Will PlayStation 5 Launch This Year? Sony Thinks So, But What About Me?

These days, amidst a serious global pandemic with far-reaching economic impact, it’s impossible to be sure of anything in gaming and tech.

Which is why it’s notable that people familiar with Sony’s production pipeline say the company is still on target to launch its upcoming PlayStation 5 (PS5) console by year-end, according to a report today from Bloomberg.

Sources claim that the coronavirus outbreak has affected the company’s promotional roll-out and marketing strategy more than production of the console itself. Which would explain why we still don’t know what it looks like or, most importantly, how much it will cost at its scheduled launch later this year. (At least PlayStation Blog revealed the new DualSense controller last week to sate the rapid appetite for hints as to the aesthetic of Sony’s final product.)

Part of why the Japanese firm will reportedly still meet the late 2020 release window for PS5 is that its roll-out will be more limited than the PlayStation 4 (PS4) back in 2013. Sources say the console maker is informing production partners it intends to ship between 5 and 6 million PS5 hardware units between Q4 launch and March 2021 fiscal year end.

Compare this to the PlayStation 4 console after its November 2013 release: That hit 4.2 million and 3.3 million unit shipments during its first couple quarters respectively, for a total of 7.5 million in the fiscal year ending March 2014. So at best, internal estimates put the PS5 launch down 20% versus the prior generation. At worst, this forecast leads to a 33% dip.

It’s worth noting that this early production would be above 2006’s PlayStation 3 output of 3.5 million consoles during its first half year, as noted in this CNET piece.

On the personal prediction side, I’m expecting closer to the lower range of Sony’s PS5 guidance. 5 million to 5.5 million range. As I’ll expand on later, I’ve decided to remain conservative in today’s landscape.

Estimates and speculations reported by Bloomberg are quite revealing about Sony’s overall approach. It shows executives pressing forward to hit market by the holiday season despite anticipating lower output, a move which it hopes to make up for in volume on the back-end.

The other intriguing part of the equation and Bloomberg’s report is the exact topic on which I speculated in a recent article: How much will PS5 cost?

Developers interviewed for the piece imply a launch price of $499 to $549 in US Dollars, which would be a dramatic increase compared to where PS4 started at $399. In my aforementioned article debating about price, one of the most important points is the rumored cost to make PS5 totaling $450. Which leaves little room for margins if priced below that low end of developer speculation.

Main reason for the higher launch price seems to be its beefier specs, higher component costs driven and part scarcity. (I’d wager a costlier marketing campaign plays a factor, too.) Many tech products require the same kinds of components to build, and are sourced from China and related Asian markets, which were generally hit by the coronavirus earlier than the West. It follows that the launch price is most certainly impacted by the pandemic, there’s no avoiding it.

I was wavering in my personal price estimate after hearing the final technical specs. Now with the developer input plus knowledge of continued component shortages, I’m upping it to a minimum of $449 with the more likely outcome being $499. It’s just not realistic to expect Sony to take a significant loss per unit in this environment and while forecasting softer sales.

These estimates and speculations reported by Bloomberg are quite revealing about Sony’s overall approach. It shows executives pressing forward to hit market by the holiday season despite anticipating lower output, a move which it hopes to make up for in volume on the back-end. Not only that, its employees are working remotely which makes it more difficult to finalize plans both logistical and financial or meet with the external teams responsible for making the hardware itself.

Another element to the company’s strategy is potential discounts on current PS4 generation console versions plus offering services like PlayStation Plus in order to recoup the loss of hardware sales. If the PS5 is in shorter supply, can Sony entice people to stick around its ecosystem by selling PS4 this late in the generation? I’m skeptical on that play. The market is saturated as it is, with nearly 109 million PS4s in circulation already. If it’s just a couple more months of waiting, people will save that money to put it towards the next generation. Especially given that PS5 is backwards compatible with software on its predecessor.

I was wavering in my personal price estimate after hearing the final technical specs. Now with the developer input plus knowledge of continued component shortages, I’m upping it to a minimum of $449 with the more likely outcome being $499.

Good news for Sony in terms of marketing strategy is it’s much more viable to do a digital-only events these days, even for major product reveals. Normally hardware companies will host a huge in-person media event during a console unveiling. Given where we are at with the coronavirus and government mandates, this is unrealistic for the short to even mid-term and coincides with when Sony would want to ramp up its advertising campaign.

There’s also the question if Sony is still waiting for Microsoft to make its first move on release date and pricing for its Xbox Series X. Tough to know, since competitors monitor each other of course however each have their independent plans. Honestly, I don’t expect Microsoft to commit to a release date or cost soon. So Sony will either have to keep waiting and delaying its formal reveal, or make the first move and risk being beat on price or market date.

These points all lead back to the topic: Will Sony stick to the current schedule to release this year or have to push the PS5 launch date to 2021?

My answer: I believe that’s what Sony wants to do, even if it’s not necessarily what will happen.

Production pipeline estimates from Bloomberg’s sources say that suppliers are already getting parts to those that assemble the console. Broader PS5 production is expected by June. Which indicates that Sony is steadfast in its plan to reach consumers this year during a unified, global launch.

Thing is, it’s difficult to predict the future even without the variable of a pandemic. Components aren’t guaranteed to be in the same supply even weeks from now let alone months. There may be follow-up outbreaks that impact employees at those suppliers and assemblers. Even separate of the virus, production disruptions can happen for any number of reasons.

Once the console is built, there’s the added layer of retailers and their ability to attract customers. Then the economic impact on disposable income in Sony’s key markets. Where will demand be when people are recovering from what could be the worst recession since the Great Depression?

Many parts of the world are still on lock down. So many people aren’t working. Even when the situation turns more positive in a broad sense and worldwide cases dwindle, people start thinking of a return to normalcy, there’s the risk of follow-up outbreaks. I might be the most pessimistic in this context as I’m expecting this will last a lot longer and we shouldn’t expect it to change quickly.

The further Sony goes without revealing the console and its price, the more likely we’ll see the delay to early next year. It also depends on what Microsoft does with its Xbox Series X roll-out of course, however they are experiencing the same exact conditions as Sony when it comes to part suppliers and manufacturing pipelines.

There’s the strong possibility we see one of two things from Sony:

  • Soft initial roll-out of PS5 leading into the holiday season with low shipments and decreased sell-through to consumers until 2021.
  • Broader delay of its global console launch until Q1 of 2021, when retailers and distributors are more secure and demand has recovered.

Right now, I’m predicting the first scenario. Yet most certainly will not rule out the second.

Either way, my estimates parallel with Sony predicting that if the PS5 launches this year, shipments should be down compared to last generation when component costs are impacted by supply. Not to mention the appetite for expensive, new technology is subdued and won’t recover until next year. If the launch happens in 2021, I’m more optimistic on initial shipments and people’s willingness to spend.

What about you? Are you team Late 2020 or Early 2021? Feel free to get back to me here or Twitter on your expectations! Thanks for reading.

Note: Prices quoted here are using US Dollars.

Sources: Bloomberg, CNET, New York Times, PlayStation Blog, Sony Corp.

-Dom

Now That We Know Specs, How Much Will PlayStation 5 & Xbox Series X Cost?

The short answer: We still don’t know. Yet that won’t stop us from speculating!

Even though we’re now a bit closer to seeing the full picture, there are still plenty of variables at play. Right now, no one on the outside actually knows.

That said, it’s time to guess.

After Sony’s “Road to PlayStation 5” video reveal of the technical specifications for its upcoming PlayStation 5 hardware, we know a lot more about components and power expectations for it alongside its main competitor in Microsoft’s Xbox Series X. So it’s easier to approximate where they might be at launch, currently scheduled for late this year. Which is great. Because while power is important, I’d argue price drives consumer sentiment more than anything.

For those looking for in-depth breakdowns of specs and numbers for Sony and Microsoft’s hardware, check out Digital Foundry’s work at this link for the PlayStation 5 and this one for the Xbox Series X. The team also compiled a comparison piece across the two consoles, at least based on the information so far.

Then there’s the latest collaboration with Digital Foundry, Austin Evans and Xbox Wire with even more detail into Microsoft’s project, plus Sony’s own PlayStation Blog post summarizing various items on its box. Plenty of places to soak up the technical jargon. It’s impressive coverage, to the point where even someone that follows the business and critical side of games can almost understand.

Here, we’re going to cover mostly the general points and see just what they mean for potential launch pricing. Price drives consumer decisions just as much as power, arguably even more so since it’s an easy comparison point between different products. Don’t worry if some of the tech side goes over your head. You’re not alone.

Based on the reports as you see above, the conclusion is the raw components and feature sets are mostly comparable with some important distinctions. In terms of capabilities, there are common ones. They support high frame rates and 8K resolutions. They’ve got Raytracing (get used to this buzzword for a fancy lighting technique). 3D audio. Custom AMD processors. Solid state drives. Some form of backwards compatibility for legacy software.

It’s looking at the divergences that spark discussion of course. Without getting too much into the weeds, I’ve heard it framed as such: The Xbox Series X is more powerful while the PlayStation 5 is notably speedier. The former has the more capable processing power, while the latter has a tailored solution for delivering the highest speed possible.

Which makes sense when we step back. Microsoft’s general philosophy is now about how it has the most powerful console this generation in the Xbox One X, and the focus remains on the upper end targeting tech enthusiasts this time as well. The upcoming Xbox Series X is twice as powerful as the improved version of its predecessor, the Xbox One X. Microsoft’s goal is to have games looking great and running smoothly plus is going to offer the ability to suspend and resume multiple games at once. Which fits with its ecosystem, software compatibility and catalog approach.

The downside to the raw power of the Xbox Series X is that it requires proprietary expandable storage options, which will add to the cost of keeping the console over time when hard drive space inevitably fills up. This certainly lowers its price tag, yet adds to the overall investment across the full generation. There’s also the question of first party software support, which is a primary concern though less relevant in this context.

Flipping over to Sony’s PlayStation 5, its specs are still impressive. While in raw terms its numbers are notably lower than Xbox, its implementation is slightly different in using what’s termed “variable frequency,” more plainly a type of “boost” to allocate its power budget. Sounds to me like a focus more on optimization rather than sheer strength.

This also fits with its design mantra of placing a major focus on speed. Limiting loading times for players, offering studios the tools to minimize downtime and providing better options on the consumer storage side. This is achieved by leveraging a custom system alongside its 825 GB solid state hard drive plus expandable storage that doesn’t require proprietary equipment. Simply, the real treat is its storage speed and flexibility.

Mark Cerny, Sony’s lead system architect and hypnotic public speaker, described the solid state drive as the single most requested component by software developers. Capabilities for the people that make games are just as important as delivering performance output to those that play them. Which is why the PlayStation 5 seems tuned for speed.

One disappointment of Sony’s messaging so far is its stance on backwards compatibility. The aforementioned PlayStation Blog post alludes to many of the most popular PlayStation 4 games being playable at launch on the new console generation, then comments that there are roughly 4,000 PS4 games on which they will be working on this feature. Does that mean only select games will be available? Or that those will benefit from the PS5 power? We need more clarification of this increasingly more important feature.

Capabilities for the people that make games are just as important as delivering performance output to those that play them. Which is why the PlayStation 5 seems tuned for speed.

This summary of the broader strategies across the two competing hardware makers brings us to the real debate:

How much will people have to pay to move to next gen later this year?

