Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Tuesday, Don't Fail Microsoft Now

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Next Tuesday can't come soon enough for the video game industry.

Microsoft's (NASDAQ: MSFT  ) highly anticipated unveiling of the new Xbox gaming console comes at a desperate time, with die-hard gamers dramatically scaling back on their purchases.

Industry tracker NPD Group put out its monthly retail sales data last night. It wasn't pretty. Sales plunged 25% last month when pitted against April of last year. These sharp declines have been routine for three years.

The Xbox 360 may continue to be the country's best-selling console -- it's been that way for 21 months in a row -- but it's a shrinking pie. Hardware sales fell a brutal 42%.

Naturally this places a lot of pressure on Microsoft to hit a homer at Tuesday's media event. It needs to raise the bar. The software giant's stock may be trading at a five-year high, but a hearty reception for the new Xbox will comfort investors fearing Microsoft's fading relevance in its operating systems stronghold.

The NPD Group data isn't complete. It only covers physical retail sales. We know that digital sales are on the rise, and that's not factored into the 25% drop. The resale of used games and gear also isn't in the data, and investors will get a solid glimpse into that niche when GameStop (NYSE: GME  ) reports on Thursday.

The video game retailer scores its thickest margins in the used game resale category, but even that once lucrative line has been slipping at GameStop in recent quarters.

The one thing that we can't ignore is that 42% drop in hardware. There's no digital padding there, and that's a troublesome indicator. Apologists were hoping that new consoles would help end the problematic slide in hardware and accessory sales, but last year's Nintendo Wii U obviously didn't breathe new life into the industry.

Electronic Arts (NASDAQ: EA  ) -- the country's second-largest video game publisher -- has apparently abandoned the platform.

"We have no games in development for the Wii U currently," an EA spokesman told gamer hub Kotaku this week.

The industry needs Microsoft's Xbox to come up big this holiday season, and we'll have a better feel if that is a realistic goal or not come Tuesday.

This may very well be the industry's last shot at mainstream relevance. No pressure, Microsoft. No pressure.

Now let's talk about a game that's getting bigger
With the European debt crisis and slowing growth in China, many investors are worried about heady growth going forward, but fear not because: The Future Is Made in America. Domestic manufacturing is poised to once again become the investment driver of the world, and all because of one disruptive technology. You can uncover the three companies that will become the American Steel of tomorrow in The Motley Fool's new free report. Just click here to read more.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 18, 2013, at 12:14 AM, prginww wrote:

    REally? You mean people aren't buying as many 8 year old consoles as they were 3-4 years ago? No way!

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2439147, ~/Articles/ArticleHandler.aspx, 9/27/2016 9:48:54 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 32 minutes ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
MSFT $57.95 Up +1.05 +1.85%
Microsoft CAPS Rating: ****
EA $85.20 Up +1.70 +2.04%
Electronic Arts CAPS Rating: ***
GME $27.43 Down -0.21 -0.76%
GameStop CAPS Rating: **