The migration away from traditional video games continues.
Sales tracker NPD Group came out with its monthly industry report late last week, and it was another doozy. Despite last month's debut of Activision Blizzard's (NAS: ATVI) Diablo III and Take-Two Interactive's (NAS: TTWO) Max Payne 3, the sale of new video games in physical form plunged a whopping 28% in May. NPD notes that there were also 27% fewer new titles introduced last month, but that's merely an industry reaction to waning gamer interest. Stuffing the channels with new diversions isn't going to kick this industry out of its three-year slump.
Accessory sales inched higher, but hardware sales plunged 39%. Diehard gamers are apparently either through buying consoles and handhelds, or they're holding out for the next generation of gaming systems.
Microsoft (NAS: MSFT) managed to claim a positive spin here, arguing that it's still selling more Xbox 360s than its two console rivals combined, but there's no reason to get excited. Microsoft is simply situating itself in the presidential suite of the sinking Titanic. The view may be divine, but the icy waters are swallowing everybody.
It doesn't come as much of a surprise, then, that GameStop (NYS: GME) hit a multiyear low last week. Digital sales have been a bright spot, but that merely means software publishers and console makers are making direct connections with gamers.
There will continue to be a market for the blockbuster games that diehard gamers crave, but the industry continues to shed the mainstream players who used to be responsible for record sales results. This game isn't over, but it's not winnable for the traditional gaming companies.
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At the time thisarticle was published The Motley Fool owns shares of Microsoft, Activision Blizzard, and GameStop and has written calls on Activision Blizzard.Motley Fool newsletter serviceshave recommended buying shares of Activision Blizzard, Microsoft, and Take-Two Interactive Software, creating a bull call spread position in Microsoft, writing covered calls on GameStop, and creating a synthetic long position in Activision Blizzard. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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