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Video games put together another strong month of sales in December, nearly even with December 2021’s total when video game sales were shattering records every month. Despite the slight decrease, video game demand remains higher than pre-pandemic levels, and several catalysts are likely to drive further growth through 2022. 

Microsoft made headlines this week by purchasing video game heavyweight Activision Blizzard in an all-cash deal valued at roughly $70 billion, by far the largest acquisition Microsoft has ever made. The move signals Microsoft has faith in the staying power of the video game boom and CEO Satya Nadella noted this acquisition “will provide building blocks for the metaverse”. Additional M&A activity between tech companies and video game manufacturers could be on the way in the year ahead.

Related ETF: Wedbush ETFMG Video Game Tech ETF (GAMR)

Video Game Sales Remain Historically Elevated in December

Despite facing tough year-over-year comparisons from the pandemic driven video game boom last year, 2021 ended up as another record-breaking year for the video game industry.

According to the December NPD Group video game spending report, consumer spending on video game hardware, content and accessories was recorded at $7.5 billion, a 1% decline compared to December 2020. On a month-to-month basis, spending rose more than 20% from November’s total of $6.3 billion.

The end of year report notes that video game sales throughout 2021 totaled $60.4 billion, an 8% increase compared to 2020’s record year. Despite persistent supply constraints for video game manufacturers such as Sony and Microsoft, hardware spending rose 14% in 2021 to $6.1 billion.

Further, PR Newswire highlighted a report from the Entertainment Software Association which believes the multiyear trend of video game growth is here to stay.  ESA President Stanley Pierre-Louis recently said the “impact of the video game industry over the past year underscores the sustained trends we have seen for several years,” noting that people of all ages and demographics continue to play video games for joy and competition.

Mobile app gaming helped boost the continued growth of video games as well. Per eMarketer, time spent gaming via mobile apps grew by 1.2% in 2021, building upon the pandemic driven surge in mobile gaming in 2020. Mobile gaming is expecting to continue its upward climb, albeit at a slow but steady pace in the coming years as gaming’s popularity proves to be more than just a pandemic phase.

Many had predicted that once pandemic restrictions subsided and the economy reopened the popularity of video games would fade, yet that has been far from the case. Even if 2022 is unable to top 2021’s record breaking year, the industry appears primed for another year of historically strong sales and accelerating adoption as demand for games continues to rise.

The sector remains hot heading into the new year, and tech companies are increasingly interested in grabbing a share of the video game market and, more specifically, the metaverse.

Microsoft Makes Headlines, Further M&A Activity Could Follow

Not only was last year a record shattering year for video game sales, but dealmaking across the sector also reached an all-time high.

According to a report from global investment bank…

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