NEW YORK, NY--(Marketwire -04/06/12)- The video game industry has shifted from one dependent on the sale of packaged goods and perpetual licensing, to one dominated by digital distribution. As result traditional video game companies are finding it harder to monetize the industry. Five Star Equities examines the outlook for companies in the Video Game Industry and provides equity research on Activision Blizzard, Inc. (NASDAQ: ATVI - News) and THQ Inc. (NASDAQ: THQI - News).
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Consumers have taken gaming to their smartphones and tablets, where games are priced under $5 while console games still range from $30 to $60. As a result video game sales in the U.S. have dropped drastically. The NPD Group, a market research group, says U.S. video game sales fell 20 percent for the month of February. Sales totaled $1.06 billion for the month of February compared to $1.33 billion in 2011. Software totals showed a 23 percent decrease to $464.4 million, and hardware totals fell 18 percent to $381.4 million.
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Activision Blizzard, Inc. recently announced that Microsoft veteran Dennis Durkin has been named Chief Financial Officer. Durkin, 41, has been at Microsoft since 1999, most recently as Corporate Vice President, Chief Operating and Financial Officer of Microsoft's Interactive Entertainment Business (IEB), which includes Xbox. During his nearly six year tenure in IEB, he was a member of the IEB's leadership team, which is credited with turning the business from a significant operating loss to greater than $1 billion in annual profit, while establishing Xbox 360 as the #1 console globally in 2011.
THQ Inc. recently announced its updated business strategy to exit the traditional kids' licensed video game category and focus on its core game franchises and digital initiatives. As part of this business realignment, the company is implementing plans to streamline its organization and cost structure to support what will be a smaller company positioned for sustained profitability. The company currently expects these actions will result in a reduction of selling, general and administrative expenses and product development expenditures totaling approximately $160 million from its annualized run rate.
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