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Games sales figures show online is key
The NPD Group has released sales figures for 2005, estimating that the US spent $1.4 billion on games last year. An interesting and growing proportion of that income was from online games -- $344 million, about one quarter of the total spending, came from recurring subscription fees.Breaking that down, NPD estimates about 85% of that recurring income is from specific games like World of Warcraft, whereas the rest -- a non-trivial $52 million -- comes from casual games portals. It's clear from the tremendous amount of money being generated by both games and gaming portals, as well as the popularity of MMOs and casual games, that online is a key area to watch in future. While digital downloads are only a small part of the picture -- 3% of total market sales -- the area should grow, partly driven by the convenience of buying and delivering online. Of course, paying for a game through monthly subscriptions rather than a one-off box fee is appealing, though players of games like World of Warcraft don't seem to mind doing both.
What investors think of Take-Two today
A picture is worth a thousand words. A graph, about 555 words, because there aren't as many pretty colors. This graph (modified after being taken from the latest issue of the Video Game Journal research report published by Susquehanna Financial Group analysts Jason Kraft and Chris Kwak) shows Take-Two's stock (Nasdaq: TTWO) performance since May of last year, when the company's shares were flying high on the release and success of Grand Theft Auto: San Andreas. The Hot Coffee scandal isn't the only thing that wiped out nearly a billion dollars in Take-Two share value. The launch of the Xbox 360 has reduced demand for the company's titles on older-generation consoles, resulting in a string of disappointing sales figures. Then there's the whole public spat with a member of the Take-Two board, lawsuits in California, and a Banc of America Securities report suggesting that the company was running low on cash. For context, we'll post the graphs for Electronic Arts, Activision, and THQ next.
