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Video Game Sales Report: Good News for Activision; Bad News for Electronic Arts

By John Ballard - Dec 25, 2017 at 6:00AM

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Both top game makers released highly anticipated games in November. Here's how each one fared, and what to expect moving into 2018.

NPD Group recently released video game sales data for November, and it points to Activision Blizzard (ATVI 0.91%) on track to finish the year on a high note. It's much anticipated release, Call of Duty: WWII, ranked as the top-selling game for the month, selling a strong 4.4 million units.

As for Electronic Arts' (EA 0.89%) Star Wars: Battlefront 2, the data were not so good, with sales of only 882,000 units in the month. Battlefront 2's performance isn't surprising given gamers' negative reaction to the game because of its heavy reliance on microtransactions, which was so severe it prompted EA to suspend in-game purchases for the time being.

November is typically the most important month of the year for video game sales. It's the time of year that usually sees big-budget game releases and new console hardware. Most importantly, it sets the tone for the holiday quarter. In that light, let's review where Activision and EA stand following their much anticipated releases.

Hands holding a game controller with TV displaying a video game in the background.

IMAGE SOURCE: GETTY IMAGES.

Activision is finishing 2017 with momentum

Activision's strong November was expected given high interest leading up to the launch of Call of Duty: WWII. After last year's Call of Duty: Infinite Warfare disappointed fans with its futuristic gameplay, Activision took the franchise back to a historic setting, and that resonated with the game's longtime fans.

A strong start for the new Call of Duty was really important for Activision, as this year's revenue and earnings is expected to be flattish over 2016 because of fewer game releases.

But Activision shareholders have plenty of reasons for optimism as we close the books on 2017 and start looking ahead. Call of Duty: WWII is building a sizable player base, which provides the audience reach Activision needs to funnel gamers to spend money on in-game content.

Activision's stock price is up 80% year-to-date, and there's plenty more to come with esports and in-game advertising coming to the front next year, which will pave the way for more money-making opportunities.

Battlefront 2's sales may benefit from new Star Wars movie

EA will have to hope the Dec. 15 release of Star Wars: The Last Jedi in theaters  will spur sales of Battlefront 2, just as the movie release of The Force Awakens in 2015 seemed to stimulate sales of the previous Battlefront game. 

It's important to point out that NPD's sales data only counts physical sales of games, so the figures reported by NPD are probably underestimating the actual sales once we consider digital downloads. Downloaded games made up 36% of EA's unit sales in the fiscal second quarter, and that percentage is expected to keep trending higher over time.

However, digital downloads may not help Battlefront 2 sales that much, since management expects the game to be a strong gift-giving title during the quarter. That would favor a higher mix of physical unit sales over digital downloads.

EA's problems may not be as bad as everyone believes

All that said, there's a lot EA can learn from the poor performance of Activision's Call of Duty: Infinite Warfare in 2016. Activision made up for those lost sales with stronger player engagement in other titles, which kept in-game spending at healthy levels and allowed the company to get off to a stronger-than-expected start in the first half of 2017.

EA has similar diversity, which can help it weather the storm. Top sellers like Battlefield 1, Madden NFL 18, and FIFA 18 can pick up the slack over the next few quarters. This might be why EA management announced in a recent SEC filing that the suspension of microtransactions for Battlefront 2 are not expected to have a "material impact" on the company's previous guidance for fiscal 2018 financial results.

We'll know more when EA reports its fiscal third-quarter earnings in a few months, but it seems like there's a good possibility EA's holiday quarter might not be as bad as some anticipate.

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Stocks Mentioned

Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
EA
$122.73 (0.89%) $1.08
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
ATVI
$78.57 (0.91%) $0.71

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