growth rates of 73% are certainly rare,”  Mat Piscatella, NPD’s games industry analyst, told me, adding April’s growth pace also marked a record and more than doubled the previous peak rate in April 1998. 

Video game sales had actually declined in January and February before stay-at-home orders that began in mid-March drove up the month’s sales by 12%. Piscatella, who had originally expected the U.S. industry sales to see a total decline this year, said annual growth is now possible. 

As many major retailers reported their fiscal first-quarter results this week, video games has indeed surfaced as one rare discretionary-category bright spot, in a storyline that generally shows those selling grocery and other essentials like Walmart WMT , Target TGT , BJ’s Wholesale and Home Depot HD benefiting from higher demand while fashion and other non-essential merchants, from Macy’s M and Kohl’s to Foot Locker FL and Urban Outfitters URBN , posted sharply lower sales.   

In a telling sign, Best Buy BBY ’s entertainment segment, including drones, gaming hardware and software, was the only area that showed a 9.5% increase when the electronics retailer reported a 5.7% comparable sales decline in the fiscal first quarter that ended May 2. Best Buy’s other segments including consumer electronics, mobile phones, appliances and services all posted either lower or flat sales. 

Target, which reported a 10.8% fiscal Q1 comparable-sales increase thanks to growing online grocery orders, said video game sales helped drive a 45% jump in its electronics business. 

Since GameStop GME , the largest specialty U.S. game retailer, shut its physical stores on March 22^nd, it’s been able to keep “over 90% of its planned sales volumes in the two-thirds of” its stores that offer curbside pickups, the company said in late April. GameStop, which had seen comparable sales slump 23% in the nine weeks through April 4, said its sales had grown 3% since its stores closed as it “experienced a surge in demand across products.”

All that fervent demand has also translated to a boom in video-game- related advertising. Ad spending from video game retailers, console makers and game title publishers more than doubled in April from January level, according to ad-industry tracker MediaRadar. Spending by video game retailers, including GameStop and online players like PlayStation Store, Fortnite’s Epic Games Store and online game rental subscription service GameFly, saw “the most dramatic increase,” the data shows. 

It’ll also be interesting to see if one title advertiser will surface in May’s total. Amazon AMZN , which owns Twitch game-streaming site, this week released “Crucible,” said to be its first big-budget, original game that Amazon Game Studios has released to vie against titles like Fortnite and Apex Legends. 

Related: Amazon is reportedly eyeing bankrupt J.C. Penney as coronavirus stokes M&A activity

Related on Forbes: Potential Uber Eats-Grubhub combo would create the largest U.S. food delivery app

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https://www.forbes.com/sites/andriacheng/2020/05/22/coronavirus-isnt-hurting-all-discretionary-sales-april-video-game-sales-hit-a-record-high/

2020-05-22 20:56:05Z
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