As it cools here in the States and spooky season concludes, it’s time to enter a new one: earnings season!
Here it is, my usual quarterly calendar of earnings dates for gaming, media and technology companies.
The list continues to approach 120 entries, in what I consider one of the strongest earnings calendars on the web. Note that all are in local time zones, as reported by investor relations. Adjust sleeping schedules accordingly!
See above for the full calendar as an image. Below, you’ll find a Google Sheets link for easy access.
I’ve also highlighted three companies to watch during the next few weeks. Thanks for visiting. Enjoy and be well!
South Korean publisher NCSoft reports third quarter fiscal 2024 next week, and I’m keeping it on my radar for a couple reasons. First, its Amazon Games collaboration Throne & Liberty is making waves in the online role-playing space, accumulating over 3 million players in a week and peaking at an impressive 336K on Steam alone. Secondly, the company announced it will undergo a major restructuring, planning to split-off into four entities. Three of them will focus on game development of core franchises Throne & Liberty, Project LLL and Tactan, while the final one named NC Research will have an artificial intelligence specialty. All of this will happen beginning in February 2025.
Sega Sammy Holdings Inc. (6460): Friday, November 8th
The group that owns Sega, Atlus, Ryu Ga Gotoku Studio and others reports second quarter results early in November. It’s had a really good run of quick global sellers and critical successes recently, including Like a Dragon: Infinite Wealth, Shin Megami Tensei V: Vengeance, Persona 3 Reload, Metaphor: ReFantazio and Sonic X Shadow Generations this year alone. The publisher is executing well on its diversified strategy of remakes, remasters and original projects alike. It also might share more information about its announced suite of legacy property titles like Crazy Taxi, Jet Set Radio and others, plus that mysterious “Super Game” teased a few years back, if it still exists.
NetEase Inc (NTES): Mid November
The final entry on this quarter’s watch list is another Asia-based publisher in NetEase, which will share fiscal 2024 Q3 numbers sometime in November. I admit, its inclusion here is mainly so I could critique the announcement of free-to-play mobile title Destiny Rising. In a light collaboration with Bungie, NetEase made the bizarre decision to make its own online shooter set in the Destiny universe, except for phones and related devices, which implies the usual predatory strategies like time-gating the best rewards and stamina. Plus, I’d imagine, gacha mechanics for earning new characters or abilities. I was hoping a Destiny mobile project might be more creative and exist in parallel to the shared world shooter, like a deck-builder that incorporated its rich lore or a dating sim featuring its various characters. Instead, this looks more like a knock-off version of the base game with crummy mobile trappings. We’ll know for sure as it enters beta phase this Friday, November 1st, and pushes towards release sometime in the future.
Today I’ll be rounding out the big three of gaming after my articles on Microsoft and Nintendo!
Sony Corp shared fiscal 2024 first quarter results in Japan. As usual, I’ll focus on its Game & Network Services (G&NS) segment i.e. the PlayStation business, which had a solid three-month period, boosted by services and add-on content, despite a distinct lack of catalysts especially for hardware.
Here’s the headlines from PlayStation’s April to June 2024 quarter.
Revenue increased 12%, albeit mostly due to yen weakness.
Operating profit moved up over 30%.
PlayStation 5 hardware unit sales declined double-digits.
PlayStation Network (PSN) saw comfortable user growth.
There’s significant impact from currency movements on a Japanese company that operates globally. Fluctuations have a major impact on sales, and to a lesser extent on profit. As I’ll show later, without exchange rate deterioration, PlayStation revenue growth would be a more modest 1%.
PlayStation 5 shipments appear to have topped off, at least for now and perhaps permanently, as it now trails its predecessor by an even wider margin than last quarter. The upward trajectory of financials here are being bolstered by PSN and downloadable content spend, not to mention savings from laying people off and closing studios.
Management pointed out an “increase in sales from network services, mainly PlayStation Plus,” which clearly benefited from recent price increases, while also noting the “decrease in sales of hardware due to a decrease in unit sales.”
Read on for a closer look at the group’s performance plus a set of near-term predictions.
As you’ll see in the gallery above, here’s the scoop on PlayStation’s quarter overall.
