NPD: July Video Game Sales Increased 10% to Record $4.6 Billion

Following a brief downturn in April, sales of video games, hardware and accessories rose 10% in July to a record $4.6 billion, compared with revenue of $4.18 billion in July 2020 at the height of the pandemic, according to new data from The NPD Group.

Spurred by greater availability of new-generation consoles from Microsoft and Sony, hardware sales skyrocketed 98% to $323 million — the best July sales tally since 2008. Hardware sales topped $161 million in the previous-year period. Year-to-date spending on consoles through July is up 50% to $2.7 billion from $1.81 billion in 2020.

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Game software sales rose 6% to $4 billion, from $3.7 billion in 2020. Year-to-date revenue rose 12% to $29.45 billion, from $26.29 last year. The top-selling game in July was Nintendo’s The Legend of Zelda: Skyward Sword, followed by perennial chart topper Call of Duty: Black Ops Cold War from Activision.

Total consumer spending on gaming for seven months reached $33.5 billion, up 14% from $29.38 billion during the same period last year.

DEG Panelists: PVOD Here to Stay

After an accelerated push during the pandemic in 2020, premium VOD is a permanent addition to the home entertainment marketplace, said panelists during a Jan. 27 DEG: The Digital Entertainment Group online presentation.

“We think that PVOD is here to stay, and it really is a big part of our business,” said Fandango SVP Mark Young. Fandango owns transactional VOD services Vudu and FandangoNow.

Microsoft’s Pedro Gutierrez noted that PVOD, debuting in the same window or close to theatrical release, allows for more effective studio marketing. Whereas traditionally a film’s home entertainment marketing would come months after its theatrical push, PVOD has allowed studios to move it up so the title is “fresh in consumers’ minds,” he said.

“You’re able to see the studios able to support the home entertainment releases stronger than previously,” he said, adding “you have that nice consistent message for the title availability.”

For parents like him, family titles are a particular draw during stay-at-home orders, even with a bigger price tag, he said.

“When there is new content that can buy an hour and a half or two hours of silence, we are jumping at the opportunity,” he said.

Aside from first-run films on PVOD, catalog is also getting a boost as folks stay home, Young said, noting that the classic series “The Twilight Zone” has been a strong seller.

“It’s good fodder for cathartic viewing,” he said.

Fandango has also employed TVOD bundling of titles to entice customers.

“We work with the studios’ licensing groups … whether it’s by genre, by actor, by type of movie, whether it’s by demographic,” he said. “We look at our data to be able to bundle things that are interesting for consumers … in some cases across studios.”

Gutierrez agreed that unique marketing is key for TVOD.

“At the end of the day, we all have the same piece of film content, whether it’s from Warner, from Universal, from whichever partner,” he said. “How do we make it unique? We spend a lot of time targeting our customers in a manner that’s appropriate for them [with a title that] shows their interest based on prior search or selections — or we even do a lot of game and movie bundles for our gaming audience on Xbox.”

He said collectors are alive and well in the digital realm, just as with discs.

“We’ve all seen the people who have their wall of DVDs,” he said. “With the digital stuff, people want to show you their library’s bigger than Netflix. They want to buy. [The digital collector] does not want to have to worry about do I need to go to HBO Max, do I need to go to Disney+. Where is my content? My content is right here in my collection.”

“We also see on Vudu in particular a lot of collectors, rabid collectors,” added Fandango’s Young.

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FilmRise’s Fisher touted the growth and appeal of his expanding part of the digital business: free, ad-supported streaming or AVOD.

“In the AVOD space, one does not need a credit card, does not need to log in. All they need is an internet device,” he said. “Not all families in the U.S., let alone around the world, can afford 10 subscriptions. Some can’t even afford one subscription.”

FilmRise has found success with catalog as well, including the recently acquired classic show “The Rifleman.”

“It’s a black-and-white TV show, four by three aspect ratio, over six decades old,” he said. “We identified that the consumer demand was really strong.”

FilmRise uses data algorithms and “proprietary analytics” to find such underutilized content, adding AI machine learning in 2020.

“We don’t care what the industry thinks people want to see, we care what people want to see,” he said, adding that such older shows as “3rd Rock from the Sun,” “21 Jump Street,” and “Lost in Space” are doing well on AVOD. “Unsolved Mysteries” and “Forensic Files,” which attract strong demand for FilmRise, have even been rebooted, he noted.