We’ll start with the PlayStation 5, mainly because we already have some insight into its supply chain and pricing decisions from a Bloomberg piece last month.

For context, PlayStation 4 released at $399 back in 2014 while 2016’s more powerful mid-step PlayStation 4 Pro hit that same price later in the cycle, after discounts applied for the original box.

Rumors suggest that the manufacturing cost for the upcoming PlayStation 5 is currently at $450 per console, which is well above the estimated $381 for the base model of its predecessor. And this is strictly speaking about component cost. It doesn’t include the additional marketing and distribution associated with launching a flagship product.

During a conference call with investors earlier this year, Sony’s Chief Financial Officer Hiroki Totoki said “We must keep PlayStation 5’s bill of materials under our control and we need to make the correct number of units in the initial production.”

That certainly sounds like component cost might be approaching levels that Sony didn’t anticipate. Knowing these factors, could we see the same $399 introductory price for the PlayStation 5 this holiday?

I think there’s an argument to be made that we will, and it’s where I predicted it to be when discussing the topic in late 2019. That was without knowledge of the power capabilities and higher-than-expected component cost. Console manufacturers traditionally have slim margins early in a console life cycle, though $399 would be clearly selling at a loss. Companies aren’t in the business of losing money.

I’m leaning towards upping my forecast to $449, with Sony eating those additional expenses in hopes of making it up in volume and software sales. This puts it roughly at what it costs to make, and it’s only 50 bucks more than where it launched PlayStation 4 nearly seven years ago.

Gaming has been largely free from the reality of inflation so far, what with big budget software costs remaining consistent through the years. Even if publishers are finding ways to generate additional revenue via downloadable content and customization options. With rising costs to build hardware, it’s looking like a higher baseline for console launch cost is approaching.

There’s also a chance that Sony’s console starts at $499, especially if supply chain constraints limit the availability of parts. I don’t think it will be this high due to both sticker shock and competitor decisions, yet we can’t rule out the possibility based on what we know of its specs now. Especially if Sony only has the one model at launch, its usual strategy.

Microsoft’s situation is somewhat different. It’s already revealed plenty about the beefy Xbox Series X. While there aren’t yet rumblings of how much it costs to build, we can deduce that it’s likely going to be more than the PlayStation 4.

Thing is, there’s still the unknown of Microsoft potentially offering a more affordable option simultaneously at launch. Allegedly the team is working in parallel on the Xbox Series X and what’s dubbed Project Lockhart, a slimmed down version with less power and a friendlier price. Similar to what phone manufacturers do. Two products, one targeting the enthusiast and the other suited more for a broader, casual audience.

Even this generation, Microsoft has dabbled with offering a variety of console options. Xbox One hit market in late 2013 at $499, a much higher price point than its competition. Problem was, it wasn’t actually more powerful. It was that way because of bundling Kinect.

We then saw the Xbox One S version in 2016, beginning lower at $299. The most powerful family member in the Xbox One X launched a year later, coming in at $499 to appeal to dedicated players that wanted more than the earlier models could produce.

Shoot, Microsoft has been even more experimental later this generation. The Xbox One S All-Digital Edition hit last year for $249, making it the most cost effective in the family. Even if it had little fanfare and we don’t actually know how well the market reacted.

Phil Spencer, Head of Xbox, hearkened back to the early days last gen in an interview with Eurogamer by saying “If you remember at the launch of Xbox One, we were $100 more expensive and less powerful. So, I won’t be in that position. There’s no doubt about that. As an industry that’s growing so fast, we do think about price. We do think about performance as well. I’m not going to sacrifice performance for the sake of price.”

Combining this sentiment with now seeing the power potential of Xbox Series X, I’m at a minimum of $499 for launch cost. I just don’t see a way Microsoft can price it lower and not take a serious bath on each unit. $549 is probably a smarter prediction, even $599 contingent upon the existence of the lower-priced Lockhart version of course. I don’t think Microsoft can enter next gen with only one console priced at $599. That’s beyond risky. I think the smart people on the team know that.

There’s ways to make it more enticing even at a higher price than the PlayStation 5. I’ve said bundling Xbox Live and/or Xbox Game Pass would go a long way to incentivizing the undecided audience towards the Xbox ecosystem. Even spreading out the cost with a payment plan, similar to its Xbox All Access program.

Gaming has been largely free from the reality of inflation so far, what with big budget software costs remaining consistent through the years.. With rising costs to build hardware, it’s looking like a higher baseline for console launch cost is approaching.

What makes predicting this generation even more difficult is the increased uncertainty surrounding global economies and the impact of coronavirus. How will it impact component availability and supply chain? Could it even delay the launch to 2021? I’m not calling for that just yet. We have to acknowledge it could happen.

The last question for now is: When will these companies reveal pricing? The Bloomberg piece suggests that Sony is somehow waiting for Microsoft to make the first move. Sony hasn’t even shown the form factor of PlayStation 5 yet. While Microsoft has even let certain media members see Xbox Series X in person and been extremely vocal about sharing details, it’s still quiet on the potential of another model. With the delay of various gaming events globally and the move to a digital format for many presentations, I expect a longer wait than usual for price announcements. Think closer to the summer.

I’m on record with my predictions of $399 for the PlayStation 5 and $499 for the Xbox Series X, while leaving the door open to moving up slightly if component scarcity hits or some other disruption. It’s too early to lock in officially. (Yes, I’m leaving myself an out. Wouldn’t you?)

Anyone confident enough to place bets even when we don’t have all the information and there’s plenty up in the air with current socioeconomic elements? What are your price expectations right now?

Pretty soon, we’ll all have to go on record.

I look forward to hearing here or on Twitter. Thanks for reading!

Note: All pricing discussed above is in US Dollars.

Sources: Bloomberg, Eurogamer, Digital Foundry, Microsoft, PlayStation Blog, Sony, Xbox Wire.

-Dom

Sony, Ubisoft, Activision & Take-Two Earnings Recap: It’s a Numbers Game

As you likely read recently at my post of this quarter’s earnings calendar across gaming, tech and media, this week was an especially busy one for these industries.

In addition to the likes of Twitter and Disney, we saw gaming giants share updates on their recent financial results. Today I’ll both summarize and analyze Sony, Ubisoft, Activision and Take-Two reports and highlight the most important parts driving each business. Plus, chat some about predictions and where these companies are going in the near future.

I hope to.. hm, earn your confidence as we work through these because it should be a good one!

Sony Corp: Tuesday, February 4th.

Japanese media and gaming conglomerate Sony Corp reported a number of updates across its myriad of businesses for 3rd quarter of fiscal 2019, including its Gaming & Network Services (G&NS) business which houses its PlayStation brand and continues to be its main revenue source.

Notably, Sony announced that its PlayStation 4 hardware has now passed 108.9 million consoles shipped globally after moving 6.1 million during the holiday quarter. As expected later in the console cycle, this quarterly figure is down from 8.1 million last year. Still, the company reiterated its current forecast of 13.5 million consoles for the full year, implying we’ll see another 1.4 million come the end of March.

In terms of software within G&NS, PlayStation 4 game sales totaled 81.1 million copies in the quarter compared to 87.2 million in Q3 of 2018. 49% of these full game sales are now digital, when last year it was 37%. After its Q1 report hit 53% digital back in June, Sony is certainly on track to see at least 40% digital share this fiscal year which would be the first year ever it’s crossed this threshold.

Switching over to the services side, its PlayStation Plus subscription service, which offers online multiplayer access, hit 38.8 million registered users versus the 36.3 million player base last year. This increased subscription audience drove Network Services to be the only sub-segment within G&NS growing this quarter on dollar sales.

Speaking of dollars, Sony overall generated $22.4 billion in sales and operating revenue which is up 3% since last year on strength in its financial services and imaging businesses. Operating income however experienced a decline of 20%, to $2.73 billion. Within G&NS, sales dipped 20% to $3.3 billion with operating profit down 27% to just under $490 million due to lower hardware and external software sales. That PlayStation Plus user increase did help to offset this.

You’ll see in the chart above that even aggregating over the last 12 month period, during which sales were approximately $18.8 billion for its gaming business, the decline is tangible. It’s more pronounced than I even expected leading into the formal reveal of its PlayStation 5, due this holiday season. Partially due to the major success of titles like Red Dead Redemption 2 and Marvel’s Spider-Man driving sales during last year’s comparable time frame.

Sony’s higher network services revenue shows the growing importance of ecosystem and subscriptions to keep an audience engaged especially late in the cycle, helping to smooth out performance plus offset weakness in hardware and full game sales.

Within the PlayStation business, Sony realigned its segment reporting which I’ve presented above. Both digital software and add-on content and hardware sales experienced double-digit declines, though network services gained nearly 10%. Sony’s higher network services revenue shows the growing importance of ecosystem and subscriptions to keep an audience engaged especially late in the cycle, helping to smooth out performance plus offset weakness in hardware and full game sales.

Looking forward, the firm actually boosted its overall guidance slightly for sales and operating profit for the full year, though lowered these projections within its PlayStation unit, which means it expects a lower contribution than before. My personal take is that this quarter’s result is a bit lower than I anticipated, though certainly fits with where the major manufacturer and software producer is at ahead of its next console release in the back half of this year.

It’s going to be lackluster for a few more quarters leading into PlayStation 5, and I’m intrigued to see how its network services and subscriptions perform in the interim.

Ubisoft Entertainment SA: Thursday, February 6th.

Yesterday’s third quarter sales announcement from French video game publisher Ubisoft was lighter on the details than its competitors. But there’s still plenty to discuss (and speculate, of course)!

From the numbers side, sales for the nine months ending December dipped 16% to $1.23 billion which is on pace to come in well below the firm’s initial expectations due to softer sales of games like Tom Clancy’s Ghost Recon Breakpoint and Tom Clancy’s The Division 2 in particular. Ubisoft did point out that Just Dance 2020 is.. this is an easy one, performing well. Digital equates to nearly 80% of total sales, a figure which includes both digital game downloads and in-game purchases.

Because of somewhat weaker results for new titles, back catalog sales are propping up its recent numbers. Revenue of these older titles hit nearly 69% of business compared to 62% in the same period last year. Assassin’s Creed Odyssey from 2018 saw a major rise in unit sell-through plus engagement compared to its predecessor Assassin’s Creed Origins. 2015’s Tom Clancy’s Rainbow Six Siege is still showing excellent momentum years after launch, boasting 55 million registered players and record active users for a December month.

Unfortunately, Ubisoft doesn’t share much in the way of profitability metrics outside of annual reporting. I’d imagine it’s facing a similar trend in declines, perhaps even more pronounced because of rising costs associated with developing games that it delayed a few months back. It did reiterate its full-year sales targets for both this fiscal year ending March and the following one, showing early confidence in its adjusted release schedule.

At a personal level, I’m extremely excited for Ubisoft’s robust lineup after the type of year it’s had with core franchises. At an analyst level, I’ll remain intently skeptical all targets will be met until we hear exactly how these games will roll-out.

Speaking of its development pipeline, we’ve arrived at the best part of Ubisoft’s press release and conference call. The rest of this fiscal year through March is light. No major releases. Looking forward, CEO Yves Guillemot highlights the internal organizational restructuring in an attempt to strengthen its most important titles, which means the firm reiterated its plan to release five new triple-A titles between October 2020 and March 2021. Now we’re getting somewhere.

