JPR predicts PC gaming hardware will reach $27 Billion in 2010

According to Jon Peddie Research, PC gaming hardware will reach $27 Billion in 2010 and the results are (of course) better than previously expected. The worldwide PC gaming hardware market (which includes PC systems, accessories, and upgrades) is forecasted to gain $1.2 billion for 2009, which is a 5.9% increase versus 2008 (from $20.07 to $21.26 billion). The increase is due to higher than anticipated consumer demand for enthusiast, performance, and mainstream hardware - strongly influenced by the ability to play video games.

Due to what JPR says, significant growth across all major markets in the worldwide PC gaming hardware sector are expected to climb 30 percent in 2010. Senior Video Game Industry Analyst at JPR, Ted Pollak, credits this growth to a number of key factors:

“The largest influence on the high forecasted growth rate is due to purchasing delays for systems and upgrades in 2008/2009 as consumers circled the wagons and took a conservative position on discretionary spending. A recovering economy, processing advancements, and higher quality gaming offerings will all contribute to a healthy year for PC gaming hardware in 2010.”

“The PC gaming market continues to be the high growth, and technological leader for home entertainment. With Windows 7 and DirectX 11, advanced and exciting physics, and stereovision capabilities, the PC platform is far and away the most advanced,” noted Jon Peddie President of Jon Peddie Research. “And, the PC has the added advantage that when not used for gaming, it can be used for more practical purposes, and/or as a media center.”

The data comes from the Worldwide PC Gaming Hardware Market report series by Jon Peddie Research. It comes in three very expensive flavors: Enthusiast, Performance, and Mainstream versions, with each version selling for $5,000 and the set of three for $12,000. Find out more about it by visiting www.jonpeddie.com.

Call of Duty: Modern Warefare 2’s $550 million milestone

Despite the controversy (or perhaps, because of it) surrounding Activision Blizzard and Infinity Ward’s Call of Duty: Modern Warfare 2 continues to break sales records. Modern Warfare 2 has set a new worldwide estimated five-day sell-through record of approximately $550 million, according to internal Activision estimates.

Modern Warfare 2’s launch beat all previous first-and five-day entertainment industry box office, book and video game sell-through records set by Harry Potter and the Half-Blood Prince film ($394 million), The Dark Knight film ($203.8 million) and the previous record set by Grand Theft Auto IV (6 million units, $500 million) - just to name a few.

Modern Warfare 2’s success also extends to Xbox LIVE, where more than 5.2 million multiplayer hours were logged playing Call of Duty: Modern Warfare 2 on the first day alone. More than 2.2 million unique gamers played Call of Duty: Modern Warfare 2 in one day on November 10th - a new one-day record for Xbox LIVE.
Finally more than 11 million achievements were unlocked on Call of Duty: Modern Warfare 2 on the first day.

Love it or hate it, Modern Warfare 2 is kickings a$$ and cashing checks.

EA posts Q2 loss, plans massive layoffs

Imagine how it must feel to hear that EA has acquired Playfish, a social game development company, for a possible total of $400 million USD and then in the same breath that you are losing job. That’s what some EA employees might be hearing (or have heard) today as EA reveals its abysmal second quarter results and a series of planned layoffs.

Electronic Arts said Monday that its loss widened in the second quarter and that it plans to lay off around 1500 employees, or about 17 percent of its global workforce. This would happen before April 2010, the velocity of those layoffs is an unknown at this time; for all we know they have already begun..

In the second quarter EA posted a net loss of $391 million, or $1.21 a share - a 26 percent increase over the same period a year ago. Net sales saw a 12 percent decline to $788 million in the second quarter as well. Sales, including deferred revenue from online games, did grow 2 percent to $1.15 billion during the quarter, but obviously it was not enough to pull Q2 into the black.

It must hurt those employees to hear that This morning EA announced that it had committed to purchase the outstanding assets of Playfish, one of the largest social game development studios on Facebook (and other platforms), for a total of $400 million USD (see this news story for a break-down). EA said that these layoffs, 1300 of which are part of a restructuring plan that was already in place, will be completed by March 31, 2010. According to the company, this plan will result in annual cost savings of at least $100 million and restructuring charges of $130 to $150 million.