Revenue rose 12% to $5.56B.
This included $589M of currency impact.
Operating profit jumped 33% to $419M.
This included of currency impact.
Excluding currency movement, the top line (revenue) was a slight increase of 1% while the bottom line still generated an impressive 30% gain. Executives did call out first party software sales as one of the contributors, alongside impressive growth for services and add-ons.
The firm also mentioned peripherals. I’d guess partially the DualSense Edge controller and mostly the PlayStation Portal. I’d love if Sony shared more about how the cloud-based streaming handheld is faring. Indicators point to a good amount of demand, I’m just unsure about how many were actually produced for market. I also don’t think the gains were from PlayStation VR2.
There’s also the unfortunate impact of layoffs that are meant to reduce costs, which is one reason G&NS profit metrics are up. It happened after the quarter end, yet something like Bungie is an example that any subsidiary can be hit by layoffs or restructurings in the hopes that these numbers will look better for investors.
Underlying the sales movement were the following categories by dollar sales:
Add-On Content rose 37% to $1.87B.
Network Services increased 28% to $1B.
Hardware dipped 22% to $941M
Digital Software lowered 8% to $912M.
The G&NS segment is effectively being carried by its services and downloadable content slices, the knock-on from something like Helldivers 2 or MLB The Show 2024, those PS Plus price increases and the likes of June’s Elden Ring: Shadow of the Erdtree and, albeit to a lesser degree, Destiny 2: The Final Shape expansions.
Taking into account this latest quarter, I’ll now tally the trailing 12-month figures.
All-time high annualized revenue of $28B, up 14%
Operating profit 24% higher to $1.97B.
In both cases, the annual trend-line is quite positive due to some of the same aforementioned reasons as the quarter, while acknowledging sales are highly susceptible to currency fluctuations.
I’ll now expand on the hardware side, namely around units shipped to retail.
PlayStation 5 shipped 2.4M between April and June.
During Q1 last year, the console moved 3.3.
PlayStation 4 also had 3.3M in the same quarter.
PlayStation 5 lifetime sales are now 61.7M, behind PlayStation 4’s 63.5M.
While these numbers seem gloomy, I wouldn’t yet overreact on this console generation. (Not until next year’s Grand Theft Auto VI, at least.) PlayStation 5 is keeping up with or exceeding the sales speed of consoles historically. It’s trending 7% above PlayStation 4 in the United States, according to Circana, and will be the top seller in most key markets this year.
It’s no secret PlayStation 5 adoption is slower than the previous cycle. Sony also didn’t provide an update on sell-thru to consumers, which was at 50M back in December 2023. Based on this, I assume it hasn’t crossed the 60M milestone despite shipping nearly 62M to date.
Now, switching over to software unit sales stats from this latest announcement.
Game sales across PlayStation were 53.6M, down from 56.5M.
First party titles totaled 6M, compared to 6.6M.
Digital downloads contributed 80%. (Pretty sure an all-time high.)
Management attributed growth from software to first party sales, which I assume counts Koei Tecmo’s Rise of the Ronin and Shift Up’s Stellar Blade, both of which were published by Sony Interactive Entertainment. There was also May’s PC launch of Ghost of Tsushima, fitting with the firm’s strategy of diversifying beyond consoles.
Signs point to lower output on the third party side for Final Fantasy 7 Rebirth, compared to last year’s Final Fantasy XVI. These exist under a console exclusive relationship that will probably go away soon based on Square Enix’s decision to shift towards multiple platforms.
In terms of general engagement, which is often driven by evergreen games like Minecraft, Fortnite and Roblox in combination with newer experiences, Monthly Active Users (MAUs) across PSN jumped from 108M to 116M. It was down sequentially since the March quarter’s 118M.
It was a decent start to PlayStation’s 2024 fiscal year, featuring slight revenue growth excluding currency impact, a nice boost to operating profit and a great supplement from PSN alongside its subscription business. Publishing partnerships with Asian developers like Team Ninja and Shift Up appear to have appeal within Sony’s global user base, even if not directly driving console sales.