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Microsoft Bows Xbox Series X and Series S Consoles

Microsoft Nov. 10 announced availability of the next-generation Xbox Series X video game console, priced at $499, and Xbox Series S unit available for $299.

Microsoft will formally launch the new gaming systems in a global livestream at 11 a.m. PT/2 p.m. ET on YouTube, Twitch, and Facebook Gaming.

Microsoft says the Xbox Series X features 12 teraflops of GPU power enabling new technologies and features such as framerates up to 120 fps, hardware-accelerated Direct X raytracing, variable rate shading, and Quick Resume, which enables players to resume exactly where they left off. The Xbox Series S offers similar performance at a more affordable price. The Xbox Series X|S are available in 40 markets around the world today.

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Microsoft claims the Xbox Series X|S are the only next-generation consoles enabling gamers to play thousands of games across four generations.

“We believe that gamers should be able to play all of their games from the past without needing to purchase them again, and they should play better than ever before,” wrote Will Tuttle, editor in chief of Xbox Wire.

This means that all titles should run at enhanced speed and more clarity than they were originally designed for on their original launch platform. Backward compatible games run natively with the full performance of the Xbox Series X|S for each and every backward compatible game.

“These games will look better than ever thanks to improved texture filtering, higher and more consistent frame rates, faster load times and Auto HDR support,” Tuttle wrote.

Redbox Free Live TV Adds Xbox One Distribution, Content Channels

Redbox Free Live TV, the ad-supported VOD sister service to kiosk-based disc rentals, has signed an agreement with Microsoft to make its app available on the pending Xbox One X and Xbox One S video game consoles. Free Live TV is also available on the Roku platform, Apple TV and Android TV, in addition to iOS and Android. It is not yet available on Amazon Fire TV.

Redbox also added music video streamer Vevo, Pocket.watch, featuring children’s programming and Johnny Carson, an OTT video platform streaming the late late night comic’s episodes. The additions bring to more than 75 the number of content channels offered free (with ads) to consumers.

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“Our Free Live TV service continues to grow at a rapid pace and we’re committed to creating a product that our customers love and we know that includes adding awesome channels such as Vevo that we know our audiences will enjoy,” Chris Yates, GM of Redbox On Demand, said in a statement. “Free Live TV is the home for our customers to find and watch great content from their favorite channels, all free.”

GameStop Inks Strategic Partnership With Microsoft

Video game retailer GameStop Oct. 8 announced it has entered into a multiyear strategic partnership agreement with Microsoft to help expand its physical and digital video game offerings in the cloud, as well as enhance the chain’s retail technology infrastructure.

GameStop operates more than 5,000 retail stores worldwide, in addition to an e-commerce platform and the PowerUp Rewards customer loyalty program. Through the partnership, GameStop hopes to standardize its business operations via Microsoft’s cloud solutions and hardware products to deliver enhanced digital “experiences” to customers.

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“This is an exciting day at GameStop as we announce the advancement of an important partnership that capitalizes on the power of our operating platform and significant market share in gaming to accelerate our digital transformation; drive incremental revenue streams; and over time, further monetize the digital world of gaming,” CEO George Sherman said in a statement.

Under the agreement, GameStop will standardize its back-end and in-store operations with Microsoft’s portfolio of cloud-based business applications and customer data. This is to enhance store personnel with integrated business operations, including finance, inventory, e-commerce, retail and point-of-purchase sales.

For example, cloud-based in-store software could enable store personnel to access information on a customer’s gaming preferences and purchase history in real time on product availability, subscriptions, pricing, and promotions in order to provide a differentiated and more personalized in-store shopping experience.

GameStop plans to roll out Microsoft Office 365 and Microsoft Teams to its stores, empowering more than 30,000 store associates with enhanced productivity and collaboration tools.

“By harnessing the power of Dynamics 365 and Microsoft 365, GameStop will be able to modernize its technology infrastructure and support store associates and consumers in new and exciting ways,” said Matt Renner, president of U.S. Enterprise Commercial at Microsoft.

Store associates will be equipped with new Microsoft Surface devices,  enabling them to move freely within the store footprint, meeting the needs of customers faster and more efficiently.

GameStop is also expanding its Xbox family of product offerings to include Xbox All Access, which provides an Xbox console and 24 months of Xbox Game Pass Ultimate to players with no upfront cost. GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.

