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Turtle Beach Idea Proposal (HEAR)

Turtle Beach Idea Proposal (HEAR)
 

Will Turtle Beach build on its 2018 breakout or crash back to Earth in 2019?

Report Available: February 13, 2019

 

Blueshift’s initial research found sales of HEAR headsets exploding, largely thanks to the popularity of multiplayer games like Fortnite. However, it is not clear whether such games can continue their massive growth. In a highly competitive accessories market that includes LOGI and MSFT, much attention in 2019 will be on developing products focused on the Nintendo Switch, last year’s runaway winner among gaming consoles.

 

Observations

  1. HEAR, the leading maker of headsets for video games, said its Q3 net revenue more than doubled compared to a year earlier, and the company increased its Q4 outlook, predicting an 18% year-over-year revenue gain. Shares of HEAR skyrocketed in 2018 from below $2 to a high of more than $32 in early August, but have since lost more than half their value.
  2. HEAR has benefited from the exploding popularity of “battle royale” games, particularly Epic Games’ Fortnite and Bluehole’s PUBG. The massively multiplayer games allow for live chat among players, making headsets and microphones a must-have accessory. Fortnite is now the most popular video game in the world with 125 million players, helping Epic Games amass a $3 billion profit in 2018. But some industry observers wonder whether the battle royale format is a fad that will soon pass.
  3. Spending on graphics cards for gaming PCs and on accessories such as headsets rose 29% in December, according to the latest data from NPD Group. Total spending in the cards and accessories category hit an all-time high of $4.5 billion in 2018, a 33% increase from the prior year. Another positive indicator is that GME, one of the top retail outlets for HEAR products, said its holiday sales were up on the strength of a 28.7% surge in accessories sales. During a Blueshift visit to a GME store in the Midwest this week, however, a sales associate said his store sells more headsets from LOGI’s Astro Gaming despite HEAR being higher quality, and the store has a lot of leftover HEAR inventory from the holidays.
  4. HEAR’s share of the gaming console headset market now tops 45%, but it faces fierce competition from the likes of Astro Gaming, MSFT and PLT. A key focus for 2019 will be on trying to take advantage of the success of TYO:7974’s Nintendo Switch, which was the best-selling console in 2018, both in unit and dollar sales. To that end, HEAR has introduced Battle Buds, a lightweight microphone/ear bud combination aimed at mobile gaming on the Switch and smartphones.

 

How did HEAR headsets perform during the holidays? How does inventory look in the channel coming out of the holiday season? What are 2019 expectations for the headset category in general and HEAR products specifically? How are HEAR’s newest PC headsets and Battle Buds doing? How is competition affecting HEAR? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Retail store associates, Retail buyers, Distributors and other supply chain executives, and Industry specialists.

 

Companies: Turtle Beach Corp. (HEAR), GameStop Corp. (GME), Logitech International SA (LOGI), Microsoft Corp. (MSFT), Nintendo Co. Ltd. (TYO:7974), Plantronics Inc. (PLT)

 

Research Begins: January 28, 2019

 

Are you aware Intro-act, our corporate access solution, is part of the Blueshift Research ecosystem? To learn more, go to Intro-act.com or check out our video suite.