LA Times says CWA looking to organize video game companies
Welcome to "Game On," The Fly's weekly recap of the stories powering up or beating down video game stocks.
NEW RELEASES: Among the games coming out this week is Bandai Namco's "Dragon Ball Z: Kakarot," an action role-playing game set in the "Dragon Ball" franchise. The game comes out for PC, Xbox One (MSFT), and PlayStation 4 (SNE) on January 17 worlwide. In addition, Nintendo's (NTDOY) "Tokyo Mirage Sessions #FE," a role-playing game that originally came out for Wii U in 2015, is being ported to the Nintendo Switch on January 17.
GAMESTOP HOLIDAY SALES: After the market close on Monday, GameStop (GME) reported that sales for the recent holiday period were $1.83B, marking a 27.5% decline compared to the 2018 nine-week holiday period. Total comparable store sales for the period fell 24.7%, following a 1.5% increase for the similar period in fiscal 2018. GameStop said that sales results during the holiday period are indicative of overall industry trends impacting the video game industry and driven by an "accelerated" decline in new hardware and software sales, particularly in the month of December.
Looking ahead, the video game retailer said that comps are now expected to decline in the range of 19%-21% for fiscal 2019. The company previously saw FY19 comps declining in the "high-teens." While GameStop said it is not updating earnings per share guidance, it now expects an adjusted net loss for the year, with adjusted earnings per share impacted by the further deceleration in sales in December. The company added that it now expects FY19 capital expenditures of $75M-$80M.
STEPHENS: On Tuesday, Stephens analyst Jeff Cohen told investors in a research note that he is bullish on video game publishers heading into the new console launches expected in next year's holiday season as he anticipates strong adoption and accelerating digital download penetration. Cohen said he prefers Electronic Arts (EA) and Ubisoft (UBSFY) over Activision Blizzard (ATVI) and Take-Two (TTWO) as they are cheaper and have more potential for upside given their more robust release slates over the next 12 months. Given this broader view on the space, the analyst upgraded Ubisoft to Overweight from Equal Weight and downgraded Take-Two to Equal Weight from Overweight, saying it is not clear that Take-Two will have a blockbuster non-sports title within the company's currently announced fiscal 2021 release slate.
UNIONIZATION: Last week, Los Angeles Times staff writer Sam Dean wrote that technology and video game industries have seen some workforce actions and activism over the past couple of years. "But despite this swell in labor activism, employees at no major video game studios and only a handful of tech offices have formally voted to form or join a union," the story said. According to the Times, the Communications Workers of America, or CWA, look to change that with a new campaign launched on Tuesday dubbed the Campaign to Organize Digital Employees, or CODE for short.
OTHER STORIES TO WATCH:
Sony said it will skip this year's Electronic Entertainment Expo, or E3, for the second year in a row, saying it does not feel the "vision of E3 2020 is the right venue for what we are focused on this year." Following the news. Xbox chief Phil Spencer said on Twitter that his team is "hard at work on E3," adding that he looks forward to "sharing with all who love to play what's ahead for us."
Meanwhile, Xbox Game Studios head Matt Booty told MCVUK's Seth Barton last week that Microsoft's first-party video games looking ahead will be both forwards and backwards compatible, meaning Xbox One and Xbox Series X games won't be exclusive to either platform, at least for the first year or two of the Xbox Series X's availability.
Two major Square Enix releases set for this year have been delayed, as the release of "Final Fantasy VII Remake" has been pushed to April 10 from March 3, while "Marvel's Avengers" has been delayed to September 4 from May 15.
"Fortnite" creator Epic Games said that its PC game storefront has accrued 108M PC customers since its launch in late 2018. Investors in Epic include Tencent (TCEHY), Disney (DIS), and KKR (KKR).
Nintendo announced last week that "Pokemon Sword and Shield" will be getting two expansions later this year.