I spoke with Ubisoft Investor Relations briefly over email to confirm that three of these flagship games are targeted for the October to December window while the remaining two are slated in January to March. Three of these five have been formally announced: Watch Dogs Legion, Gods & Monsters and Rainbow Six Quarantine.

The worst kept secret in the industry is that a Norse-themed Assassin’s Creed game is on the way this Fall, so let’s mark that down as the fourth. My ongoing assumption for the final one is a new mainline Far Cry, thereby crushing the hopes of Splinter Cell fans everywhere yet again. Kotaku’s Jason Schreier claims that these are both true, so we essentially have an unofficial confirmation of its full fiscal year lineup.

It’s an ambitious schedule, especially for this upcoming holiday quarter during the launch of consoles from Microsoft and Sony. Ubisoft is usually one of the most dedicated supporters of a new generation, capitalizing on the updated tech and fervent early adopters. It sounds like this time it’s no different, although I wouldn’t be surprised if only two projects end up releasing before December and the remainder sometime during the first half of calendar year 2021. Having three titles jam-packed into the holiday quarter risks cannibalization, especially given how most of these games feature some sort of open world or action elements.

Now these aren’t the only pending games from the publisher. Guillemot points out it does have more intimate ones, as he describes them as “very innovative titles that have a particular focus on social interaction.” Main example being Roller Champions. I’d imagine there’s also a mobile game from internal studio Social Point or perhaps a new UbiArt style project made by a smaller team.

At a personal level, I’m extremely excited for Ubisoft’s robust lineup after the type of year it’s had with core franchises. At an analyst level, I’ll remain intently skeptical all targets will be met until we hear exactly how these games will roll-out.

Activision Blizzard: Thursday, February 6th.

Out of those reporting this week, domestic publisher Activision Blizzard was the only one with a fiscal year ending in December. Thus it shared both fourth quarter and annual metrics.

Twice the fun!

For the quarter, results exceeded internal expectations with net revenues of $1.99 billion though were down compared to the $2.38 billion generated last year. Operating income totaled $454 million, off from the $694 million in fourth quarter 2018. Nearly $1.29 billion of sales, equating to 65% of the total, were from subscriptions, licensing and micro-transactions rather than retail product sales or full game downloads. That’s the model for these major software makers going forward, after all.

Across the full year, Activision Blizzard generated almost $6.49 billion. Which is down a billion bucks since 2018. 76% digital share in 2019, essentially flat compared to the 77% in prior year. Operating profit reached $1.61 billion, down from the near $1.99 billion. Which means that while results beat the firm’s estimates, the trend is certainly down for the company overall.

What really caught my eye when looking at what’s driving these figures is the distribution of sales for the full year across its Activision, Blizzard and King businesses. Historically, Activision is top dog. That fits the narrative this year, as its split is 36% of total sales and 41% of profit. However, mobile subsidiary King is now in second place, which means the overall firm is now benefiting more from its casual phone offerings like Candy Crush than traditional games made by its storied Blizzard studios.

It’s clear that flagship franchise Call of Duty from Activision is as strong as ever. Call of Duty: Modern Warfare unit sales and engagement stats are up strongly compared to last year’s Call of Duty: Black Ops 4. Around half of Modern Warfare console sales are now digital, helping it become the best-selling game in the States during 2019 as I wrote about recently. Then there’s Call of Duty Mobile, which now has over 150 million downloads after one of the biggest launches in history.

On the Blizzard side, dollar sales ended the year at $1.72 billion which is down 25%. Monthly active users dipped 3 million since this time in 2018, now at 32 million. It’s a mixed bag for this division, where growth for Overwatch and World of Warcraft driven by a resurgence of interest for its Classic version couldn’t offset declines in Hearthstone and Diablo. It’s been an intriguing time for Blizzard in recent years, with a focus on continued support of older franchises rather than new releases. There’s Overwatch 2 in the pipeline, with no launch window. And I’m still skeptical of how fans will react to it. Then there’s Diablo IV, which I have to believe is a long ways out. This trend is likely to continue for the short to medium term.

Mobile subsidiary King is now in second place, which means [Activision Blizzard] is now benefiting more from its casual phone offerings like Candy Crush than traditional games made by its historic Blizzard studios.

Tying in with this is the last major item: its forecast for next year plus its mention of new titles. Activision Blizzard expects to generate $6.45 billion in revenue during 2020, slightly below this year’s figure. Guidance for earnings is also down 5%. Factored into this forward-looking guidance is.. surprise! A new Call of Duty project set to release in the last quarter of 2020.

Thing is, I’m not sure what else will drive its performance. Blizzard is set to focus again on continuing games like WoW, then a test phase for phone game Diablo Immortal in the middle of 2020. King reportedly has multiple new mobile games in development. On its conference call, Chief Financial Officer Dennis Durkin alluded to these not having material impact on guidance.

So, what will? Well, friends, we’ve reached the highlight. Activision Blizzard is sitting on a goldmine of legacy properties that it hasn’t leveraged as well as competitors. To that end, the company expects to “tap into our portfolio of beloved IP to bring several remastered and re-imagined experiences to our players in 2020, which we will announce closer to launch” according to Durkin.

In recent years, the company’s seen success with collections like Crash Bandicoot N. Sane Trilogy and Spyro Reignited Trilogy, the former being a major commercial win at 10 million units shipped. This type of quote shows that executives at least acknowledge the value of such brands. The issue becomes that fans of these franchises desire new games yet the quote is ambiguous. Will it continue to be more of the same or might we see new projects within these nostalgic series? Apparently we should hear sooner than later.

Take-Two Interactive: Thursday, February 6th.

Finally this brings us to the last one up. Another stateside developer/publisher in Take-Two Interactive, owner of historic labels Rockstar Games and 2K Games plus the Private Division publishing arm and mobile subsidiary Social Point. Take-Two reported its third quarter of fiscal 2020 results via the usual press release, then went in-depth on its conference call highlighting sales results of all its major franchises. (My favorite part.)

The way I’ll tackle Take-Two is talking broadly about its quarterly figures then drill into its owned businesses. Net revenue overall reached $930 million, down from $1.25 billion. Mostly because of the comparison to the massive launch of Red Dead Redemption 2 this time last year. Operating profit hit $177 million, down from $303 million in 2018 Q3.

Of its total sales, 37% is now from recurring spending; a metric which grew 15% this quarter and represents virtual currency, add-on content and in-game items. This drove the digital share to 75% of full revenue for the quarter. The company also reported that around 41% of its business originated from catalog sales, mainly those within the Grand Theft Auto and Red Dead Redemption franchises plus mobile titles from Social Point.

2K Games, which the company estimates will be around 55% of its business this fiscal, benefited from ongoing sales of NBA 2K20 as it now totals 8 million units shipped to date since its September release. Roughly on part with its predecessor. This quarter’s slate included the launch of Sid Meier’s Civilization VI on console, Borderlands 3 and NBA 2K20 for Stadia (neither of which I imagine contributed materially) and WWE 2K20.

Borderlands 3 continues its better-than-expected start since release a few months back, now totaling 8 million units sold-in. This is after moving 5 million copies within a five day span near launch. Take-Two notes that while it expects lifetime sales to achieve a record within the franchise, it’s factoring lower sales for Gearbox Software’s latest into its annual forecast.

On the flip side, WWE 2K20 saw a lackluster launch that drastically under-performed the firm’s internal estimates on both the critical and commercial sides. Developer Visual Concepts is working to rebound, though I think this year’s iteration is down for the count.

Still, the cash cow for Rockstar continues to be Grand Theft Auto V. A game which apparently isn’t yet in the homes of every single person who owns a gaming console because its lifetime copies shipped hit a whopping 120 million in the holiday quarter.

One of the most consistent and frankly notorious teams in the business is Rockstar Games, which will account for 35% of Take-Two’s annual net bookings. Its main release this past quarter was Red Dead Redemption 2 on PC around the year anniversary of its console version, which drove lifetime unit sales for the game to over 29 million. This is up from 26.5 million copies as of September, proving the impact of the new platform plus the ongoing adoption of Red Dead Online for which CEO Strauss Zelnick said engagement tripled year-on-year.

Still, the cash cow for Rockstar continues to be Grand Theft Auto V. A game which apparently isn’t yet in the homes of every single person who owns a gaming console because its lifetime copies shipped hit a whopping 120 million in the holiday quarter. That’s 5 million more than the prior quarter. No one at Take-Two or really anywhere in their wildest dreams could have predicted this sort of longevity.

A part of this crazy momentum is the ongoing success of Grand Theft Auto Online, which somehow achieved a record audience size in December and in the quarter overall. Recurring spending from consumers on GTAO jumped 54% this quarter after a new expansion in the Summer. Take-Two expects this online mode to have a record fiscal year in terms of recurring consumer spend. Keep in mind: The base game released in 2013, and its online mode really picked up steam the following year. Honestly doesn’t seem to be stopping anytime soon.

Moving to Private Division, its major release during Q3 was The Outer Worlds which debuted on Xbox Game Pass in addition to its console and PC platforms. Obsidian Entertainment’s recent space role-playing title, which earned a Top 5 spot on my 2019 Games of the Year list, has now sold-in 2 million copies since October. And that doesn’t even include downloads from Xbox Game Pass, nor its Nintendo Switch release which is set for sometime before March 2021 (I’d imagine even sooner).

Another quick note is that Kerbal Space Program, the first game in a franchise now run by Private Division, is approaching a new sales milestone itself by reaching nearly 4 million copies shipped. The company reiterated that its sequel is due in fiscal 2021 as well.

Switching over to the broader company’s outlook for the full year, it adjusted the numbers slightly though I wouldn’t say it’s a substantial impact. Basically it tightened the range in which its revenue expectations, then slightly lowered its profit guidance. As you’ll see above, net revenue should be up however net bookings will contract. I’m not as concerned as other industry commentators, as I think this quarter and year look a whole lot worse than they really are because of just how ridiculously well Red Dead Redemption 2 did.

I’d even argue Take-Two’s upcoming lineup is just as intriguing as Ubisoft’s, even if we don’t know as much about its major projects. Speaking on its development pipeline, Zelnick called it the “largest and most diverse in our history, including releases from our largest franchises, new IP and a broad mix of gameplay experiences.”

Sure, that’s a bit of corporate speak. It’s still somewhat indicative of where one of the industry’s premier software players is going. Shorter-term, this implies to me new annual releases in the NBA 2K and even WWE 2K franchises, new platforms for existing titles plus ongoing content for the online modes in its main games.

Medium to long term is where it gets exciting. First and foremost, the filing announcing the departure of former Rockstar Games co-founder and vice president Dan Houser said the team is working on both “current and future projects.” Where does Rockstar goes with its upcoming slate now that its model has changed to fostering player retention via online modes rather than solely single-player experiences? Will there be a Grand Theft Auto VI? The answer is yes, we just don’t know what form it will take with this different ideology. I’m more curious about what games Rockstar might have that aren’t Grand Theft Auto.

Then there’s (my beloved) BioShock. Take-Two announced a new studio called Cloud Chamber this past quarter, which is currently developing the next iteration in the series. Within this earnings release, the company reiterated that it will be in the works for “several years.” While it isn’t factored into the immediate forecast, I’m ecstatic to hear how it progresses.