“GameStop’s extensive store base, focus on digital transformation in an omni-channel environment and expert gamer associates remain an important part of our gaming ecosystem,” added Phil Spencer, EVP of Gaming at Microsoft.

Sony Cuts PlayStation 5 Console Production, Citing Chip Issues

Ahead of a Sept. 16 pricing unveil for the next-generation PlayStation 5 video game console, Sony Interactive Entertainment has reportedly cut production for the year by four million units to 11 million, citing software chip issues.

As first reported by Bloomberg, which cited sources familiar with the situation, production for the new console was being hampered by a 50% reduction in available custom-designed system-on-chips (SOC) that help drive the unit. Coupled with manufacturing delays due to the coronavirus pandemic, production of 11 million PS5 units would still surpass previous first-year PS production runs.

“If Sony can really ship 11 million for this fiscal year, we do not think the shortfall will be critical,” Kazunori Ito, analyst with Morningstar Investment Management Asia, told CNBC.

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The news, which saw Sony Corp. shares dip slightly, comes as PS battles Microsoft’s Xbox with new gaming systems in time for the 2020 winter holidays. Microsoft earlier this month announced that the Xbox Series X and Xbox Series S consoles would launch Nov. 10, priced at $499 and $299, respectively. In a first, the software giant will market financing options for the consoles, beginning at $24.99 monthly.

After a near two-year slump as gamers awaited the arrival of new consoles and/or migrated to online gaming, the video game market has exploded during the pandemic. Driven by house-bound gamers and consumers, monthly industry sales ballooned more than 70% in April, according to The NPD Group — with accessory sales hitting an all-time high in August.

Nintendo, whose Switch gaming device has dominated the market in the absence of new Xbox and PS units, saw operating profit skyrocket 400% for the fiscal quarter from April to June 2020.

TikTok Owner Picks Oracle as ‘Trusted Tech Partner,’ Rejects Microsoft/Walmart Bid

ByteDance, the Chinese owner of social media video app TikTok, has reportedly selected Oracle Corp. to acquire its U.S. operations as a “trusted tech partner.” The deal, which must be approved by U.S. and Chinese regulators, amounts to a high-priced partnership rather than outright asset sale, according to media reports.

Beijing-based ByteDance had previously rejected a joint offer by Microsoft and Walmart, Microsoft disclosed in a Sept. 13 blog post. The amount of the software and retail giants’ bid has not been disclosed. The offer by Oracle reportedly hovers around $20 billion.

“ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” the software giant wrote. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”

TikTok has emerged into a social media phenomenon during the coronavirus pandemic generating upwards of 100 million users monthly watching both self-generated and third-party videos. It has also come into the crosshairs of the Trump Administration, which considers the app a national security threat, among other concerns. Trump has warned the government would ban the app in the U.S. by Sept. 15 unless it was sold to an American company.

Specifically, the National Security Agency and United States Cyber Command claim that Chinese control of TikTok’s computer code could influence distribution of propaganda and politically-motivated content to end-users.

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Microsoft said it would have made the required security, privacy and online safety adjustments to appease both federal and Chinese regulators. The Xbox manufacturer said it would have taken steps to prevent the spread of disinformation on the app — something it made clear to ByteDance.

“We look forward to seeing how the service evolves in these important areas,” Microsoft wrote.

Whether Oracle founder Larry Ellison’s personal relationship with Trump played a factor in the deal remains to be seen. Ellison has hosted a fundraiser for Trump, and Oracle CEO Safra Catz worked on Trump’s transition team in 2016.

New Microsoft Xbox Pricing Revealed; Nov. 10 Launch Date Set

With all eyes in the video game industry awaiting next-generation console launches from Microsoft Xbox and Sony PlayStation this fall, Microsoft has disclosed pricing for the Xbox Series S console at $299 — the smallest-sized Xbox unit ever.

“Looking forward to sharing more! Soon. Promise.” Microsoft wrote on the Xbox Twitter page.

Industry tip sheet Windows Central claims the larger-sized Xbox Series X will launch Nov. 10 and carry a $499 price tag with monthly (“Xbox All Access”) financing options of $25 and $35, respectively, for the Series S and X models. In a first, Microsoft is launching two next-gen consoles targeting separate ends of the market. The Series X console will accommodate discs through an internal 4K Blu-ray Disc drive.

