GameStop to Rebrand EB Games in Canada

GameStop July 28 announced that it plans to rebrand 4,000 EB Games stores in Canada to GameStop. By the end of this year, EB Games’ Canadian locations and online store will assume the GameStop brand and name.

GameStop acquired Electronic Boutique in 2005 for $1 billion. It remains Canada’s largest video game retailer.

“This decision follows our receipt of feedback from our valued customers and stockholders,” GameStop said in a media statement.

The company, under a new CEO Matt Furlong and chairman Ryan Cohen, will join the S&P MidCap 400 exchange on Aug. 4.

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PS5 Has Sold More Than 10 Million Units Globally

The PlayStation 5 (PS5) game console has sold through more than 10 million units globally since its Nov. 12, 2020, launch, according to Sony Interactive Entertainment.

The PS5 is the fastest-selling console in the company’s history and continues to outpace sales of its predecessor PlayStation 4 (PS4), according to SIE.

SIE also achieved additional milestones across its portfolio of PlayStation Studios games, including:

  • Marvel’s Spider-Man: Miles Morales from Insomniac Games has sold more than 6.5 million copies since releasing on Nov. 12, 2020.
  • MLB The Show 21 from San Diego Studio is the fastest-selling title in franchise history with more than 2 million copies sold across all platforms. The game has reached more than 4 million players since releasing on April 16, 2021.
  • Returnal from Housemarque  has sold more than 560,000 copies since releasing on April 30, 2021.
  • Ratchet & Clank: Rift Apart from Insomniac Games has sold more than 1.1 million copies since releasing on June 11, 2021.

 

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“I can’t express enough the deep gratitude we feel for our passionate community of PlayStation fans who have embraced PS5, and the world-class development and publishing partners who bring such incredible gaming experiences to our platforms,” Jim Ryan, president and CEO of Sony Interactive Entertainment, said in a statement. “While PS5 has reached more households faster than any of our previous consoles, we still have a lot of work ahead of us as demand for PS5 continues to outstrip supply. I want gamers to know that while we continue to face unique challenges throughout the world that affect our industry and many others, improving inventory levels remains a top priority for SIE.”

Video Games Surprise: Half-Year Sales Up Over 2020 Boom Year

The video game industry continues to prosper through six months of 2021 after setting revenue records during pandemic 2020.

According to the Q2 2021 Games Market Dynamics: U.S. report from The NPD Group, overall total consumer spending on video gaming in the U.S. totaled $14 billion in the second quarter of 2021 (April to June), an increase of 2% compared to Q2 2020.

Gains were seen across PC, cloud and non-console VR content, mobile and subscription spending, as well as hardware. Console content and accessories experienced declines.

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Overall content spending in Q2 reached $12.57 billion, an increase of 2%. Subscription content was the only content segment with double-digit percentage gains compared with Q2 2020. Hardware posted a 12% increase, while accessories declined 11%.

Among the best-selling and most played games across all platforms in the second quarter were Among Us, Call of Duty: Black Ops Cold War, Call of Duty: Warzone, Candy Crush Saga, Candy Crush Soda Saga, Clash of Clans, Coin Master, Fortnite, Garena Free Fire, Genshin Impact, Grand Theft Auto V, Homescapes, Mario Kart 8, Mass Effect: Legendary Edition, Minecraft, MLB The Show 21, New Pokémon Snap, Pokémon Go, PUBG Mobile, Resident Evil: Village and Roblox.

“Despite changing pandemic conditions across the country, video games spending remained strong in the second quarter of 2021,” Mat Piscatella, games industry analyst at The NPD Group, said in a statement. “A year ago, in the second quarter of 2020, consumer spending on video games increased a remarkable 47% compared to the same period in 2019. Consumer spending has not only maintained the elevated levels reached a year ago, but exceeded them in key areas such as hardware, mobile and subscription spending. Video games have become a bigger part of consumers’ entertainment and social lives, factors that lend confidence to continued growth for the industry.”

Data from Sensor Tower shows U.S. consumer spending in mobile games during the second quarter increased 5% from Q2 2020. Multiplayer gaming on mobile continues to be a standout theme, with seven of top 10 earning titles focused on real-time online play, up from five in Q2 2020.

