People are turning to video games for escape as the coronavirus leaves millions trapped in their homes

Gamers line up for a copy of Animal Crossing video game outside an EB Games store on Yonge St., in downtown Toronto despite requests to self-distance and stay home.

Andrew Francis Wallace | Toronto Star via Getty Images

Sales of the latest video games have smashed records as millions are stuck at home after governments around the world locked down entire cities and pushed for social distancing measures to stop the coronavirus from spreading.

Nintendo‘s latest installment of its Animal Crossing franchise, titled New Horizon, was released on March 20 and sold more than 1.8 million copies in its first three days in Japan, according to video game publication Famitsu. In the U.K., the title sold more copies in its first week on the shelves than the launch sales of all previous entries in the series combined, gaming publication gamesindustry.biz reported. 

The social simulation game allows players to create their own avatar and engage in activities such as fishing and gathering resources across islands, with the aim of building new tools and expanding their virtual homes.

A game like Animal Crossing is an antithesis to the difficulties that many people are suffering from the coronavirus outbreak.

Piers Harding-Rolls

Research director for games, Ampere Analysis

Piers Harding-Rolls, research director for games at Ampere Analysis, told CNBC in an email that the early sales figures were “an outperformance on prior expectations.”

“Animal Crossing as a Nintendo (intellectual property) has never been a tier-one seller,” Harding-Rolls said. “This latest release has shifted the franchise to the big league.”

Niko Partners' senior analyst Daniel Ahmad was less surprised. He said the game was “expected to be a strong seller out of the gate” but acknowledged its initial sales performance was “beyond expectations.”

Both analysts agreed that the coronavirus outbreak likely had a part to play in the sales spike. In a bid to slow the spread of the virus, major cities in the world have gone into lockdown as people are asked to stay at home and avoid going outside unnecessarily, with some authorities even going as far as shuttering certain businesses that are not deemed “essential.” Millions around the world have been cooped up at home as a result of these measures.

“COVID-19 has ultimately helped boost sales as more people are under lockdown and gaming is a safe and low cost form of entertainment,” said Ahmad.

Harding-Rolls said the the sales spike was likely partially fueled by “the fact that a lot of gamers have more time on their hands at home at the moment.”

He added: “A game like Animal Crossing is an antithesis to the difficulties that many people are suffering from the coronavirus outbreak, so has appealed to a lot of people because of that.”

Animal Crossing is not the only title that gaming enthusiasts are flocking to. Multiple reports surfaced last week that first-person shooter, Doom Eternal, launched on March 20, had the best launch weekend in the franchise's history.

In addition, Ahmad also cited another game that recently launched — Activision Blizzard's free-to-play first-person shooter, Call of Duty: Warzone, which launched on March 10. Within just ten days, the game drew 30 million players.

“This makes it the fastest growing non-mobile title of all time,” Ahmad said.

Staying in touch through games

Beyond those examples, both Harding-Rolls and Ahmad said online service-based games were likely to see a boost during this period, as people seek ways of connecting with others while at home.

“A lot of existing online service-based games are seeing more usage and records broken,” said Harding Rolls. He said one of the reasons is that those who did not play as often before now have “more time on their hands at home.”

Another category of people who could return to games are those who have “lapsed” and are now looking for some familiarity, Harding-Rolls said. With this group returning to games, they “may have played a lot in the past but have since dropped.” 

Games will become a place to socialize with friends in a virtual world when the real world is off limits.

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Daniel Ahmad

senior analyst at Niko Partners

“Online competitive and live service games will see the strongest boost going forward,” Ahmad said. He cited reasons such as them being an avenue for people to stay in touch with friends as well as the introduction of new content over time to drive long-term engagement.

“We also note that non-competitive games with social and online elements are another way for friends to stay in touch, explore game worlds and create user generated content,” Ahmad added. “Games will become a place to socialize with friends in a virtual world when the real world is off limits.”

Outlook for sector

As fears over the economic impact of the coronavirus roiled markets globally in recent weeks, the video game sector appears to have weathered the storm better than its peers.

VanEck's Gaming and Esports ETF, for instance, is up 2% year-to-date while the ETFMG Video Game Tech ETF has fallen only about 5% amid the big market sell-off. In comparison, the Dow Jones Industrial Average and S&P 500 posted their worst ever first quarter, losing about 23.2% and 20%, respectively. 

Still, the overall sales impact of the pandemic on video games is still not clear.

Acknowledging that upcoming big budget games could see a boost in digital sales as consumers “treat themselves to entertainment in the home,” Harding-Rolls said overall sales is likely to take a negative hit by the closure of games retail in many major markets. As a result, the jump in digital sales revenue may not “offset this hindrance,” he said.

Ahmad, on the other hand, said the video game market is likely to see a “short-term boost” as a result of the lockdowns imposed.

— CNBC's Annie Pei contributed to this report.

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