Can Madden NFL 16 Provide A Blockbuster Start To the 2015 Holiday Season?
Electronic Arts (NASDAQ:EA) has started its campaign for the 2015 holiday season with the release of one of its core franchises: Madden NFL 16. On August 25, EA launched this year’s edition of North America’s most popular sports franchise, with enhanced graphics, game-play, and some new features to attract more gamers. [1] Will Madden NFL 16 be the first of the core titles to revive the software sales?
EA’s stock went up by nearly 7% a week after the release of the game.
Our $76 price estimate for Electronic Arts’ stock is roughly 10% above the current market price.
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It’s That Time Of The Year
The gaming industry is usually dependent on these top tier games to augment the software sales in the latter half of the calendar year. Some of the AAA games, including Electronic Arts’ FIFA, Madden NFL, and other sports titles; and Activision Blizzard’s (NASDAQ: ATVI) Call of Duty, are the most awaited games of the year worldwide. However, looking at the numbness in the game sales segment, due to the absence of any blockbuster release in the first half of the year, the core gamers are eagerly waiting for the new editions of these games to be launched. According to the monthly NPD report, the gamer spending in August 2015 on video-game hardware and software declined 2% year-over-year (y-o-y). [2]
The software sales figure for the first 8 months of 2015 is roughly the same as that in the same period of last year. However, in the hardware segment, the gamers seem to have moved on from previous generation consoles, and most of them have completed the transition to new generation platforms. As a result, the market is speculating the holiday season 2015 to be better than last year, considering that more gamers will be eager this season to buy games to try out on the new systems. Furthermore, some of the hardcore games are making a comeback this season, including the all-time famous racing franchise: Need For Speed.
The launch of the Madden NFL title by EA, marks the end of summer for most of the gamers on one hand, and marks the onset of that period in gaming season when most of the top game developers release their record smashing games. There is no doubt that Madden will end the drought that has been troubling the industry for the last couple of quarters. The question that the market is wondering is whether this season’s Madden will perform better than last year’s edition.
What To Expect From Madden NFL This Season?
Madden NFL, North America’s most popular and most played sports video-game title, has been reporting increased game-play hours every year. According to VGChartz, Madden NFL 15 has sold more than 6 million units as of July 2015 on the top 4 gaming platforms (PS4, PS3, Xbox One, Xbox 360). [3] Morever, with the absence of NCAA Football series, the gamers who prefer American football are opting for Madden NFL.
Software sales are in-line with last year’s figure in the first 8 months, despite the absence of any major title release. This can be indicative of the fact that the number of units sold per title has increased this year, as more gamers have transitioned to new generation console platforms. Consequently, if the industry is assuming more number of core titles to be released in the second half of the year, compared to that in last year, we can expect the software sales to outperform last year’s numbers.
Madden NFL 15 sold more than 2.35 million units on the top 4 gaming platforms in the first month of the release. If Madden NFL 16 manages to sell roughly 2.5 million units in the first month, it will be a huge boost for the video-game software industry. Moreover, this number is achievable, considering the fact that Madden NFL 16 topped the U.S. charts for the most units sold in August, and that, too, within 5 days of its release. Additionally, Electronic Arts has come up with a new Drafts Champions mode, which allows a gamer to play fantasy football mode.
Trefis estimates the number of Madden units sold to increase by 8% in 2015, and to account for more than 10% of the total revenue this year.
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