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The Series S and X models will also play existing Xbox One S and X model games, with the latter’s headset adaptable as well on the Series S and X units.

Separately, Sony Interactive Entertainment on the PlayStation blog disclosed pending updates for the PS ecosystem, including a VR-based PS Store promotion — but no pricing or release dates. Online scuttlebutt had suggested Sony would announce PS5 details on Sept. 9 — the 25th anniversary of the PlayStation launch in the United States. A company representative said otherwise.

“To manage expectations, there’ll be no PS5-related news,” Gillen McAllister, senior specialist, content communications with Sony Interactive Entertainment, said in a statement.

Microsoft’s Dametra Johnson-Marletti: Representation Across All Levels Key to Corporate Diversity

With the country in the midst of coronavirus pandemic and social unrest, Dametra Johnson-Marletti, GM of Microsoft’s digital store and a female executive of color, has found herself wearing many hats due in part to her unique background.

Growing up in inner-city Los Angeles, Johnson-Marletti used her basketball skills to earn a scholarship to Colorado State University, which followed a short pre-WNBA professional stint in the Australian Professional Women’s Basketball League. At her parent’s urging, Johnson-Marletti transitioned into the business world, as a sale representative with Bristol-Myers Squibb, before joining Microsoft in 2001.

On the Sept. 3 Canon Club Salon webcast, Johnson-Marletti was asked by event host and Media Play News editor in chief Stephanie Prange about the challenges facing women and minorities in the corporate workplace during a pandemic.

Dametra Johnson-Marletti

The 20-year Microsoft executive said that solving issues such as increased female leadership in the workplace has to include minorities and people of color in the discussion.

“[They’re] all in the same realm of challenges that we’re trying to solve,” Johnson-Marletti said. “Before any of us can build a plan to get [a woman] to the executive suite, I think we need to have a plan to have [minority female] representation across all company levels.”

She said that too often a female of color doesn’t make it to the top tier of management because they haven’t been an active participant in “the journey” to get there compared to others (white men and women) who have built “equity” moving up the corporate ladder.

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“If we don’t have those early and career people [of color] represented in middle management, senior local managers all the way up to the executive suite, we have a leaky funnel. And it can never spill the right way.”

She said the focus shouldn’t necessarily be only on reaching the executive suite (“the North Star,” Johnson-Marletti says), but rather on constructing the paths and bridges leading up to that level. The executive said the situation could be broached through support channels (including mentoring) that would help retain and motivate up-and-coming female executives.

“I think that’s where the work has to be done,” Johnson-Marletti said.

Stephanie Prange and Dametra Johnson-Marletti on Zoom

Walmart Joins Microsoft in TikTok Bid

Walmart has reportedly joined Microsoft in the ongoing bidding for TikTok, the Chinese-owned social media app with more than 100 million monthly users in the United States and 800 million globally.

TikTok, whose CEO Kevin Mayer resigned earlier in the day, has been caught in the crosshairs of the Trump Administration’s growing tech spat with China. Trump issued an executive order that seeks to ban TikTok in the U.S. if its Chinese ownership isn’t removed — citing national security issues.

Walmart confirmed to CNBC it has joined Microsoft in bidding that could fetch upwards of $20 billion for the app. Oracle reportedly is also interested in TikTok.

Walmart spokesperson Randy Hargroves (formerly with Blockbuster) wouldn’t comment how the retailer and Microsoft would split ownership of TikTok, or whether the retail behemoth would incorporate the app (and its user-generated videos) in its pending subscription-based Walmart+ streaming platform.

“We believe a potential relationship with TikTok, in partnership with Microsoft, could provide Walmart with an important way … to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” Hargroves said. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”

Walmart has dabbled in entertainment tech before, acquiring transactional movie platform Vudu.com for $100 million, and becoming the first retailer to offer digital codes for studio DVD and Blu-ray Disc movies. The retail behemoth recently sold Vudu (which had absorbed the disc-to-digital business) to Fandango.

Daniel Ives, managing director and technology analyst at Wedbush Securities, believes TikTok would be good for for Walmart’s e-commerce business.

“When you think right now about going up against the 800-pound gorilla, Amazon, obviously [Walmart has] been behind the eight ball, Ives told CNBC. “But Walmart could use this as a golden opportunity to partner with Microsoft and monetize the TikTok base, which could start to rival Instagram in the next few years just given its global presence.”