Looking to the next quarter, EA predicts GAAP net revenue to be between $3.6 and $3.9 billion; Non-GAAP net revenue is expected to be $4.2 to $4.4 billion; GAAP diluted loss per share is expected to be between $1.20 and $2.05; Non-GAAP diluted earnings per share is expected to be between $0.70 and $1.00; and return to profitability in Q3 and Q4.

Activision Q3 Profits up on Guitar Hero, Call of Duty

Activision Blizzard announced a profit for the third quarter, thanks to two important events: a reduction in costs and strong sales of titles like Guitar Hero 5. Shares rose 2 percent in afternoon trading on the news. The company also predicted lower fourth quarter numbers than what Wall Street expected, despite the pending release of Call of Duty: Modern Warfare 2, which ships next Tuesday.

For the third quarter, Activision reported a net income of $15 million - 1 cent per share - compared with a net loss of $108 million - 8 cents a share, for the same period a year ago. Net revenue dipped 1 percent in Q3 to $703 million. Excluding revenue that was deferred from the sale of certain titles, the company said revenue for the period would have been right around $755 million.

In the quarter Activision Blizzard increased its U.S. and European share 1.2 points over the previous year across all platforms to 12.3 percent and had two of the top-10 best-selling titles in the U.S.: Guitar Hero 5 and Guitar Hero World Tour, according to retail sales data from NPD Group (U.S.) and Charttrack and Gfk (Europe).

The top selling games for the quarter were Guitar Hero 5, Marvel: Ultimate Alliance 2, and older versions of Guitar Hero, Call of Duty and - of course - World of Warcraft.

For the fourth quarter, Activision is predicting earnings of 43 cents a share on revenue of $2.22 billion, on a non-GAAP basis. Analysts were expecting earnings of 44 cents a share on revenue of $2.3 billion. The fourth quarter will include the release of Modern Warfare 2, Tony Hawk: Ride, DJ Hero and Band Hero.

CD Projekt and Optimus complete transaction

Poland-based CD Projekt and Optimus S.A. have concluded a deal this week that will see the creator of The Witcher and the owner of the classic games web site Good Old Games get a 23 million dollar injection cash once the deal is complete. As part of the deal CD Projekt will retain control of the company (CD Projekt Group) and gain control of Optimus by acquiring 50 percent of the listed company’s shares. This also makes CD Projekt a publically traded company.

“This transaction represents the full realization of the strategic goals that CD Projekt’s owners set for themselves,” said CDP Investment stockholder Adam Kiciński in a statement of the company’s official web site this morning. “Above all, we will become a publicly listed company, which denotes access to capital. That in turn will spur further company growth. The immediate financing we obtained through the deal will allow us to pursue our operational goals in troubled times. We have gained all this while retaining control of the business, which was essential to us. The added spice of the contract is that we are merging with a corporation that, like CD Projekt, has been at the center of the Polish computer market throughout its history.“

Optimus S.A. is a Warsaw, Poland-based computer company that makes PCs and providing IT solutions for companies. In the 1990s Optimus S.A. was one of the leaders of the Polish computer market.

By the numbers: Tokyo Game Show

Video game industry sales decline by 29 percent inJuly

According to retail sales data from NPD Group revenue for the video game industry saw a major decline, finally putting to bed the question of whether or not the sector was in fact recession proof. A certain analyst whose name I won’t mention might have said that once, but you won’t hear such utterances from him about that now. It has been the fifth month that the interactive entertainment has seen a decline, according to NPD. Total sector revenue was $848.9 million, down dramatically from $1.2 billion a year ago.

Analysts expected a 15 percent decline in game, console and accessories spending in July, but what they got was nearly double that - a 29 percent drop overall. Hardware sales were the biggest losers in July, with a major decline in Nintendo Wii, PS3 and Xbox 360 sales. The Nintendo Wii saw a 54 percent drop in sales, the PS3 a 45 percent drop and the Xbox 360 was off by 10 percent. Hardware sales amounted to $280.9 million in July (a 37 percent decline), down from $447.7 million a year ago.

Analysts are saying that it is probably necessary for Sony, Nintendo and Microsoft to start thinking about cutting the prices of their respective systems, but Nintendo and Sony probably won’t - or at least that is what both have been saying for quite some time. We’ll see.