Executives even fielded questions on other teams such as Hangar 13, known for Mafia 3, then the newly-formed 2K Silicon Valley led by industry veteran Michael Condrey. Sounds like these are in fact actively working on projects, we just can’t hear about them yet.

I’d say Take-Two’s current position is summarized by President Karl Slatoff as he echoes his CEO’s sentiment: Its pipeline consists of “new IP and existing franchises, free-to-play games, different business models, casual games, core games, mid-core games” about which they will share more in upcoming months.

While I don’t expect Take-Two to have a major presence during this year’s set of console launches outside of sports titles, we’ll undoubtedly see it capitalize on the new tech in the mid-term. And who knows, maybe Rockstar will surprise us?

Well then. That’s a pretty darn comprehensive look at the week that was in games industry financial reporting if I say so. Spiced up with my takes (as varying in quality they might be).

Reflected across all four is the trend of ongoing digital and services attempting to offset the contraction in hardware resulting from next generation beginning this holiday season, plus development plans that will ramp up at various points in the future. Ubisoft seems to be the most immediately impacted with its recent delays, while Activision and Take-Two lean on recurring sales from their biggest budget franchises to soften the blow while we await new tech from hardware manufacturers and emerging platforms alike.

If you made it this far: You rock! Thanks for reading.

Note: All comparisons are year-over-year unless noted. Currency conversions are to U.S. dollar as of February 7, 2020 for the sake of comparison.

Sources: Company Investor Relations & Media Sites, Getty Images, Kotaku, The NPD Group.

-Dom

Review: Kojima’s Death Stranding is Groundbreaking & Special, Yet Stumbles in its Delivery

Death Stranding is one of the most important, unique and thought-provoking games of this generation with its themes of personal connection, harmony of humanity and the relationships between body, soul and afterlife. It’s the actual playing of the game that’s the difficult part, stumbling along the way with shaky gameplay, arduous controls and a confusing reward structure. This boldness ultimately makes for a truly memorable experience, as much for its underlying message as for the struggle in getting there.

It’s hard to summarize what the heck legendary gaming icon Hideo Kojima made with PlayStation 4 exclusive Death Stranding, his first independent project since splitting from Konami in 2015 and creating Kojima Productions. The genius Japanese designer is best known for many core games in the Metal Gear franchise, equal parts military stealth action and over-the-top, nonsensical commentaries on future tech and politics.

Death Stranding is, effectively, Kojima unchained. At its base level, it’s a third-person game in which the main character Sam Porter Bridges (Norman Reedus) delivers packages in order to connect remote regions of a disjointed America under a shared network. In reality, it’s so much more. A story with enough plot lines to make one’s head spin. It’s set in a post-apocalypse where dead now infiltrate the living world after a catastrophic event dubbed a “void out”, an explosion that occurs when entities from the other side interact with a human.

The cause of this initial void out and its subsequent fall-out is detailed in the off-the-wall story, told in chapters that focus on each character. One as weird as the next, though it all begins with the story of the gruff, solo delivery man Sam Bridges.

Sam is the playable character, complete with a tragic past and the ability to sense supernatural beings, who receives a task from his parent company (conveniently also called Bridges) to bring supplies to distant areas in order to integrate them into what’s know as the “Chiral Network.” He starts on the East Cost with the end goal to reach the Pacific, where the former President’s daughter is being held captive by a terrorist cell as she describes during visits via her holographic likeness. (I told you it was weird.)

This plot device of creating a network is a means by which Death Stranding reveals its most innovative, cool feature: Asynchronous online multiplayer. Each individual on their own is delivering packages, building up infrastructure and spawning vehicles. All of which can pop up across other people’s games. Players can “like” all of these things, in the vein of social media. When Kojima claimed this new title occupied a new genre called Strand Games, this is what he meant.

Its world and setup is a smorgasbord of proper nouns and foreign words. Admittedly, as wild as they appear, somehow everything fits together under the lore of this future universe.

Chiralium (A made up element that has magic powers.) The Beach (i.e. Purgatory). Beached Things (BTs. Hostile ghosts from The Beach). MULEs (Former delivery folks obsessed with stealing packages.) Homo Demens (Terrorist outfit whose leader acts as the main antagonist.) Bridge Baby (BBs. Tiny pre-infants that exist between plains of existence and can sense BTs, so they are used as tools by various factions via placing them in a jar of goop then connecting an umbilical cord to one’s suit. Nope, I’m not lying.)

It’s surprisingly well-fleshed out. Partly because Kojima beats the player over the head with it from jump so that it’s unavoidable. More importantly because much of the back-story is available in flavor text throughout the game’s messaging system or data dictionary, plus characters reference these things as everyday terms. In this timeline, people eating “Cryptobiotes” to heal themselves is as ubiquitous as avoiding “Timefall,” rain that speeds up time to make everything age much more quickly when caught in it (like, of course!).

I’ll hand him credit: Kojima sure knows how to build a world like no other.

This plot device of creating a network is a means by which Death Stranding reveals its most innovative, cool feature: Asynchronous online multiplayer. Each individual on their own is delivering packages, building up infrastructure and spawning vehicles. All of which can pop up across other people’s games.

Flipping from plot to visuals, it’s a stunningly gorgeous game built on the Decima engine borrowed from Sony’s Guerrilla Games studio. Which clearly specializes in glorious landscapes and environmental detail. I can’t oversell the spectacle of looking into the distance as a storm approaches or climbing a snow-capped mountain to take in the wintry horizon. These special moments almost make up for how painstaking it is to get there.

Speaking of that, here’s where the issues arise. Narrative set-up and universe-building can be as incredible as they are, yet the game is so brutal to play. Boring, even. Which is still a key aspect of one’s enjoyment. The core gameplay loop is picking up packages, balancing them on Sam’s back by using the trigger buttons, stumbling towards a destination avoiding rocks, Timefall plus pockets of enemies then dropping said packages off. It’s way too laborious until the better upgrades start appearing, which is no joke at least 8 to 10 hours into the game.

It’s not a case of “get good.” Sam’s lack of tools is by design. It feels intentionally frustrating in the first couple chapters, I’d imagine as an allusion to how difficult it would be without connections to other locations or players. That’s not even to mention the survival elements. Sam has a stamina gauge, then an energy bar, then the ever-present annoyance of “time fall” which is rain that speeds up time (of course) to the point where packages deteriorate.

There’s little to alleviate these pains until after those near dozen hours, when Sam earns gadgets and tools to assist in his effort. Making it even more annoying, the controls aren’t anywhere near intuitive. It never feels all the way right. Not to mention this quest design never changes. Unlike its game world, mission structure doesn’t evolve. Sure vehicles and weapons help. But the missions are basically the same in hour one as they are at the end. It’s boring by the second act and plain tiring in the last.

And what’s the reward? This is part of the problem. The lack of incentive, other than to progress the narrative to the next cutscene. Each mission awards experience based on a number of factors, like speed or package condition. The same animation plays as Sam delivers the package, a little bar goes up, there’s some dialogue then often times it’s back to the menu to pick up yet another boilerplate order. Very infrequently, the bar fills up to a point where that location doles out an upgrade or gift. There’s no clear path to seeing which places give what or how much time or experience it’s going to take to get that upgrade. It stumbles through its incentive structure as much as Sam does while getting there.

The argument against this thought process is that the journey is the reward, rather than the destination or reward. I understand that appeal to an extent. Though I think both have to be true in order for a game to be elite: I can find reward in getting to a place just as much as the tangible benefit for arriving there. Great games do this consistently well. Death Stranding isn’t one of them.

Other than an intriguing side quest involved pizzas, I stopped attempting optional deliveries in the back half in order to devour the story as fast as possible. I couldn’t get enough of the narrative. I certainly had my fill of its snooze-fest mechanics and fetch quest design by then.

Once the pace picks up and upgrades unlock, weapons start popping up with characteristics explained in the underlying world. The main material used to combat BTs is.. fluid from Sam’s body. Bridges is constantly extracting these from Sam, since he’s special. Namely that his blood and bathwater impact the ghastly BTs. Blood is used for grenades and even bullets, in an interaction between character development and gameplay application. These kinds of gadgets along with other aiding in deliveries, like vehicles and stabilizing armor, help the minute-to-minute gameplay break out of its early rut to become much more tolerable in the game’s middle chapters.

A related nitpick in this kind of game, which is one I’ve expressed for others in the past. Namely stealth games. The expectation here is to be as non-lethal as possible. If someone is killed, and their body isn’t incinerated, it can cause a crazy explosion when BTs find them. Then the developers provide all sorts of lethal options while simultaneously chastising the player for using them. What the heck is the point? Thankfully, Death Stranding often offers non-lethal counterparts that are essential. Unless you want a crater on the map in the aftermath of a void out.

Let me say this now, because I can hear the comments already. I don’t think a game has to be fun in order to be great. There are classics that aren’t fun. I believe it should at least be engaging from a gameplay perspective as early as possible, otherwise who wants to play a game they aren’t enjoying or don’t think the rewards are justified except to see the story play out? I felt like this during both the beginning hours then the end here, when I wish I didn’t at all.

Getting back to the positives, the realistic look of its characters is a superb achievement. These roles feature near perfect acting, as they well should from an experienced cast of talent: The aforementioned Norman Reedus, Mads Mikkelsen as Cliff Unger, Léa Seydoux as Fragile, Guillermo del Toro as Deadman and even The Bionic Woman herself Lindsay Wagner as Amelie. Add in cameos from some of his more recognizable friends and even though it’s kind of a ridiculous concept to see Conan O’Brien or Edgar Wright as characters throughout the world, I can’t say it doesn’t fit with Kojima’s persona.

It’s the type of lineup rarely seen in games, if ever. Which is groundbreaking on its own, where blurring the line between cinema and interactive media is the intent. Each chapter focuses on a different character, which keeps it as focused as a game about so many different themes can be. There’s a risk of losing a player for a section if they aren’t interested in that particular person, which throws off pacing. For instance, I found Heartman, who induces cardiac arrest at intervals to search The Beach for his deceased family then revives himself back to reality, particular engaging while others not as much. Covering all of them here is impossible, so suffice to say it’s a diverse cast that supports Kojima’s character-driven saga.

I want to point this out before dipping into other areas: Troy Baker, one of the most prolific voice actors in games, is exquisite in his role as the villainous Higgs. It’s great to see him in action rather than as the voice behind a character. I hung onto every moment he’s on screen, almost proud how well he flexed his ability to hang right there alongside traditional film actors.

After a slow beginning from both story and gameplay perspectives, Episode 3 starts the second act which is the game’s absolute best. This is when it finally doles out the upgraded versions of gadgets and introduces weaponry that helps drastically. Plus, the puzzle of how characters interact and who they really are pieces itself together, namely the mysterious character played by Mikkelsen which up until then existed only in the memories of Sam Bridge’s Bridge Baby buddy (say that fast).

Main complaint is on its delivery method, which I should honestly expect by now in Kojima games. His writing is as subtle as a sledgehammer. It lays the exposition on thick during many scenes, as if the player isn’t smart enough to figure things out on their own. Like how the President, who wants to connect everyone, has the last name Strand. Or how the woman with a ghost baby is called Mama. Or how the guy nicknamed Deadman is cobbled together with organs from the deceased. We get it. Their names parallel their character traits. We don’t have to hear it every time we see them.

