I love statistics, and I love video games. Readers out there with a similar bent will be happy to know that the video game industry's latest facts and figures indicate a healthy status quo.
A recent CBS MarketWatch article quotes statistical research compiled by The NPD Group. To me, the numbers continue to support my belief that the video game industry will keep growing well into the future and that this sector's blue-chip players remain strong long-term ideas for the individual investor's portfolio.
A few numbers jumped out at me. Sales across the entire gaming business -- hardware, software, and accessories -- increased approximately 21% to $4.1 billion in the first six months of 2005, relative to year-ago numbers. Handheld sales jumped by a whopping 181%, proving that Sony (NYSE:SNE) and Nintendo are right to bet on players' hunger for portable gaming. While the article mentions the Nintendo DS as well, I generally notice more excitement for the Sony PSP.
Still, Nintendo can be proud that its Pokemon franchise continues to entice younger gamers. 1.1 million copies of the latest version, PokemonEmerald, have been sold. Nintendo may have a brand challenge on its hands, but at least its crazy little creatures still bring in the sales.
Investors shouldn't worry too much about the 6% decline seen in hardware sales. The industry has a new console cycle coming, with Sony's Playstation 3, Microsoft's (NASDAQ:MSFT) Xbox 360, and Nintendo's Revolution all headed for store shelves.
Motley Fool Stock Advisor picks Activision (NYSE:ATVI) and Electronic Arts (NASDAQ:ERTS) continue to be the best bets for leisure software stocks, and I also personally like THQ (NASDAQ:THQI). These publishers know how to license solid properties and manage distribution.
Some investors may still shy away from video game stocks, wondering whether games are a fad that will suddenly dissipate. It's always a possibility. Way back in the days of the Atari 2600, a glut of low-quality software led to the industry's infamous crash. Today, however, games are intensely interactive, adding complex plots and detail to traditional games' reliance on skill and practice. Asteroids is a lot of fun, but it just doesn't offer the same overpowering experience as Grand Theft Auto. To this Fool, video games have nowhere to go but up.
Further button-mashing Foolishness:
- Should Take-Two Interactive have known better?
- Then again, maybe Take-Two garnered some great publicity.
- Viacom and its MTV division want to play games with the biggies.
- Activision and Atari decide to get small together.
Compare scores at the Fool's Video & PC Games discussion board.
Any player can beat Grand Theft Auto -- beating the stock market is an entirely different challenge. If you'd like to one-up Wall Street, letMotley Fool Stock Advisorbe your strategy guide. To discover Tom and David Gardner's favorite stocks, subscribe today.
Fool contributor Steven Mallas owns none of the companies mentioned. He loves all the old Atari 2600 games. The Fool has a disclosure policy.
