"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.
NEW RELEASES: This week's major new release is Besthesda's "Deathloop," a first-person action-adventure title out for PC and PlayStation 5 (SONY) on September 14. While Bethesda is owned by Microsoft (MSFT), the game is launching as a timed console exclusive for PS5 due to a prior agreement.
EPIC/APPLE: The legal battle between Apple (AAPL) and "Fortnite" maker Epic Games over in-app purchases reached its latest milestone late last week after the judge overseeing the case issued a decision on the matter. Judge Yvonne Gonzalez Rogers ruled that while the court did not conclude Apple is a monopolist under federal or state antitrust laws, the tech giant is "engaging in anticompetitive conduct." As a result, the judge issued a permanent injunction against Apple, ordering that the company be "permanently restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and communicating with customers through points of contact obtained voluntarily from customers through account registration within the app." On the other counts, however, Rogers ordered Epic Games to pay damages to Apple "in an amount equal to 30% of the $12,167,719 in revenue Epic Games collected from users in the Fortnite app on iOS through Epic Direct Payment between August and October 2020, plus 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment, and interest according to law."
In response to the decision, Apple general counsel Kate Adams said that the ruling was a "huge win for Apple" and that the company is "extremely pleased" with the "resounding victory." Meanwhile, Epic CEO and founder Tim Sweeney said on Twitter that the ruling was not a "win for developers or consumers." Reuters later reported over the weekend that Epic intends to appeal the ruling.
Following the ruling, analysts at Baird said the determination in the case could have positive consequences for mobile game publishers including Zynga (ZNGA) and Playtika (PLTK) and "to a lesser extent" multi-platform publishers such as Activision (ATVI), Electronic Arts (EA) and Take-Two (TTWO). In addition, Wedbush analyst Michael Pachter said the injunction could boost earnings for mobile game makers as well, saying it is likely that game makers would see a material increase in gross margin as the amount paid for in-app purchases shrinks. Investors in Epic Games include Tencent (TCEHY), KKR (KKR), Disney (DIS), and Sony.
AUGUST NPD NUMBERS: NPD analyst Mat Piscatella said that August 2021 consumer spending across video game hardware, content and accessories grew 7% when compared to a year ago, to an August record $4.4B. YTD consumer spending totaled $37.9B, a 13% increase when compared to the same period in 2020. Hardware was a primary driver of spending gains in August. Led by Sony's PS5, hardware dollar sales gained 45% when compared to August 2020. Mobile and Subscription pushed August content spending higher when compared to a year ago. August video game hardware dollar sales gained 45% when compared to August 2020, to $329M. This is the highest total achieved in a August month since 2008, and the third highest August month total in history. Year-to-date hardware spending has increased 49% when compared to the same period in 2020, totaling $3B. Nintendo Switch (NTDOY) was the best-selling hardware platform in units during both the August month and year-to-date, while PlayStation 5 leads both time periods in dollar sales. After 10 months in market PlayStation 5 remains the fastest selling PlayStation platform in history, Piscatella added.
On the software side, the analyst said that EA's "Madden NFL 22" debuted as the best-selling game of August, while also ranking 4th among the best-selling games of 2021 year-to-date. This is the 22nd consecutive year that a "Madden NFL" franchise release has been the best-selling title of its launch month. Sony's "Ghost of Tsushima" ranked as the 2nd best-selling game of August, after finishing at #110 on the best-selling titles chart in July. The launch of "Ghost of Tsushima Director's Cut" for PlayStation 5 and PlayStation 4 drove the change. Sega's (SGAMY) "Humankind" ranked 1st among tracked PC titles in August spending, while placing 4th on the overall best-selling titles chart. Humankind currently ranks as the 5th best-selling tracked PC title of 2021 year-to-date.
OTHER STORIES TO WATCH:
At its PlayStation Showcase event last Thursday, Sony unveiled a number of new games coming to PS5 consoles in the future, including "Wolverine," "Spider-Man 2," "God of War: Ragnarok," a remake of "Star Wars: Knights of the Old Republic," and "Gran Turismo 7" [more]
Meanwhile, Sony announced the acquisition of U.K.-based developer Firesprite [more]
Take-Two delayed the next-generation releases of "Grand Theft Auto V" to March 2022 from November 2021 but reiterated its earnings and net bookings guidance for FY22 [more]
Microsoft is rolling out its xCloud services in Brazil in an open beta in the coming weeks, according to The Verge's Tom Warren [more]
Ubisoft (UBSFY) named Igor Manceau as its next chief creative officer [more]