Its final act was exceedingly too long, exacerbated by the increased cutscene frequency combined with way too many places to deliver. By this point, the gameplay loop was way less satisfying as it asks you to do the same old fetch quest dressed up in a new way for the umpteenth time. Other than an intriguing side quest involved pizzas, I stopped attempting optional deliveries in the back half in order to devour the story as fast as possible. I couldn’t get enough of the narrative. I certainly had my fill of its snooze-fest mechanics and fetch quest design by then.

No story spoilers, other than to say it’s even further out there than I imagined. It goes places, then the ending flies off the rails. Turns total video game mixed with art film combined with anime. It’s totally aware and self-indulgent. I can’t tell if I love it or despise how Death Stranding wraps up during its, no hyperbole, more than two hours of cutscenes before actual final credits.

I firmly believe Death Stranding is the most important game of 2019. Not because it’s the best. Or even one I can recommend to everyone. It’s significant because it tries to be something more. It’s as special as it is flawed, stumbling all along the way to delivering its important message.

Speaking of the ending, we’re almost at the conclusion of this piece. I want to first highlight what I consider a main component of modern game design: Systems and quality of life. These are just as important to my game experience as how the game looks and runs plus its narrative progression.

To put it plainly: Death Stranding is cumbersome, in both movement and systems. As revealed by some very odd decisions. Namely, how the player navigates as Sam and his interactions with the world plus everything it throws at you in its myriad of menus.

There must be a hundred or more entries in the game’s log of how to play it or what to know about its mechanics. Hold the triggers to balance. Don’t let stamina deplete. Packages can be destroyed by falling or standing in timefall. Batteries power all the gizmos attached to Sam’s body. Smoke can hide you. Noxious gas can kill you. Don’t put too many packages on your back, there’s an encumbrance mechanic. You can hang onto parcels by hand, only by holding that particular trigger button. You can throw packages, only by hitting the punch button then letting go of said trigger. (This last one was especially comedic.)

It’s near comical how many times I had to check if I was doing something correctly. Or if I was forgetting some integral mechanic that would magically enhance my experience.

Then there’s the stealth. Mainly applies to two scenarios: Areas where Beached Things (BTs) exist, you know the ghosts that cross over to our dimension, or human enemies of MULEs and terrorists. BTs are intermittently invisible, so passing through those areas takes meticulous creeping and timing to kill them with Sam’s blood weapons. Not to mention time slows down for around 10 seconds every time Sam enters an area with these creatures. And they are around A LOT. It’s like when a Zelda game stops to tell you which item you’ve picked up, every damn time you pick it up.

The hint system is obnoxious, showing the same phrases over and over countless times on a huge portion of the screen. Sure they can be turned off. But what if I’m interested in learning new things about the game but don’t care about the hints I already know? I mostly appreciate these quality of life options in games. Not those that overstay their welcome, like they do here.

Then we have the infrastructure building system. It’s not bad. Players gradually get the ability to craft a variety of structures that help with navigation or combat. They can put up signs to encourage or warn other people. It starts with basic bridges and postboxes that require metal, then evolves into generators that replenish energy plus ziplines that zoom players around (however only if they can connect, which they often don’t, because only some of them populate from other people’s worlds).

All of this is governed by different materials like metal or resins, plus a general area has to be connected to the network in order for these to work. It’s a great way to make it feel like an evolving, connected world. I love how much it helps once it works. Though somewhat inconsistent in its application, plus Sam receives no help unless the main quest in a given area is complete.

Another major help in navigation that pops up after the first few painful hours is fast travel. Its implementation fits with one of the character stories, plus it allows movement between safe houses in different regions. Downside is the materials and gadgets don’t travel with Sam, so you can’t use it to actually make deliveries of course. It’s a travel system for him alone.

Final note before we wrap is the soundtrack. I really appreciated its integration, liking most of the tracks. There’s subtle, ambient tunes when traversing the world. It helps instill the sense of loneliness when delivering packages solo. Occasionally a licensed track will play during main story missions, accentuating the journey. It’s great, other than the track name being prominently displayed on the screen for way too long. As if the designers want you to know how much Kojima loves his picks for music. The band Low Roar, especially.

This reveals a common theme with Death Stranding: Great ideas, inconsistent implementation.

In what’s my longest review ever after spending an absurd 80 hours in this world, the craziest part is that there are things about this game I’m likely forgetting. It’s complex and opaque, with systems layered on top of systems for the sake of layering systems. It’s sometimes silly, breaking the fourth wall with that classic Kojima charm. Then turns serious, touching on themes that are obviously very important to him and his entire team.

It’s also a technical showpiece, a masterclass in game design when it comes to both motion capture and graphical fidelity. It rivals the most beautiful games on PlayStation 4 to date. I’d be remiss to not praise how special this is, plus the acting and cutscene work is the best in the business. It exists on another plane within the industry, one where film is as much an inspiration as anything. When we rank cinematic games, Death Stranding now has to be the preeminent entry on the list.

Still, it’s not without faults. Many of them. Its pacing is off, it’s nowhere near fun or even enjoyable to play and quest design is rudimentary at best. Among other negatives, such as way too many mechanics for its own good plus a lack of visibility on its rewards. This means there’s limited incentive to accomplish things outside of the critical path.

I firmly believe Death Stranding is the most important game of 2019. Not because it’s the best. Or even one I can recommend to everyone. It’s significant because it tries to be something more. It’s as special as it is flawed, stumbling all along the way to delivering its important message.

Title: Death Stranding

Release Date: November 8, 2019

Developer: Kojima Productions

Publisher: Sony Interactive Entertainment on PlayStation 4. (505 Games on PC.)

Platforms: PlayStation 4. (Eventually PC.)

Recommendation: It’s hard to broadly recommend. I know it’s special. Yet only certain people will love it. If you dig Kojima’s storytelling, beautiful graphics, character acting, esoteric themes and connecting with other players then try it. Caveat being you must also tolerate all sorts of frustrations along the way with busted controls, annoying survival elements, repetitive fetch quests and unclear upgrade paths.

If not, play at your own risk.

Sources: Kojima Productions, IGN, PlayStation 4 Pro Screenshots.

-Dom

Sony’s PlayStation 4 Becomes Second Best-Selling Home Console of All Time

Passionate PlayStation fans have driven Sony Corp to yet another impressive, hm.. milestone in its storied history as a game console manufacturer.

Announced in a supplemental sheet as part of its quarterly earnings report today, the Japanese technology conglomerate shared that it shipped 2.8 million PlayStation 4 consoles in the three months ending September 2019. Which means that to date, the PlayStation 4 has now passed 102.8 million consoles sold.

While at first it doesn’t sound as noteworthy as the PS4 surpassing the 100 million threshold last quarter, it’s super impressive in the context of all-time sellers in the home market. That’s because PS4 formally passed both Nintendo’s 2006 system Wii (101.63 million) and Sony’s own original PlayStation from 1994 (102.49 million) to land as the second best-selling console ever.

Only Sony’s PlayStation 2 system has shipped more units, at a whopping 155 million at last count.

Sensing a theme?

This marks yet another major accomplishment for the team. Led by Sony’s focus on appealing to core gamers with both its marketing and software lineup plus launching at a lower initial price than its main competitor in Microsoft’s Xbox One, the PlayStation 4 has cemented itself as a legendary couch gaming experience with exceptional commercial success.

Obviously question is: Can it pass its most accomplished ancestor, the PlayStation 2?

My simple answer is: Unlikely. Sony has already announced the PlayStation 5 is due out in late 2020. The company has consistently reduced its forecast of PS4 shipments for its full 2019 fiscal year from 16 million back in April to 15 million in July, then 13.5 million in this latest report. Assuming it does hit 13.5 million, that equates to roughly 110 million in the wild overall by March 2020.

Even taking into account another fiscal year during the transition to a new generation, I can see under 125 million before PS5 appeals to a broader audience than just early adopters. Depends of course on how later generation software exclusives fare plus discount trend over time.

Well. It will have to settle for second place at the moment.

Beyond the eye-catching headline, Sony’s latest financial quarter was mixed at best especially within its gaming division. Check below for highlights and, might I say, lively commentary. The company’s presentation is here. Note that dollar amounts used are estimates, converted from local currency.

As displayed above for the company’s overall second quarter, sales and operating revenue dipped 3% since last year to around $19.5 billion while operating income surpassed $2.57 billion, an increase of 16%. Both revenue and earnings-per-share results actually beat analyst consensus, though Sony lowered its forecast for both metrics when considering the full fiscal year ending in March 2020.

Within its Game & Network Services (G&NS) unit, which includes PlayStation hardware, software and related services, quarterly sales slipped 17% to $4.5 billion while operating profit dropped 28% to just under $600 million. Sony pointed out that an increase in PlayStation Plus subscription revenue was not enough to offset a dip in both hardware and software dollar sales, thus the lowered performance.

Now, it’s always worth considering these reports in a broader context. Comparing quarters is only part of the equation. When pushing the dollar sales trend out to a trailing 12-month period then mapping over time, we certainly see a recent decline. Thing is, it’s above this time last year. Which means that even as it approaches the reveal and launch of the PlayStation 5, gaming is maintaining decent momentum. Profit is down slightly when looking at a similar trailing time frame, though well above where it’s been in prior years.

Note that similar to the company’s overall forecast, Sony also lowered its G&NS division forecast for both sales and profit for the full year, plus the PlayStation 4 hardware target as I noted previously.

Let’s chat a few specifics within its gaming business, then wrap with a couple observations and future thoughts.

While PlayStation 4 eclipsed sales of most of its historical competitors this quarter, it’s obvious that hardware and software are both slowing ahead of a new console cycle. The full game software sales total of 61.3 million copies is down from last year’s 75.1 million, likely due to the massively popular Marvel’s Spider-Man releasing in the corresponding quarter of 2018.

In terms of physical and digital split, 37% of software sales in Q2 were downloads. Compare this to around 28% this time last year, and it’s clear the trend is inching towards digital even for a traditional platform holder. Combine this with the popularity of PlayStation Plus, which rose to 36.9 million subscribers compared to last year’s 34.3 million, and we see how much digital and services matter when hardware sales are tapering off due to the natural cycle. It’s especially true this generation, as prior generations skewed much more towards retail consumption.

Speaking of business split, above charts out individual product categories within the gaming division over recent quarters. Which shows a handful of notable trends.

First, hardware sales are among the lowest this generation. Expected now that PS5 is official. Software remains the most prominent part of the PlayStation business other than occasionally during the holiday quarter, so it’s natural that growth ebbs and flows with it. Take a look at the green Network Services bar. This burgeoning segment has shown double-digit year-on-year growth every single quarter. Services are the talk of the industry lately, and for good reason. Sony is seeing tangible contribution from providing customers with things like PlayStation Plus, PlayStation Now and others to where I anticipate this to continue smoothly in both the near and long term.

So. What does this all mean and where’s Sony going in the future within its most important business segment?

It’s obviously a mixed quarter both overall and within G&NS, most notably because of its lowered guidance for annual revenue, profit and PlayStation 4 hardware sales. Though when smoothing this quarter’s performance over time, the PlayStation business is showing legs before entering into a new chapter. Most noteworthy being the digital and services slices.

