The video game industry is fired up and focusing on the third holiday season for the current generation of gaming consoles, which has traditionally been the sweet spot for players and publishers alike. Insiders predict sales will be fueled by a host of hot new game titles for this generation of hardware.“This is the year of content, content, content,” deadpans Sony Computer Entertainment of America, a unit of Sony (NYSE:SNE), CEO Shawn Layden, adding, “the development community is hitting its stride.”
Analyst Michael Pachter of Wedbush Securities expects a third-year lift for the whole industry. “The pie is going to be bigger and anyone with a popular game will thrive... There will be twice as many [new generation] Xboxes and PlayStations at the end of this year as vs. the end of last year and consumers will buy twice as many games as they did last year.”
Pachter says consumers are champing at the bit to buy quality content, especially related to Star Wars. Gamers got a sneak peak during this year’s E3 video game expo, held last month, which offered a record 52,000 plus attendees a glimpse of gaming’s future in virtual reality.
To Infinity and Beyond
The force should be strong with Disney (NYSE:DIS) Interactive’s Infinity series, a leader in the growing toys-to-life trend, as the new 3.0 version offers two distinct Star Wars experiences based on the original six films and a third from the series due later “this winter” based on “The Force Awakens.”
In just two years, Disney has sold more than $1 billion worth of the first two iterations of the game and the collectible toy figures. Disney shares are hovering at a record up 25% YTD.
John Blackburn, Sr.VP/GM of Infinity, who helped create the game for Disney Interactive says, "I didn’t realize the value the figurines would have for the company. I did feel like they’d have a lot more value if we thought of things as one platform where all the properties would come together.”
Activision’s (NASDAQ:ATVI) Skylanders blazed the trail in the $4 billion category and continues adding characters including a mash up with Nintendo that brings its classic characters into the action. Nintendo last year introduced Amiibos for its Wii U console.
Meanwhile, Time Warner's (NYSE:TWX) Warner Bros. is launching Lego Dimensions so you can send Batman, Dorothy, Marty McFly, and Unikitty off to the see the Wizard of Oz.
And the party may be getting even more crowded. “I know at least two other players trying to get into that,” says Sony’s Layden, who says PlayStation is not creating its own line.
Pachter also says to keep an eye on toymakers. “The winners are going to be Mattel and Hasbro. They should be putting NFC (near field communication chips that bring the figures to life) in every Hot Wheels, Barbie, Transformer, or GI Joe they sell.” So far this year, Hasbro (NYSE:HAS) has been winning the toy war, its shares up 43%, while Mattel’s (NYSE:MAT) are down 16%.
Enticing Exclusive Offerings
Analysts and video game executives say exclusive games, content and features are now even more crucial to sell consoles since so many games are available across platforms.
Additionally, Nintendo, Sony's PlayStation, and Microsoft's (NASDAQ:MSFT) Xbox have all rolled out beloved sequels and reboots, while also offering first dibs on downloadable content and all are hoping to build on the past year’s momentum. These console makers are hoping these roll outs will ultimately entice long-time fans and neophytes to upgrade or invest in these current-gen consoles.