“Spending in mobile games remains elevated, showing signs of a continuing lift from the surge of new players who flocked to the category beginning in the second quarter of 2020,” said Randy Nelson, head of mobile insights at Sensor Tower. “Thus far, we see no indication that spending or usage has diminished as consumers have begun their return to life in a post-vaccine world.”

WarnerMedia Ups Q2 Home Entertainment, Games Revenue 15%

Spurred by an ongoing video game boom as well as an enduring digital and packaged-media retail market for movies, WarnerMedia July 22 reported a 15% increase in second-quarter “games and other” revenue to $405 million, from $351 million during the previous-year period.

Through six months of the current fiscal year, retail sales of games, movies and TV shows is up 5% to $754 million, from $715 million in the previous-year period.

The top-selling game in June was Mortal Kombat 11 from Warner Bros. Interactive, according to The NPD Group.

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In home entertainment, Godzilla vs. Kong is the top-selling combined DVD/Blu-ray Disc release through June, according to NPD. Others include Tom & Jerry at No. 3 and Batman: The Long Halloween — Part One at No. 7.

Warner Bros. titles have dominated market sales, accounting for 70% of the Top 10 selling titles in the U.K. — the world’s No. 2 home video market. DC Comics superhero movie Wonder Woman 1984 is the top-selling title across the pond through June 30 across all formats.

Pachter: Netflix Foray Into Video Games a Mistake

NEWS ANALYSIS — Netflix’s recent behind-the-scenes maneuvering to establish a foothold in mobile video gaming isn’t sitting well with longtime Wall Street bear Michael Pachter. The Wedbush Securities media analyst, who specializes in video games, for years has considered Netflix shares overvalued, underscoring his sentiment with the streamer’s erstwhile (until 2020) negative free cash flows.

Michael Pachter

Thus, while Netflix reported $1.8 billion in second-quarter (ended June 30) operating income, the service burned through $175 million in free cash on content. Netflix generated $899 million in free cash in the previous-year (pandemic) period.

Free cash is the amount of money a company has left over after paying for operating expenses.

Pachter says that as Netflix burns cash, it is expanding content offerings to include lower cost podcasts and video games, as the former is relatively inexpensive to produce. Gaming is a different ballgame — one that has seen many high-profile players enter and stumble.

“We think this is not smart [by Netflix],” Pachter wrote in a July 21 note.

To be sure, the gaming market is booming. Through the end of May, total revenue of hardware, games and accessories was up 17% to $24 billion from $20.5 billion in the previous-year period, according to The NPD Group.

While Netflix says it will initially focus on mobile games, Pachter questions whether the SVOD pioneer has any idea how difficult the mobile games business has become. The business graveyard is littered with the corpses of content companies that have failed at making mobile games, with Disney the most prominent failure.

“Video game publishing [heavyweights] like Activision, EA, Take-Two, Ubisoft and Nintendo have tried for years to create compelling mobile content, and each has had lasting success only through acquisition [of content],” Pachter wrote.

The analyst wonders why Netflix hired gaming veteran Mike Verdu to spearhead the venture — claiming the executive hasn’t produced games in about 20 years.

“While [Verdu] worked for mobile developers, his experience is limited, given that Zynga produced its first mobile game after he left the company, Kabam was sold only two years after he arrived, and he was at EA during a period of no growth,” Pachter wrote.

Netflix expects to create games based on its intellectual properties such as “Stranger Things” and “Bridgerton,” among others. Pachter says only one TV show in the past 20 years has morphed into a successful video game: “The Walking Dead.” Successful movie franchises translated into strong-selling games are largely limited to “Spider-Man,” “Harry Potter,” “Star Wars” and “Lord of the Rings.”

“If [Netflix] hopes to monetize its valuable television and movie IP, it would be less costly and more effective to follow Disney’s example of licensing its content to competent [game] creators,” Pachter wrote.

Netflix Takes Next Step Toward Video Game Streaming

After much speculation, Netflix is reportedly set to enter the video game market, hiring a former Electronic Arts and Facebook executive to run the venture.

