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Missed Opportunity for Games

Smart TVs Won the 'In-Store Wallet' on Black Friday, Says Wedbush

Smart TVs had better-than-expected sell-through on Black Friday, Wedbush Securities analyst Michael Pachter wrote investors Monday, saying connected TVs won “the in-store wallet.” Wedbush’s in-store Black Friday consumer electronic channel checks indicated inventory and sell-through were lighter in most categories, aside from smart TVs, “even as elevated inventory threatened to overwhelm tighter demand in the current environment.”

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Wedbush’s online checks showed consumers are increasingly shopping online for most of their smaller consumer electronic needs, including gaming peripherals, Pachter said. In stores, Wedbush saw better sell-through on “bargain” items -- those with the deepest discounts as well as items with lower-tier pricing.

The PlayStation 5 and high-end Xbox Series X game consoles ($499 each) continue to be in limited supply, with the wait to buy new devices “now at over two years for many gamers,” Pachter noted. At the entry level, Microsoft priced a Series S bundle at a 20% discount, bringing it to $239. Nintendo put its Mario Kart 8 Deluxe Switch bundle on Cyber sale at $299, “essentially packing in the game and a limited-time online subscription for free with the console purchase,” said the analyst.

Black Friday was a “missed opportunity” for video games, Pachter said, saying bargain bin games -- EA and Take-Two sports games and Ubisoft franchise titles -- performed well, but headliners including Call of Duty: Modern Warfare II, God of War Ragnarok and select Pokemon titles “were record breakers before Black Friday had even begun.” As a result, he said, “there didn’t appear to be the restocking push or price cuts that we otherwise would have expected.”

The depth and breadth of sales this holiday season vs. recent years indicates “companies are more focused now on driving unit sales in a shaky macro environment with reduced consumer discretionary spending,” Pachter said. Outside of smart TV purchases, Black Friday shoppers were mostly gift shopping, “and doing so with more price sensitivity than in recent years,” he said.

In addition, the depth and breadth of sales from the companies Wedbush covers were “largely in tune with consumer behavior, and position each to limit downside over the holiday period,” Pachter said. Roku and Turtle Beach are “best positioned” as lower-priced options among peers, “and with the best discounts,” he said.