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The coronavirus pandemic has been a blessing in disguise for the video gaming industry as people switched over to in-house entertainment sources while social-distancing amid the pandemic. Moreover, the boom in the video gaming space may remain in the post-pandemic era as the outbreak has changed the lifestyle and preferences of Americans to a large extent.
According to a report from The NPD Group, total consumer spending on video gaming in the United States continues to soar, rising 26% year over year to $18.6 billion in the fourth quarter of 2020. For the pandemic-stricken 2020, consumer spend across all categories within the U.S. games industry was $57 billion, up 27% from 2019.
Riding the trend, Activision Blizzard, Inc. , which reported fourth-quarter 2020 earnings results on Feb 4, has delivered better-than-expected results. Moreover, it has returned around 9.6% since the earnings release.
Q4 Earnings at a Glance
The company reported fourth-quarter 2020 non-GAAP earnings of 76 cents per share, up 22.6% year over year. Consolidated revenues rose 21.5% year over year to $2.41 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 11.5% to $2.81 billion. The Zacks Consensus Estimate for earnings and revenues was pegged at $1.18 per share and $3.05 billion, respectively.
However, Activision Blizzard witnessed a year-over-year drop in Monthly Active Users (MAUs) during the quarter ended Dec 31, 2020. Overall MAUs came in at 397 million in comparison with 409 million as of Dec 31, 2019. Meanwhile, the company’s net bookings rose 12.7% year over year to $3.05 billion. Net bookings from digital channels came in at $2.34 billion, up 24.5% year over year. Notably, in-game net bookings were $1.32 billion, up 22% year over year.
Video Gaming Industry Thriving Amid Pandemic
It seems like there is no stopping video game players, with the health crisis forcing people to stay at home. There are a number of reasons that drove the uptake of video games in the period.
Commenting on the industry, Mat Piscatella, games industry analyst at The NPD Group, reportedly said that “growth across almost all gaming segments drove the market to record spending in both the fourth quarter and the year. Video game content growth was led by mobile, both the biggest and fastest growing segment, while console, PC and other segments such as cloud gaming also experienced significant increases,” as mentioned in The NPD Group report.
Activision (58.9% of revenues) revenues increased 16.2% year over year to $1.66 billion. The division had 128 million MAUs as of Dec 31, 2020, unchanged year over year. The segment’s top-line growth gained from solid demand for Call of Duty (COD) franchise that grew by a double-digit percentage year over year. COD in-game net bookings on console and PC grew more than 50% year over year.
Guidance
For first-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2 billion and earnings of 59 cents per share. Net bookings are expected at $1.75 billion. Going on, for 2021, Activision Blizzard projects non-GAAP revenues of $8.23 billion and earnings of $3.34 per share. Net bookings are expected to be $8.45 billion.
ETFs to Ride the Tide
Against this backdrop, investors can take a look at the following ETFs:
VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report)
The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. It holds 25 stocks in its basket. Activision Blizzard holds the seventh spot in the fund, with 5.88% weight. With AUM of $872.7 million, the fund charges 55 basis points in expense ratio. The fund has returned about 1.3% since Activision Blizzard’s earnings release (read: A Thorough Guide to Video Gaming ETFs).
The fund seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. It holds 40 stocks in its basket. Activision Blizzard holds the third spot in the fund, with 6.24% weight. With AUM of $810.3 million, the fund charges 50 basis points in expense ratio. The fund has gained around 2.3% since Activision Blizzard’s earnings release (read: 5 ETFs to Pick as Coronavirus Cases Continue to Soar Globally).
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Activision ETFs Set to Shine on Strong Q4 Results
The coronavirus pandemic has been a blessing in disguise for the video gaming industry as people switched over to in-house entertainment sources while social-distancing amid the pandemic. Moreover, the boom in the video gaming space may remain in the post-pandemic era as the outbreak has changed the lifestyle and preferences of Americans to a large extent.
According to a report from The NPD Group, total consumer spending on video gaming in the United States continues to soar, rising 26% year over year to $18.6 billion in the fourth quarter of 2020. For the pandemic-stricken 2020, consumer spend across all categories within the U.S. games industry was $57 billion, up 27% from 2019.
Riding the trend, Activision Blizzard, Inc. , which reported fourth-quarter 2020 earnings results on Feb 4, has delivered better-than-expected results. Moreover, it has returned around 9.6% since the earnings release.
Q4 Earnings at a Glance
The company reported fourth-quarter 2020 non-GAAP earnings of 76 cents per share, up 22.6% year over year. Consolidated revenues rose 21.5% year over year to $2.41 billion. Adjusting for revenues from non-reportable segments, net effect from the recognition of deferred revenues and elimination of intersegment revenues, total revenues climbed 11.5% to $2.81 billion. The Zacks Consensus Estimate for earnings and revenues was pegged at $1.18 per share and $3.05 billion, respectively.
However, Activision Blizzard witnessed a year-over-year drop in Monthly Active Users (MAUs) during the quarter ended Dec 31, 2020. Overall MAUs came in at 397 million in comparison with 409 million as of Dec 31, 2019. Meanwhile, the company’s net bookings rose 12.7% year over year to $3.05 billion. Net bookings from digital channels came in at $2.34 billion, up 24.5% year over year. Notably, in-game net bookings were $1.32 billion, up 22% year over year.
Video Gaming Industry Thriving Amid Pandemic
It seems like there is no stopping video game players, with the health crisis forcing people to stay at home. There are a number of reasons that drove the uptake of video games in the period.
Commenting on the industry, Mat Piscatella, games industry analyst at The NPD Group, reportedly said that “growth across almost all gaming segments drove the market to record spending in both the fourth quarter and the year. Video game content growth was led by mobile, both the biggest and fastest growing segment, while console, PC and other segments such as cloud gaming also experienced significant increases,” as mentioned in The NPD Group report.
Activision (58.9% of revenues) revenues increased 16.2% year over year to $1.66 billion. The division had 128 million MAUs as of Dec 31, 2020, unchanged year over year. The segment’s top-line growth gained from solid demand for Call of Duty (COD) franchise that grew by a double-digit percentage year over year. COD in-game net bookings on console and PC grew more than 50% year over year.
Guidance
For first-quarter 2021, Activision Blizzard expects non-GAAP revenues of $2 billion and earnings of 59 cents per share. Net bookings are expected at $1.75 billion. Going on, for 2021, Activision Blizzard projects non-GAAP revenues of $8.23 billion and earnings of $3.34 per share. Net bookings are expected to be $8.45 billion.
ETFs to Ride the Tide
Against this backdrop, investors can take a look at the following ETFs:
VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report)
The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. It holds 25 stocks in its basket. Activision Blizzard holds the seventh spot in the fund, with 5.88% weight. With AUM of $872.7 million, the fund charges 55 basis points in expense ratio. The fund has returned about 1.3% since Activision Blizzard’s earnings release (read: A Thorough Guide to Video Gaming ETFs).
Global X Video Games & Esports ETF (HERO - Free Report)
The fund seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. It holds 40 stocks in its basket. Activision Blizzard holds the third spot in the fund, with 6.24% weight. With AUM of $810.3 million, the fund charges 50 basis points in expense ratio. The fund has gained around 2.3% since Activision Blizzard’s earnings release (read: 5 ETFs to Pick as Coronavirus Cases Continue to Soar Globally).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>