Bloomberg reports that the SVOD pioneer has hired Mike Verdu to join as VP of game development, reporting to Greg Peters, chief operating officer. Verdu most-recently worked with Facebook to meld game content with the platform’s Oculus virtual reality headgear. He was chief creative officer for Zynga from 2009 to 2012, reportedly involved with franchises such as “The Sims,” “Plants vs. Zombies” and “Star Wars.”

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Mike Verdu

Games would be offered on Netflix alongside movies, TV shows, documentaries and kids fare at no additional cost, according to the report, which cited a source familiar with the situation.

While Netflix confirmed the Verdu hire, it has not responded whether it would begin renting digital games in 2022. Regardless, entering the gaming market would seem to be a no-brainer. The market has exploded since the begin of the pandemic and rollout of new gaming consoles from Sony PlayStation and Microsoft Xbox.

“There’s no doubt that games are going to be an important form of entertainment and an important sort of modality to deepen that fan experience,” Peters said on the April fiscal call. “So, we’re going to keep going and we’ll continue to learn and figure it out as we go.”

More than 212 million Americans play video games, according to the Entertainment Software Association. Through May, industry year-to-date revenue increased 17% to $24.02 billion, from $20.52 billion in 2020.

“This is a natural extension of Netflix’s content strategy, allowing it to mine intellectual property from popular shows like “Stranger Things,” Geetha Ranganathan, media analyst at Bloomberg Intelligence, wrote in a note. “Though it may not generate much additional revenue, it will help deepen engagement and increase the service’s appeal and pricing power. Don’t expect this to be a turning point, but it shows that the company will explore new formats to increase time spent on the platform.”

Netflix reports second-quarter (ended June 30) fiscal results July 20.

Electronic Arts Buys Mobile Game Developer Playdemic From AT&T/Warner Bros. Games for $1.4 Billion

Electronic Arts, AT&T, and WarnerMedia June 23 announced the sale of Warner Bros. Games’ mobile-games centric developer Playdemic, Ltd., to EA for $1.4 billion in cash.

The transaction generates more cash for AT&T to pay down $160 billion in debt following the Time Warner acquisition, while enabling Warner Bros. Games to focus on in-house IP games.

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Founded in 2010, Playdemic is known for its popular Golf Clash that allows players to compete with each other around the world in real time. Golf Clash is one of the leading mobile games in the U.S. and U.K. and has more than 80 million downloads globally to date. The game has been honored with numerous industry awards, including winner of the BAFTA Games Mobile Game of the Year (2018), Mobile Games Awards Game of the Year (2018), PocketGamer.biz Game of the Year (2017) and The Independent Game Developers’ Association (TIGA) Awards Game of the Year (2017).

“We have enjoyed working with the talented team at Playdemic as they have grown Golf Clash beyond all expectations into a hit mobile game with tremendous longevity,” David Haddad, president of Warner Bros. Games, said in a statement. “While we have great respect for the Playdemic team, our decision to divest is a part of our overall strategy to build games based on Warner Bros. storied franchises.”

The acquisition of Playdemic is part of EA’s mobile growth strategy focused on delivering exciting new games for its network of nearly half a billion players around the world. Playdemic’s portfolio and creative talent will be a significant addition to EA’s mobile growth engine. The acquisition will add to EA’s mobile portfolio of more than 15 live services across fast-growing genres, including lifestyle, casual, sports, and mid-core games.

“We founded Playdemic with a focus on creating highly engaging and innovative game experiences,” Paul Gouge, CEO of Playdemic, said in a statement. “Our success with Golf Clash has proven our approach and demonstrated the ability of our incredibly talented teams to develop and operate best in class mobile games.”

The acquisition price is subject to customary adjustments, and will be paid in cash at closing and retained by AT&T. The transaction is subject to customary regulatory approvals. The remaining Warner Bros. Games portfolio is included in the recently announced WarnerMedia-Discovery transaction and will become part of the combined media and entertainment company after the expected close of that transaction.

GameStop Generates $1.1 Billion at the ‘ATM’

GameStop, the world’s largest standalone video game retailer, continues to defy Wall Street sensibilities despite middling financials.

The Grapevine, Texas-based chain said it generated about $1.1 billion in revenue from “at-the-market” (ATM) sales of 5 million shares of common stock. An ATM offering is a type of stock sale utilized by publicly traded companies in order to raise capital over time.

