Latest Financials Bring A Sense of Deja Vu
Several companies reported positive financials this week, but lingering problems continue to warrant watching.
Sony Is Waiting for Its Next First-Party Hit
The big news is that Sony expects to only ship 18 million PS5s during FY 2022 (beginning/ending in March), down from its previous hopes to break the 20 million mark. Game sales were up 27% YoY in Q2, driven by third-party titles as first party game revenue slipped. Sony also confirmed that it has been selling the PS5 at a loss, making PlayStation game revenue – and its revamped subscriptions – all the more important.
Nintendo’s Next Big Challenge
Nintendo also cut its annual console sales forecast to 21 million, 2 million less than last year. The company is feeling the pain of game delays, with $30 million less in mobile game revenue, but plans to improve Switch Online. With the Switch’s successor a few years out, Nintendo admitted it now faces the issue of translating its huge user base to their next platform. It’s a particularly significant issue for Nintendo, given the unique gimmicks of its consoles run the risk of alienating customers with every new console.
EA Leans on Live Services
Dismal performance from EA’s tentpole Battlefield 2042 didn’t stop the company from posting almost 50% net revenue growth in the last quarter. The important figure: live service revenues for the full year were up 24% to $5 billion. EA will look to bounce back in in the coming year with marquee games releases in the Dead Space and Star Wars franchises.
Despite another quarter of strong financials, it’s hard not to feel like the industry is stuck in a bit of a rut. We’re three years into a hardware shortage that still hasn’t ended, and companies have banked on more reliable recurring live services revenue instead of new releases. It’s not the worst market for gamers – it’s certainly been great for the industry – but one wonders how long the industry can keep going like this before consumers start closing their wallets.