The dumbest thing on Wall Street: people who think gaming is dead.
Because judging by soaring stock prices of many companies tethered to gaming, the millennial fueled streaming movement has not killed the joy of playing video games.
"I don't even know where that perception comes from [that gaming is dead]," said SunTrust Robinson Humphrey analyst Matthew Thornton to TheStreet. As long as there is money to be made in gaming -- and there is still plenty -- the industry won't take a backseat to other forms of entertainment like watching Netflix (NFLX) , Thornton said. Gaming is an interactive form of entertainment, while streaming services like Netflix and Hulu are passive. The two are in separate leagues.
Much like those who say streaming will kill gaming, the camp that says cellphones will topple console gaming companies are just plain wrong.
"The experience is very different," Thornton said. "A mobile game is not comparable to a console game."
"I might watch Netflix on my phone on the train because I'm not going to bring my TV with me," Thornton said. The console experience -- sound pouring in from every corner, 70-inch plasma screen serving up real-life views of role playing -- is still the winner.
Or so says the data.
Console sales in September grew at the fastest rate on record, according to NPD Group's Mat Piscatella. The number of combined Sony (SNE) PS4 and Microsoft (MSFT) Xbox One users is 25% higher than that of the previous generation PS3 and Xbox 360 consoles, Piscatella said, suggesting that consumers are not only buying more consoles, but that they're adopting new technology faster.
Video game product sales grew 39% from last year. Piscatella predicts the top five games during the holiday season quarter will generate 20% more revenue than the top five a year earlier.
"It's been quite some time since the console market in the U.S. has been in such a strong position for potential continued growth," Piscatella says.
That continues to be great news for investors in gaming companies. Just check out the monster years for shares of console player Microsoft and even gaming chip maker Nvidia (NVDA) .
- Take-Two Interactive: +135%
- Nvidia: +112%
- Nintendo: +85%
- Activision Blizzard: +72%
- Sony: +63%
- Electronic Arts: +42%
- Microsoft: +34%
The space is also being rewarded for its successful diversification beyond console gaming, says Action Alerts PLUS Senior Portfolio Analyst Jeff Marks.
Activision Blizzard Inc. (ATVI) , for example, bought King Digital in 2016 for $5.9 billion to get access to mega-hit Candy Crush for mobile. Call of Duty on consoles continues to rack up strong sales as does Destiny 2 on PCs. The company is also pushing aggressively into the e-sports space.
Electronic Arts (EA) has notched more than $2.9 billion in total digital sales, which is comprised of mobile games, in-game advertising, subscriptions and full-game downloads, over the last twelve months.
In the handheld gaming arena, Nintendo's Switch (NTDOY) has had one heck of a year. Nintendo recently saw record-setting sales for the September quarter and doubled its profit expectations. And according to Piscatella, Nintendo could have the strongest year-one lineup of any console in history.
The data doesn't lie, playing video games has definitely not died. If you think along those lines, and bet against video game stocks, you may be the dumbest thing on Wall Street.
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