GameStop, which said it would use the proceeds for “general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet,” initiated the sale on June 9.

Meanwhile, GameStop reported a net loss of $215 million for the fiscal year ended Jan. 31. Revenue declined 22% to $5 billion.

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Since the beginning of the year, the chain has become caught up in a social media frenzy pitting crowdsourcing individual day traders against established Wall Street hedge funds. Under a David vs. Goliath media spotlight, individual traders working together were able to skyrocket GameStop’s stock valuation, resulting in significant fiscal losses for hedge funds that had bet the shares would decline in value.

Abetting the situation was the arrival of Chewy.com founder Ryan Cohen, a populist star among individual traders, who initially bought a lot of shares of GameStop when prices were low, i.e. $4 to $5 per share, and then proceeded to help  jumpstart the stock in valuation.

Soon Cohen was named to the board and then chairman. That meant the arrival of new senior executives, including former Amazon executive Matt Furlong as new CEO, with a push to jumpstart e-commerce revenue. Meanwhile, previous CEO George Sherman is exiting with a golden parachute worth about $100 million thanks to GameStop shares hovering around $214 per share in pre-market trading — compared with about a $3.77 per share low within the past fiscal year.

CFO: Verizon to Up Free Entertainment Offers on 5G, Sticking With Fios TV

Verizon has made news in recent years offering its wireless subscribers free 12-month access to Apple Music, Disney+, Discovery+ and most recently, Apple Arcade and Google Play Games. As the telecom expands its 5G Network nationwide, expect to see enhanced third-party entertainment options, according to CFO Matt Ellis.

Verizon CFO Matt Ellis

Speaking this week on the virtual Credit Suisse Communications Conference, Ellis didn’t have any new entertainment partners to announce, except to say that with the enhanced distribution options available with 5G, the entertainment options in the future would reflect the next-generation mobile phone and data communication standards.

“We got into video initially with Disney+ and it’s been a good one-and-a-half years now, right?,” Ellis said. “So we’ve had that out there and then, obviously, Discovery+ earlier this year. And so gaming was the obvious next piece to come there. And obviously, we’ve had that in the past couple of weeks with the Apple Arcade and Google Play. Too soon to already kind of see anything huge in the numbers, but certainly, the initial feedback is very much in line with expectations.”

Ellis said Verizon is analyzing what entertainment options, including live events, it could offer subscribers in a 5G world that wouldn’t be as possible in a 4G world.

“It is in line with how we’re thinking about it,” he said. “I’m not going to give anything away at this point, but certainly fair to say we expect there to be more to come.”

Separately, when asked whether Verizon might meld Fios TV into an online service in order to reduce content/distribution costs, Ellis said the telecom would be sticking with the pay-TV brand, which includes a broadband-only option.

“What we do in that space is we give customers choice,” Ellis said. “If a customer wants broadband only, we absolutely will do that for them. We love that proposition. We saw our customers who want the traditional TV package. We have that as well. It may not be as valuable to us as when we launched Fios over 15 years ago, but it’s also not a negative to the business either.”

 

NPD: April Video Game Revenue Dips Compared With 2020

Video game sales in April dipped 2% to $4.64 billion, from $4.73 billion in the previous-year period, according to new data from The NPD Group. The tally marked the first decline in 14 months, reflecting the year-over-year surge in household gaming at the start of the pandemic. The April 2020 total was up 73% from $2.73 billion in 2019.

For the first time since the launch of next-generation consoles from Sony PlayStation and Microsoft Xbox, hardware sales dropped 30% to $296 million, from $371.4 million a year ago. Through four months of 2021, hardware sales are up 42% from the same period in 2020. Accessory sales fell 23% to $168 million, from $218.1 million. Software sales spiked up 2% to $4.18 billion, from $4.26 billion.

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As expected with the start of the Major League Baseball season, the top-selling game in April was the launch of Sony Interactive Entertainment’s MLB: The Show 21, knocking off perennial chart topper, Activision’s Call of Duty: Black Ops Cold War. Rounding out the podium was Nintendo’s New Pokémon Snap.