Still, software is key and that will dictate the remainder of this year. What I anticipated to be the year’s top console seller, Call of Duty: Modern Warfare, achieved a $600 million opening weekend according to an Activision Blizzard press release today. It has an exclusive marketing deal with Sony plus PlayStation exclusive content, which means the console will benefit greatly from this rejuvenation of Call of Duty annual sales.

Death Stranding is the major console exclusive during this holiday quarter, releasing on November 8th. It’s produced by Kojima Productions, led by all-time-great director Hideo Kojima, and I’m upbeat on its sales potential despite being a new intellectual property.

The downside is that 2018 saw major releases in the God of War reboot and the aforementioned Marvel’s Spider-Man, which makes for a difficult comparison. Combine that with the delay of Naughty Dog’s The Last of Us Part II into the first quarter of 2020 fiscal and we can understand why Sony adjusted its estimates downward.

Based on the above, I’m intrigued to see how software sales compare during the back half of the year, since I already anticipate lower dollar sales from PlayStation 4 hardware due to market saturation and discounted pricing.

Sony boasts one of the most impressive achievements in its company history with PlayStation 4 joining its PlayStation 2 brethren as one of the best-selling pieces of hardware ever, though the company will face short-term pressure as it gears up production and marketing for PlayStation 5 its corresponding software lineup.

Hope you all have a good one!

Sources: Activision Blizzard, Kojima Productions, Nintendo, Sony Corp., Wired.

-Dom

Earnings Calendar Jul & Aug 2019: Gaming, Media & Tech Companies

No more funny business!

Alright, maybe just a little. Because it’s that time again. The most fun you’ll have all season. It’s way too hot (at least here in the States) to go outside, so spend the next couple weeks as one should right now: hanging in the air conditioning reading through financial reports and analyzing fancy numbers, of course.

If that’s your type of thing, you’re in the right spot. I’ve compiled the closest thing to a full list anywhere in the world for upcoming earnings dates from major global gaming, tech and media companies. I know you’re busy. Hope this will keep things organized.

You’ll notice something a bit different this time. Select rows are listed as not reporting this quarter. This is the result of trying to document as many names as possible, though not every international company reports quarterly. Some only share numbers semi-annually. I’ll keep them on the list for quick reference or access to the investor site, though we’ll have to be even more patient to see how those in particular are doing.

Full calendar image is above, then there’s the Google Doc link below that has each of them listed individually. A number don’t have set dates yet, though we have a general sense based on trends. Scroll further to see which three companies I’m monitoring closely this quarter. Truly appreciate your visit, please check back for updates!

Working Casual Earnings Calendar Jul & Aug 2019: Gaming, Media & Tech Companies

Sony Corp (SNE): Tuesday, July 30th

The Japanese gaming and consumer conglomerate has been bolstered lately by excellent results within its gaming division. While software and services are growth engines this late in the current cycle, I’m actually intrigued by how hardware is holding up since the PlayStation brand is maintaining better momentum than anticipated. Namely, will this be the quarter where Sony’s successful PlayStation 4 console eclipses the 100 million units shipped? If so, it would be only the sixth piece of hardware to ever cross this coveted threshold. two of them being earlier Sony consoles with the original PlayStation at over 102 million and PlayStation 3 achieved a whopping 155 million. Based on the lifetime sales of just under 97 million and the company’s trend of moving approximately 3 million or more PS4 in the past couple quarters ending June, there’s certainly a chance it reaches this milestone. Though I’d bet it happens later in the summer.

Capcom Co Ltd (9697): Thursday, August 1st

The resurgence of Osaka-based Capcom is one of the most uplifting stories of the current generation. Last year’s.. hm, yes I’m doing it. Last year’s monstrous hit Monster Hunter: World continues its momentum as it amazingly hit 13 million units sold just this past week, widening its margin as the company’s best-selling game ever. January’s Resident Evil 2 Remake is the 5th best-selling title of the 1st half of 2019 in the States according to NPD, and has eclipsed 4 million units at last count. March’s Devil May Cry V showed well at launch and is estimated to be nearing the 3 million unit threshold. Continued sales of these should make for solid results in the quarter ending June, though I’m actually more interested in where executives go with guidance. Especially in light of Monster Hunter World’s Iceborne expansion due out September. And where’s the company going with its fighting game approach? Will it factor in a brand new Resident Evil entry, perhaps for early next calendar year? We likely won’t know for sure until later, though any change in guidance can give us enough information to at least speculate!

Super League Gaming (SLGG): Mid August

Yup. This is a new one. eSports community and content platform Super League Gaming is the latest in gaming initial public offerings (IPOs), raising proceeds of nearly $23 million back in Q1. It’s an intriguing, modern business model in a growing industry where the firm operates more as a community platform for amateur players rather than solely competitive games for pros. Effectively highlighting content creators on social media, hosting events and offering a technology platform to organize all of it. Based on its first quarterly filing as a public company back in April, revenues nearly doubled and it’s established multiple partnerships with companies like Best Buy, Logitech and the aforementioned Capcom. With annual revenue estimated at $1 million, I’m curious to see how it continues to monetize this type of community approach especially since it’s aligned with major titles like League of Legends and Minecraft.

Sources: Company Investor Relations Websites & Press Releases, Sony PR, Capcom PR, NPD Group, Super League Gaming, Games Press.

-Dom

Sony Should Focus on Internal Investment & Partnerships Over Acquisitions Ahead of Next PlayStation

“Charity begins at home.”

I believe Sony should focus mostly on this philosophy going into the next generation of consoles, rather than seeking growth through external acquisitions. There’s only so much funding to go around, and I’m betting those precious dollars are used for a combination of internal investment and partnerships with outside teams rather than outright buyouts of major studios.

I’ll now get into why this is such a hot topic, then outline each of my reasons.

Within a mostly innocuous report from the Wall Street Journal on the Japanese gaming giant’s decision to focus on gamers for its next PlayStation gaming console which means building out its portfolio of games (surprise!), the stand-out quote is how its main strategy is bolstering its lineup of games only available on Sony devices.

Then, local site Gematsu got in on the action as it translated a Nikkei report containing somewhat vague comments from Sony Interactive Entertainment President and CEO Jim Ryan about gaming content being of utmost importance and the company considering studio acquisitions as one of its strategies for this reason.

(I’ll note here that every major publisher, shoot every public company, has teams dedicated to merger and acquisition [M&A] research. There have been recent job postings from Sony seeking talent for its M&A team, though I’m not reading into this as much as others.)

Finally, PushSquare published a piece among other media sites on likely targets of Sony’s acquisition bucks. These and more sparked rampant speculation online as to which would be the best fits based on history and existing relationships. I’m here to say the ideal foundation going forward is not built on acquisitions, but rather more investment in what it does best. And that’s its current world class studios, upcoming hardware offerings and productive 3rd party partnerships.

The safer route is absolutely to spend its precious resources in its myriad of internal studios, which have produced modern classics such as The Last of Us by Naughty Dog and God of War from Santa Monica Studio, plus align itself with external companies through partnerships rather than outright acquisitions. The most notable recent example of such a fruitful team-up being Marvel’s Spider-Man from Insomniac Games, which passed a staggering 10 million copies mere months after release last September.

Similarly, I’ll go as far to say I’m not hoping for or betting on acquisitions of any major developers or self-publishers in the near term. This list includes Bungie, Insomniac Games, Kojima Productions and Remedy Entertainment. Rather, there’s a much higher likelihood of one *maybe* two smaller teams that aren’t as cost prohibitive. If forced to pick, my bet is Housemarque. Known for arcade type shoot-em-ups such as Resogun and Alienation, I think it’s really the only smaller team suited for purchase now based on its proclamation that its style of games purely aren’t selling well, plus its affinity for working with the PlayStation team in the past.

Why? Here we go.

1. Major acquisitions are costly, time-consuming and risky.

I get it. It’s fun to speculate. To dream up scenarios where a favorite game developer gets purchased by a platform of choice. It’s just, in reality, acquisitions are usually not ideal compared to partnerships and are a truly massive undertaking presenting a variety of risks.

Acquisitions aren’t just about a big company throwing money at a smaller one. Both parties must consent, really except in the case of ugly hostile takeovers which should absolutely not be a part of Sony’s strategy. It often happens when a company is in need of a financial injection, its growth prospects have depleted or, in extreme cases, bankruptcy is looming. It’s especially trickier the more closely held a company gets, which is the case with many of the private game studios. Even those with hundreds of employees. The decision lies in the hands of a select few, normally with both financial and emotional investment from years of independent operation.

Then there’s the topics of what kind of premium the target will squeeze out of the acquirer, how well do company cultures mesh plus the whole regulatory side, all of which make this process time-consuming and expensive. M&A activity is inherently risky, blending folks that haven’t worked directly together so there’s no guaranteeing the company works as well as a subsidiary. Or there might be layoffs that happen due to redundancies. What I’m getting at is these involve many other factors than merely dollars and cents.

Let’s take a couple examples. One public, one private.

A team like Remedy Entertainment is publicly-traded. The Finnish developer is valued around $115 million in market capitalization. Not a huge figure in the context of Sony’s war chest, though certainly not pocket change compared to other names in this conversation. Not to mention that comes before any sort of projects even starting. And it has investors already. Lots of them. It doesn’t need to be injected with cash, especially with a new game Control next month and a collaboration with South Korea’s Smilegate on its CrossFire franchise. Every indication is Remedy wants to be independent. Even when Microsoft was publishing games like Alan Wake and Quantum Break, it was on its own. Why would execs and investors change their mind now, unless Sony throws some exorbitant amount of dough at it?

Then, our private example is Insomniac Games. Run by industry vet Ted Price, it’s a natural name thrown around due to its history of producing games for PlayStation like the aforementioned Marvel’s Spider-Man. Insomniac is a heck of a studio, it’s been around for decades plus boasts a portfolio of Spyro the Dragon, Ratchet & Clank, Resistance and a personal favorite, 2014’s Sunset Overdrive. It’s also dabbling in virtual reality for the Oculus Rift. So, if it’s operated this long alongside PlayStation, why isn’t it a part of Sony? Exactly. As exhibited by its releases on Microsoft and Facebook (Oculus) platforms, Insomniac seems to value its creative independence above all else. And while we don’t know its valuation, to me this clearly shows its decision-makers haven’t seen a reason to become part of Sony Interactive Entertainment yet.

World class first party games are impossible without investing in internal teams before anything else. Instead of dropping $100 million or more on a Remedy or Insomniac, those funds can be funneled internally towards high quality projects for existing teams.

2. Investment in internal teams is a better use of cash.

At present, Sony Interactive Entertainment Worldwide Studios features a suite of more than a dozen teams. Guerilla Games. Naughty Dog. San Diego. Santa Monica. Media Molecule. Sucker Punch. And more, with a legit laundry list of projects under their belts that define what PlayStation is more than anything else. These will also be the main contributors to Sony’s launch lineup next generation when the (probably named) PlayStation 5 (likely) releases in late 2020.

This is a dazzling entourage of the most talented, prolific teams in all of gaming. They make games specifically for a single company’s platforms, PlayStation 4 and PlayStation VR presently. Which means they are experts. If the big focus is appealing to the hardcore audience, that means investing in the personnel that make up these excellent studios is of much more importance than trying to attract external talent. Not to mention, it’s more cost effective to retain individual team members at existing studios than to integrate entire teams.

