According to a recent Reuters article, the video game software industry experienced one heck of a hot July in the U.S. Sales for this sector rose approximately 28% last month vs. July 2003. The NPD Group reported that sales for software from January to June rose 4% overall year-over-year; if July is any indication, the rest of the year should see a solid upward increase.
This kind of a jump was certainly expected. After all, with consoles such as Sony's
The article brings up an excellent point in terms of looking forward. There are some pretty huge titles waiting to see their moment in the spotlight. Nintendo
The one thing I hope is that this sales increase was achieved without any significant decline in margins for the industry. When one walks into any retailer that stocks video games, one is bound to see several titles being cleared out of inventory. As long as margins are kept relatively intact, I'm a happy camper.
Activision and Electronic Arts are the blue chips of this sector, and they are the stocks that long-term investors would do well to focus on. There will always be a healthy demand for video game products and services, so a well-diversified portfolio would not likely be hindered by the inclusion of such companies.
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Fool contributor Steven Mallas owns none of the stocks mentioned.