January 19, 2021
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Videogames' Immunity Boost Might Linger

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Activision Blizzard’s delayed ‘Call Of Duty: Black Ops Cold War’ launched to lackluster reviews but is on track to sell more than 20 million units.

Activision Blizzard’s delayed ‘Call Of Duty: Black Ops Cold War’ launched to lackluster reviews but is on track to sell more than 20 million units.

Photo: Activision

While most businesses are understandably pleased to see 2020 pass, videogame companies might have some mixed feelings.

The coronavirus pandemic has been an undeniable boon for the game industry. Restrictions that have kept many at home and shut down other forms of entertainment have resulted in a banner year for the sector. Six of the largest game publishers are expected to post combined total revenue of $24 billion for the calendar year, up 19% from last year, according to consensus estimates compiled by FactSet. In 2019, the same group’s combined revenue fell nearly 3%.

That number doesn’t include sales of the new Xbox and PlayStation consoles, which went on sale in early November and are still very hard to come by due to soaring demand. Other game-hardware makers also have been capitalizing on the rush.
Turtle Beach,
which makes accessories such as specialty headphones for gamers, has recorded a 71% year-over-year sales gain to $227 million for the nine-month period ended September. Newly public
Corsair Gaming,
which makes gaming PCs and laptops and other related accessories, logged a 54% revenue jump to about $1.2 billion for the same period.

For game makers, the current sales boom has been especially remarkable considering the impact the pandemic has had on their development cycles. Several major games got delayed in 2020 due to the challenges imposed by remote working. That included the annual entry to
Activision Blizzard’s
blockbuster “Call of Duty” franchise. The game, “Black Ops Cold War,” launched a few weeks later than normal and has garnered among the franchise’s lowest critic scores in more than a decade. But Cowen analyst

Doug Creutz
notes the game is still on track to sell more than 20 million units. Analysts estimate Activision’s publishing business, which comprises mainly the “Call of Duty” franchise, will show a 74% surge in net bookings for 2020, to nearly $3.9 billion, according to FactSet.

Even 2020’s flops have been relative. In a Dec. 22 regulatory disclosure, Polish game publisher
CD Projekt
reported unit sales of its problem-plagued “Cyberpunk 2077” totaled more than 13 million copies since its Dec. 10 launch. That is well below the 18 million to 25 million units that Jefferies analyst

Ken Rumph
said Wall Street had been expecting the title to sell in its debut. But it isn’t bad for a game so riddled with bugs that
Sony
dropped it from its online store, while both Sony and
Microsoft
joined other retailers in offering refunds to disgruntled players. Analysts still expect CD Projekt to post the equivalent of about $672 million in revenue for 2020—more than five times the previous year’s sales, according to FactSet.

But like other industries that have been boosted by the pandemic, the videogame sector faces the question of what business will look like in 2021 when mass vaccinations are expected to slowly bring life back to normal.

Brian Nowak
of
Morgan Stanley
argued in a Dec. 22 report that the pandemic “likely pulled forward four years of gamer adoption,” which will leave growth depending on publishers’ abilities to launch compelling games.

Of course, game publishers could be helped by further adoption of the new Xbox and PlayStation consoles, which will raise demand for games designed to take advantage of their cutting-edge capabilities. Activision and
Electronic Arts
—the two largest publishers by annual revenue—are expected to record revenue growth of 7% and 8% respectively in calendar year 2021, with at least two new games from Activision’s Blizzard side and a new “Battlefield” from EA projected to be released in the year.

The speed of national reopening also will factor heavily into the industry’s performance for 2021. Lockdowns and other restrictions seem likely to persist through the winter given the recent spike in Covid-19 cases, while the reopening of mass entertainment options such as movies, concerts and theme parks that compete for spare time and discretionary income likely will occur much later. But as more entertainment options open up and as more workers return to the office, the game industry will need to contend with not being the only game in town.

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The Wall Street Journal Interactive Edition

Write to Dan Gallagher at dan.gallagher@wsj.com

Corrections & Amplifications

Sony dropped the videogame “Cyberpunk 2077” from its online store. An earlier version of this article incorrectly said both Sony and Microsoft dropped the game from their online stores. (Corrected on Jan. 4)