Sony is known for its first party content. It’s why there are 96 million PlayStation 4 consoles shipped to date, not to mention the absurd numbers for prior generations where Sony has 5 of the top 10 best-selling pieces of hardware ever made. World class first party games are impossible without investing in internal teams before anything else. Instead of dropping $100 million or more on a Remedy or Insomniac, those funds can be funneled internally towards high quality projects for existing teams.

A preexisting agreement or relationship between a larger company and smaller development studio or self-publisher doesn’t necessarily precipitate a buyout, or even open the door to discussions on the possibility of one.

3. External partnerships are attractive for both parties.

When we talk partnerships in gaming, this includes stuff like marketing deals, exclusive content, pre-order bonuses and similar incentives to attract players towards one platform above another. As much as exclusives are not ideal, especially for those without multiple systems, it’s a reality.

The reason I think Sony should opt for partnerships over purchases is that from a corporate standpoint, these deals allow for the best of both worlds. Development teams benefit from the backing of a major console manufacturer, especially for advertising spend, while they also remain independent to pursue experimental projects or titles for multiple platforms.

Need a concrete example? Well, I already mentioned one in Insomniac Games. This time, I’d like to bring up Square Enix. I don’t hear anyone calling for Sony to scoop it up just because games like NieR: Automata or Final Fantasy VII Remake have an alignment with PlayStation as timed exclusives. A preexisting agreement or relationship between a larger company and a smaller development studio or self-publisher doesn’t necessarily precipitate a buyout, or even open the door to discussions on the possibility of one.

While a team like Remedy certainly has less output and lower valuation than Square, I view it similarly because of its standing as publicly-traded plus a history with manufacturers other than Sony. Then there’s the case of Kojima Productions. Game design legend Hideo Kojima had an infamous falling out with Konami a few years back, which led to him founding a private studio. When a company is used to being independent, or recently has become so, and it’s not facing financial instability, its asking price goes up plus the attractiveness of being owned by a parent company plummets.

4. Finally, hardware R&D will be the focus of Sony’s gaming budget.

While Sony’s gaming division now leads the overall firm in both sales and operating income, it’s just one of many considerations when budgets are drawn up. All signs point to it being the final year of the PlayStation 4’s life cycle. In the lead-up to a new generation, research and development costs naturally ramp up especially for a console targeting the “core” demographic of gamers, as illustrated above from executive comments. Design and construction aren’t cheap. Not to mention the massive marketing push that will take the better part of next year.

If Sony intends to put out a powerful console in late 2020 with a quality launch lineup, we’re talking a sizeable chunk of its budget dedicated to this endeavor. How much is leftover to use on merger activity? What’s the most effective way for it to balance hardware and software demands? My thought is that most of its budget must be allocated to its next PlayStation and a core offering of exclusive games, which leaves less for M&A prospects at the risk of being spread thin.

To wrap up this admittedly lengthy post, while I’d never entirely rule out the possibility of acquisitions, I think the contingent calling for Sony to dole out cash on multiple studios has unrealistic expectations. Namely because of where the firm is at in the console cycle. It already has so many talented studios in which it should invest to spur growth, then continue to reinforce its relationships with third parties. This is the ideal route to meet its goal of strengthening its software portfolio, plus has added benefits for external companies that have fought hard for self-sufficiency over the years.

It’s flashy to talk about studio acquisitions, almost casually tossing around names. And it’s certainly more boring to hope that a company stays consistent with its current strategy even when it’s doing quite well. In this case, I’m both hoping and betting that Sony keeps it boring like Proposition Joe said (The Wire hear me). Because its business ain’t broke, literally and figuratively, so it doesn’t need fixing.

Sources: Bloomberg, GamesPress, Gematsu, Kazuhiro Nog/AFP/Getty Images, NVIDIA, PushSquare, Road to VR, Sony Corp, Wall Street Journal.

-Dom

Mortal Kombat 11 & Nintendo Switch Kombine to Top April’s U.S. Video Game Sales Report

Lots of fighting game fans exclaimed “Get Over Here!” to NetherRealm Studio’s latest installment in the storied franchise, Mortal Kombat 11. The brutal beat-em-down title, published by Warner Bros Interactive and released on April 23rd, was the best-selling game of last month in the States according to The NPD Group’s latest report.

Mortal Kombat is one of the most well-known gaming series ever, partly due to its controversial graphic violence and propensity to upset pearl-clutching government officials. This most recent game’s predecessor Mortal Kombat X (2015) went on to be the biggest commercial success in franchise history, eclipsing more than 11 million units sold per famed co-creator Ed Boon.

While we don’t know global unit sales for Mortal Kombat 11 just yet, we now know that this latest entry is selling well domestically. It not only topped the April monthly chart, it also instantly entered the year-to-date list as the 2nd best-selling of 2019, second to only Square Enix’s Disney mash-up Kingdom Hearts 3.

Interestingly, it was tops on all four of its platforms: Xbox One, PlayStation 4, PC and even the Nintendo Switch. An impressive result all around, and I expect it will continue to chart at least during a slower summer release calendar.

Second place for April went to open world zombie game Days Gone from Sony Bend Studio, a PlayStation 4 exclusive title. I wrote recently that, despite thinking the title itself was mostly mediocre, I prognosticated that it would have broad market appeal and sell quite well. I even thought it might top the list of best-sellers last month.

While I was too bold in my prediction, arriving at #2 is a very good result. Namely since it’s limited to just the one platform. Days Gone also had the 7th best launch month for a Sony-published game in NPD’s tracking history, plus became Bend’s top-selling game ever after being on sale less than a full month.

A quiet success story unfolding as we approach mid-year is the solid momentum of another title only available on PlayStation 4, that being MLB The Show 19 from Sony San Diego. The baseball sim has achieved the #3 spot during the past two months of charts since its release on March 26th. It’s also moved up into the Top 10 of the year so far, hitting exactly #10.

MLB The Show 19 is currently the best-selling sports title of the year to date, and it’s still the fastest launch for a game in the franchise when lining up all the relevant launches. I bet the development team is.. having a ball!

Rounding out the Top 5 respectively are Ubisoft’s Tom Clancy’s The Division 2, the shared world military RPG that was last month’s best-seller, then Nintendo’s ever-present party fighter Super Smash Bros. Ultimate. The latter of which recently eclipsed a crazy 13.81 million units sold globally.

And of course, Rockstar Games continues to live up to its moniker by having not one but two of its works present on April’s list. Grand Theft Auto V being the leading one, coming in at #6 despite releasing all the way back in 2013. It’s a theme we’ve seen in most monthly charts, and I’ve continually stated it will be this way until its successor is out.

Below are April’s main software charts, which focus on strictly the U.S. market:

Top-Selling Games of April 2019 (Includes Physical & Digital Sales):

  1. Mortal Kombat 11
  2. Days Gone
  3. MLB The Show 19
  4. Tom Clancy’s The Division 2^
  5. Super Smash Bros. Ultimate*
  6. Grand Theft Auto V
  7. Sekiro: Shadows Die Twice^
  8. Call of Duty: Black Ops 4^
  9. NBA 2K19
  10. Yoshi’s Crafted World*
  11. Red Dead Redemption 2
  12. Mario Kart 8*
  13. Assassin’s Creed: Odyssey
  14. Minecraft#
  15. New Super Mario Bros. U Deluxe*
  16. Final Fantasy X/X-2 HD
  17. The Legend of Zelda: Breath of the Wild*
  18. Jump Force
  19. Battlefield V*
  20. Borderlands

Top-Selling Games of 2019 (Year to Date):

  1. Kingdom Hearts 3
  2. Mortal Kombat 11
  3. Tom Clancy’s The Division 2^
  4. Anthem^
  5. Resident Evil 2 Remake 2019
  6. Super Smash Bros. Ultimate*
  7. Red Dead Redemption 2
  8. Sekiro: Shadows Die Twice^
  9. Jump Force
  10. MLB The Show 19

^PC Sales Not Included, *Digital Sales Not Included, #Digital Sales on XB1 & PS4 Included

Flipping over to consoles, Nintendo Switch saw its 5th consecutive month atop the hardware chart as measured by both dollar sales and units. It’s still the best-selling console of the year, as well. The last time it was outpaced by Sony’s PlayStation 4 was during the pre-holiday rush of November. Even then, Switch generated more revenue. PS4 just happened to see higher unit sales because of heavy discounting.

Consumer spending on games in the States crept up 1% in April, to $842 million overall. This was driven by PC and console software, up 15% to $427 million, and the Accessories segment as it bumped 5% to $256 million on the strength of Amiibo and DualShock 4 sales. These two segments offset a 29% decline in hardware, which fell to $160 million.

For 2019 so far, consumer spending in the games market totals $4 billion. A figure that’s down 2% when compared to the same time period last year. Out of that, software has contributed almost half with roughly $1.9 billion in dollar sales.

My read overall on April is that the top three sellers in particular are impressive, even though I was wrong about which would be first. Especially Mortal Kombat 11.. fighting its way to the second spot on the year-to-date list. That indicates to me that early demand is strong. I’m not sure it can reach the lofty heights of its predecessor, though I’m confident it will carve up a good chunk of commercial success before we see what NetherRealm does next.

Another story that I think warrants more attention is BioWare’s Anthem, published by Electronic Arts, maintaining the 4th spot of 2019 so far. Granted, it’s way early. Then EA said during its Q4 earnings call recently that the game’s early sales came in below the company’s targets. It’s worth seeing if it maintains this position as the year progresses, with more major releases scheduled for the late part of the summer into the autumn rush.

Hardware sales are going to be uneventful until, honestly, holiday season at the earliest. If not next year, when I’ve been saying that the next generation of consoles will start during the second half.

Additional details on individual platform results can be found at the linked video above, from NPD Analyst and friend of the site, Mat Piscatella.

So. How did your predictions go? Any big surprises? Please share in the comments or let’s catch up on Twitter! Thanks for stopping by, as always.

Sources: The NPD Group, NetherRealm Studios, Sony Bend Studio, Sony San Diego, Nintendo, Electronic Arts, Wikipedia.

-Dom

Days Gone Is Mostly Mediocre, Morbidly Mundane And Will Still Sell Better Than Many PS4 Exclusives

Disclaimer: This is not a review, as I have not completed the game yet. It’s a series of impressions and sales predictions. Minor spoilers follow.

I went into Days Gone, the latest in post-apocalyptic PlayStation 4 exclusives, mostly curious. Minimal expectations, hoping to be surprised. I’ve felt this way since Sony revealed it back during 2016, when it was featured prominently during its E3 stage show.

Turns out that the open world biker game did in fact surprise me. Just, not in a good way.

Made by Sony’s Bend Studio out of Bend, Oregon, a team known for the Syphon Filter series and handheld Uncharted titles, Days Gone checks all the boxes for features in a standard “AAA open world” game, though fails to deliver anything extraordinary with any one of them.

The third-person game opens on the semi-ridiculous premise that the protagonist, Deacon Saint John, leaves his wounded wife Sarah to fly away to a government camp while a mysterious outbreak occurs around him, to stay behind with his best bro Boozer. I appreciate the “no man left behind” mentality, though couldn’t help feel both contempt and indifference towards Deacon after seeing him abandon his helpless lover. A main character doesn’t have to be likeable (see: Joel from The Last of Us, Nico Bellic from Grand Theft Auto IV), though I should at least give a damn about him.

