A comprehensive eport from investment bank Exane/BNPP says it expects the Video Games sector to “rebound in 2023 helped by stronger line up of new games and better availability of new-generation consoles.”
The bank reminds clients that 2022 proved to be a “corrective year” for the games sector, where the industry overall suffered a 10 per cent underperform (when compared to the global index), and that 2023 should be better. But there are favourites in a very long list of runners and riders.
The report poses some key questions. It asks, and answers:
1: Will the video game market return to y-o-y growth in 2023? The bank says it thinks so, with an overall c.+5 per cent uplift in its models.
2: When, this year? The bank says: Q3 2023.
3: Will Activision Blizzard be acquired by Microsoft by year-end? The bank says: “Yes, we think so.”
4: What will be the best-selling game excluding yearly release? The bank says: Hogwarts Legacy.
5: Will a new console come from Nintendo? The bank says: “No, we don’t think so.”
6: Will consolidation accelerate? The bank says: M&A will remain calm, “at least in H1/2023.”
As to those ‘runners and riders’, the bank says it supportive on Activision Blizzard and EA, cautious on Stillfront, Embracer and TakeTwo and issued a warning on Ubisoft for its Q3 2023 trading.
“We maintain preference for EA in the short term given resilience of sport business, solid line-up for Q4 2023, regular cash return and speculative appeal. We also see attractive risk-reward for ATVI. For the second part of the year, Take Two, Embracer and Stillfront could be interesting options if mobile market returns to growth and they can execute well on their pipeline. Despite recent weakness, we would stay away from Ubisoft given execution risk. We are also cautious on CD Projekt given the various challenges company will likely face in the coming years,” stated the bank’s report.
Relevant to the bank’s comments on Microsoft and Activision Blizzard, a news story from Reuters suggested: “Microsoft faces EU antitrust warning over an Activision Blizzard deal. The EC is readying a charge sheet known as a statement of objections setting out its concerns about the deal which will be sent to Microsoft in the coming weeks, according to people familiar with the matter.”
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