Reading through analyst reports of various companies involved in the gaming sector and recent numbers showing a decline in the number of gaming sales, I begin to wonder what the market at large thinks of this. Many, I believe, will take this at face value and make the mistake of thinking that the industry is starting to level off and that we will slowly see revenue for gaming companies begin to taper.
What the individual investor may not realize is the fact that we are in the middle of a major transitional period. And they don't pay attention to the number of quality releases in the recent months. Most members of the “hardcore” gaming community, of which I proudly belong, realize this. The major transitional phase is the fact that two new systems are on the way, and a large number of people have yet to make up their mind as to which system they'll have in the following year. The other issue is that we are comparing numbers via year-over-year percentiles, and we should be comparing figures of the the few months before the release of the last major consoles. If we were to do so, we would see a significant increase.
This, combined with gaming having been in an off-season during the summer, with only a few definite day-one buys around, is most certainly what is bringing the numbers down. The exact opposite should be happening over the course of the next few months. Although this may not be the proper technical term, I believe that the gaming industry is currently going through "accumulation." People are starting to chart out their options and fill out birthday and Christmas lists. In my opinion, the coming years will show a significant rise in game sales, console sales (obviously) and the biggest rise yet in DLC.
For anybody saying “sell” to the likes of TTWO (Take Two Interactive), ATVI (Activision-Blizzard), and even SNE (Sony) you may be sorely disappointed at your lack of risk tolerance in the years or even months to come. Investors aren't always gamers but if they were, they'd understand all this, and be primed to strike.