(By Mani) Electronic Arts Inc. (NASDAQ: EA) and Activision Blizzard, Inc. (NASDAQ: ATVI) continued to be significant contributors to the video game sales for the month of February despite the industry sales fell 26 percent to $810 million, according to recent data from NPD.
Activision's Skylanders Giants generated $35 million in sales in February, with sales of single character packs for Skylanders Giants ahead of the original Skylanders, a year ago. The franchise has generated more than $600 million in the U.S. alone since launching in October 2011, according to NPD. Activision previously announced that the franchise had surpassed the $1 billion threshold globally.
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In 2012, the combined sales of Skylanders Giants and Skylanders Spyro's Adventure toys out-sold the top action figure lines in the U.S. and Europe, including Beyblades, Star Wars and Transformers, according to the company's internal estimates.
"The Skylanders franchise became the first kids' videogame IP to cross the $1 billion mark in just 15 months, and I think we are still just starting to realize its potential," said Eric Hirshberg, CEO of Activision Publishing, Inc.
The next innovation in the franchise Skylanders SWAP Force, expected to be released in fall 2013, is being developed by Vicarious Visions, an Activision studio.
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Meanwhile, Electronic Arts saw solid results from Dead Space 3 and Crysis 3, which came in first and third respectively while Activision's Call of Duty: Black Ops II fell from first place for the first time since its November launch, finishing second.
However, total software sales fell 27 percent to $352 million, reflecting a drop in demand for mid-tier titles, with sales of new launches declining 30 percent in February 2013 versus a year ago, according to NPD.
Hardware sales were off 36 percent to $244 million on weak sales of the new Wii U and softer demand ahead of the release of new consoles this holiday season. Accessories dipped 3 percent to $214 million.
Nintendo's Wii U continues to falter, up 40 percent sequentially, put down 38 percent versus the Wii for its first three months on the market. On the other hand, Microsoft continues to gain share with sales of 302,000 X360 in the past month, despite softening demand in front of the launch of the next generation of consoles.
Sony officially announced its PlayStation 4 in February with a holiday 2013 release. Microsoft has yet to unveil its next generation console, but it is widely expected to have a new version of the Xbox for the holidays, as well.
"We anticipate further details on both consoles in advance of the E3 industry conference in June," Brean Capital Markets analyst Tod Mitchell said in a client note.
Despite sales declines, shares have benefited from a rotation into the group. Since the New Year, shares prices for EA have increased 33 percent, Activision has gained 42 percent, and Take-Two Interactive Software Inc. (NASDAQ: TTWO) have advanced 45 percent.
"We believe the ongoing momentum is being driven by a rotation into the group ahead of the release of new consoles in the fall, despite the fact that console transitions have typically been challenging for third-party publishers. We anticipate this dynamic to be present in the upcoming transition," Mitchell said.
However, current generation multi-player functionality and digital add-ons should help keep players engaged until a significant base of players coalesce around the new consoles. Take-Two's Grand Theft Auto V, a September release, EA's sports lineup and Activision's Call of Duty stand to be the most significant beneficiaries.