Fast forward a couple years, the Pacific Northwest setting is overrun by infected (I refuse to call them Freakers and I’m mad that I just did), scumbags, settlers, wildlife and “drifters” like Deacon, who considers himself honorable because of an ambiguous code which I gather is mostly that he doesn’t kill women. Unless he has to, of course.

What follows is a classic example of bloated modern game design, flooding the player with crafting, skills and systems to satisfy the endorphin rush of seeing an experience bar increase or watching numbers go up.

Within the first half hour, I was forced to smash infected children (who Deacon specifically said would mind their own business if I left them alone), because they were in my way to an objective. The game said I could avoid them then put them right in my path, overwhelming me with enemies. In fact, main missions so far have been overly restrictive to the point of “Leaving Area” signals alerting you incessantly if you stray too far.

Movement is rigid, which means Deacon is occasionally difficult to control, especially when enemies are off-screen and the camera can’t quite catch up to controller inputs.

Driving the bike is mostly competent, though the gas mileage is unforgiving early on. Who wants to stop constantly in a video game to fill up their virtual gas tank, when we do that enough as it is in real life?

Thing is, I’d be mostly forgiving of flaws if the actual content was fun. Turns out, there’s not much to it outside of the campaign. See that infected nest? Throw a molotov cocktail into it. See that outpost? Murder everyone. See that government checkpoint? Cut down the speakers, fill the generator with gas and open its doors. Then do it again. And again. Until you find another one, where you can do it all over again.


Then there’s the camp system. One of the early camps is run by a freedom fighting gun nut, whose worst offense is that he feeds obnoxious radio blasts into your ear. Which you can thankfully skip.

It’s the other camp that bothers me. It’s run by effectively a slaver operating a “labor camp.” You’d think Deacon would want to capture this camp and free its prisoners, based on his apparent moral compass, but I don’t think the game allows for that decision. You can, however, gain access to new guns when you help its leader by doing jobs or sending random survivors to work in the digging fields. And from what I can tell, there’s no consequence of choosing to work with one group over another. So morality be damned, in the name of sweet guns and bike upgrades!

I haven’t even mentioned the technical issues I’ve faced or heard from impressions online. From enemies disappearing, characters and the bike getting stuck on geometry or falling through the world, slow loading times and severe audio glitches, it’s not deal-breaking though can be annoying when considering the game’s other flaws. (Fingers crossed for more patches, since the game was already updated multiple times in classic day-one tradition.)

I’d be remiss to mention that there are certain aspects I’m enjoying, or at least aren’t interfering with my progress. It isn’t all negative, I want to make this absolutely clear.

It’s mostly stunning when it comes to visuals and art design. The setting is picturesque, and the attention to detail in parts of the world is exceptional. The artists and animators at Bend did a heck of a job. Tire treads kick up mud with a slogging sound. Light shines through tree branches before glinting off water. A foreboding sky reveals infinite stars as dusk approaches. For a dreary game, it can be remarkably majestic.

The infected horde tech is impressive, showing dozens upon dozens of distinct enemy bodies all at once that flow together like rainwater down a drainpipe. Bike customization is cool, though I wish there were more stimulating visual options. There’s a good variety of weaponry, throwables and traps for your forays into the wilderness, and shooting is competent enough. Crossbow bolts that cause enemies to turn on one another is an especially fun toy.

Survival elements aren’t overly difficult or constrictive, though it involves searching. A lot of searching. And holding down the search button. Which can break up the pacing of the game, especially when running low on materials. This was one of the main critiques of Red Dead Redemption 2, and it’s just as bad here.

Excitingly, I finally hit a narrative beat that opened up a level of intrigue. Enough so that I will be playing more to see where it goes and if the game can change my mind at all.

Here’s the thing. I’m fine being an outlier when it comes to my tastes or experiences. This time, I’m far from the only one who feels this way. Consensus on review aggregator OpenCritic is sitting at “Fair,” with less than half of the 90 critics recommending it.

One particular piece that expresses my overall hesitation is authored by Patrick Klepek at Waypoint. He writes:


Days Gone refuses to settle on what it wants to be or what it wants to say. Rather than settling on a direction, it proceeds in all directions, hoping a more-is-better philosophy will prove blinding. This is true of both the clumsy mechanics, which are ever present and impossible to ignore, and its story, following the boring moral compass of biker Deacon St. John, who roams the world in the years after an event turned the whole world to shit, claiming to operate by a “code” but refusing to allow said code to operationally manifest into action.

Marvel’s Spider-Man is currently the fastest-selling PS4 exclusive.

Mine and Patrick’s thoughts aside, where does this leave us in terms of commercial potential?

I’ve joked about it in the past, and said that I started tepid on its sales prospects. The irony is that, despite my impressions and the average critical assessments, I now actually think it will sell relatively well. Better than many games exclusive to the platform, if not becoming one of the three fastest-selling to date.

This distinction currently belongs to 2018’s Marvel’s Spider-Man and God of War, which sold 3.3 million and 3.1 million units respectively during their first three days on market. These are excellent figures, though I wrote last year that I expected a licensed property like Spidey to perform that way.

Next up, Uncharted 4: A Thief’s End moved 2.7 million units in a single week during 2016. Ever so slightly behind that was 2017’s Horizon: Zero Dawn at 2.6 million copies, though it was across two weeks.

Right about here is where I expect Days Gone to settle at launch. Between 2.5 and 3 million units, within say the next two weeks. Which means it will beat out games like Killzone Shadow Fall (2013), Bloodborne (2015), Detroit: Become Human (2017) and Nioh (2017), which all saw a million units near launch except for Killzone, which hit 2.1 million within a couple months on sale. (Detroit and Nioh are no longer platform exclusive, though were near launch.)

Sony has intensified its marketing push lately, not just in retail but also online and traditional media. Big networks like ESPN have been steadily running promos. Plus if there’s one thing that people like these days, it’s post apocalypses and zombies. Early rumblings are positive in terms of shipments from Sony, according to my bud Benji. And I expect demand especially from casual buyers will be enough to purchase most of those inventories going to retailers.

Similarly, I predict it will be the best-selling game of April in the United States, when NPD Group reports sales results next month.

After this mostly successful launch, how will it sell longer term? I can see it maybe settling right at the bottom of 2019’s Top 10 sellers, though as an exclusive it’s already at a disadvantage compared with multi-platform titles. The more titles hit release dates in this year, the tougher it gets. Lifetime units sales of 7-8 million is feasible, especially as the console’s user base approaches 100 million.

It’s always a question if single-player games can maintain strong momentum over time. At least out of the gate, I think Days Gone is more likely to.. accelerate to success than not.

All this said, should you play it? (I know many of you will, just look at my sales prediction.) Well, depends on what you like. The ultimate problem with Days Gone is that it tries to do so many things, then loses any semblance of focus. Maybe it suffered from feature creep, trying to do much more than originally intended. Or it bolted on too much close to launch. Perhaps a lack of decisive leadership during its earlier stages. What’s clear is there are other games that do these things, and do them very well, that I’d rather play.

Do you like a massive, beautiful world to explore? Play Red Dead Redemption 2.

Want stealth action and engaging character arcs? Assassin’s Creed Odyssey.

Like storming enemy encampments and taking over areas? Pick a Far Cry.

Zombies and crafting with a dynamic night-and-day cycle? Dying Light.

A sprawling world with expertly-written side quests? The Witcher 3.

Ranged combat encounters with unique enemies? Horizon: Zero Dawn.

Cinematic narrative in a post-apocalypse: The Last of Us. (Seriously if you haven’t played it, you should be doing so instead of reading this.)

Technical hiccups, repetitive side content, stiff movement, serviceable shooting, laughable enemy AI plus lots and lots of rifling through cars or houses to find crafting materials? Which are used to get caught in a tailspin of monotonous gameplay loops which serve only to make experience bars fill up, all the while questioning why you should empathize with its characters?

Shoot. Then I’d still probably play something else.

Sources: Sony Interactive Entertainment. Internet Games Database. Bend Studio. Quantic Dream. Insomniac Games. Team Ninja. From Software. Waypoint. Open Critic. Benji-Sales.

-Dom

Sony Reveals Record Gaming Sales But No New PlayStation Release Just Yet

If we learned anything from Sony Corp $SNE earlier today, it’s that it isn’t playing around when it comes to games.

The Japanese megacorp released its 2018 results, where it revealed solid overall stats and especially positive numbers within its Gaming & Network Services (G&NS) division. This includes PlayStation, downloads and related services i.e. PlayStation Plus.

Its PlayStation 4 console, released way back in 2013, has eclipsed 96.8 million in lifetime units shipped. It’s the 6th best-selling gaming platform ever, approaching the 101.63 million of the mighty popular Nintendo Wii. (Yes, the one that your grandparents even bought. To play virtual bowling.)

Quick rundown is that Sony’s total sales moved up slightly to $78 billion, while operating profit boosted 22% to over $8 billion. Sales for the final quarter came in above analyst forecast, while full-year outpaced Sony’s internal guidance.

Chart above focuses in on the gaming division, which generated a whopping $20.8 billion in sales and an increase of 75% in operating profit. This shows growth over time, using quarterly metrics, to put this record result in context.

A decline in hardware sales for the aging PlayStation 4 was offset by growth in software and subscription revenue, as PlayStation Plus members rose 6% to 36.4 million. You’ll see above that this is the best result for the “Network Services” part of this business unit, and that software is still as healthy as it’s ever been. Popular catalog titles like God of War and Marvel’s Spider-Man seem to be maintaining momentum, however Sony did not share updated individual stats on its major games.

On the hardware side, PS4 shipments were lower than the prior year however this was expected as we come up on next generation. The 17.8 million units came in above the firm’s estimate, and is helping to drive toward the lifetime 100 million threshold as mentioned before.

However, there’s an important flip side to the stellar numbers that causes me to have some hesitation for its short term prospects. (Despite remaining way optimistic longer term.)

While Sony tends to provide conservative forward-looking guidance, it’s especially the case this time. Even more so than expected, given how late in the console cycle its PlayStation business is plus unevenness in other units such as Xperia mobile phones. Operating income is expected to decline to $7.3 billion, on a 10% reduction in gaming profits. According to Bloomberg, this is below analyst consensus.

Even further, as reported by the Wall Street Journal, executives stated definitively that there will be no new PlayStation hardware released until at least a year from now. Effectively, it will go the entire next fiscal year without a new console. While it’s still projecting modest PlayStation 4 units, 16 million to be exact, this revelation along with weaker-than-expected financial forecasts and uncertainty with its games software lineup, is why I’m tepid on Sony’s short-term prospects.

It does have major games in the pipeline, including The Last of Us: Part II from Naughty Dog, Death Stranding from Hideo Kojima’s new studio and Ghost of Tsushima from Sucker Punch. Though we don’t know when any of these will be out. There’s even the possibility that one or more will be saved for next generation’s launch later in 2020. Combine this with no new console, it’s clear why Sony is being conservative.

Ultimately, while I applaud the absolutely stellar results, I’m somewhat hesitant shorter term. I don’t believe it can meet its gaming unit forecast without at least two of the three aforementioned titles, as the boost from the usual multi-platform games will exist regardless.

Thus, what will be the driving factor without new hardware or multiple flagship games? Which of its major titles will release in the next year? Upside is that we’ll know soon, one way or another.

Sources: Sony Investor Relations. Wall Street Journal. Bloomberg.

-Dom