PlayStation 5 may have very well peaked, indicated by a couple quarter’s worth of lower unit sales, though we’ll know for sure if that’s the case within the next year or so between the potential for an upgraded model plus a massive Rockstar Games title that may well lead to widespread upgrades.
Progressing into the fiscal year, it’s time to review Sony’s increased annual outlook for PlayStation.
Now expects full year revenue up 1% to $27.8B.
It would be a new local currency record.
Operating profit guidance is now $2.1B, which would be up 10%.
PlayStation 5 shipment forecast remained at 19M, unless I hear otherwise.
I’d see this sort of slight upward revision in guidance as reassuring, especially since it happened in a first quarter, when companies are often unsure about moving around their expectations.
Especially with the yen’s continued weakness, the revenue number should be achieved. That level of profit is also reasonable, even if I see downside depending on how PlayStation navigates costs, for example if a new PlayStation 5 is in development and production.
It’s that hardware portion where I’m more cautious than management. I initially thought Sony might increase the forecast over the fiscal year. I’m now betting it remains flat into next quarter. Personally, I have PlayStation 5 units at 19M to 19.5M in fiscal 2024.
Sony needs a spark, and it doesn’t have much on the exclusive side as the commercial season ramps up. There’s live service shooter Concord, which has been praised during its testing phase though there’s questions around its broad interest. AstroBot is a near full-priced platformer, the closest thing to the brand’s true mascot. I’m not sure it’s blockbuster or system-seller material.
I see more impact from external titles, for instance Ubisoft’s double feature of Star Wars Outlaws and Assassin’s Creed Shadows. Electronic Arts has its sports franchises, including the likes of July’s EA Sports College Football 25 at 5 million players strong. Then there’s Call of Duty: Black Ops 6 from Activision Blizzard which might be hampered in this context by its inclusion on Game Pass.
The elephant in the room is how about that long-rumored PlayStation 5 Pro? The closer we get to the holidays, the more dubious I become it will both hit market in 2024 and have a notable impact outside of “enthusiast upgraders.” If a fancy model is going to be out by October or November, Sony’s running out of time to start up a big marketing push.
Thanks again to everyone who stopped by for my latest recap of a major player in the games industry. Be safe and take care, all!
Note: Comparisons are year-over-year unless otherwise noted.
Exchange rate is based on reported average conversion: US $1 to ¥155.6.
Sources: Circana, Company Investor Relations Websites.
I’m here with a rare Friday recap, as everyone knows because they have studied my earnings calendar, of course.
Today in Japan, Nintendo reported results for its first fiscal quarter of 2025.
Here’s the headline numbers, during a tricky time where its storied Switch console is entering its final days and management makes moves towards the transition to its successor.
Revenue and operating profit declined well into double-digit territory.
The same goes for Switch console shipments, across all versions.
Switch unit sell-thru to consumers did reach a new lifetime milestone.
Mario Kart 8 Deluxe sold less than a million units for the first time since 2017.
It’s a tough one all around for the Mario makers, mainly due to a comparison to the company’s best Q1 ever last year due to contributions from a blockbuster film and mainline Zelda launch. Plus, the firm’s expenses are up due to investment in its next generation.
“During the first quarter of the previous fiscal year, unit sales of both hardware and software were extremely high for a first quarter,” management wrote in prepared remarks. “When The Super Mario Bros. Movie energized our dedicated video game platform business and The Legend of Zelda: Tears of the Kingdom was released, together with specially designed hardware based on that title.”
I’ll now look at the figures in more detail then provide a look ahead towards the future, a crucial time for one of gaming’s biggest and most beloved producers.
Taking a broad perspective, the main performance indicators from Nintendo’s most recent quarter ending June 2024 are below.
Revenue dropped 47% to $1.58B.
Operating income declined 71% to $350M.
Research & Development (R&D) expenses rose 18%.
As displayed in the quarterly charts later in this article, this was the lowest Q1 output since fiscal 2020 for both sales and profit. As Nintendo executives alluded in their notes, it’s mainly because there isn’t much driving growth right now, with the main release slate as two legacy titles with a fresh coat of paint while the firm navigates towards a transitory period.
Across product categories, here’s the breakout measured by revenue.
Software dollar sales made up 50.8%, up slightly from 50.1%.
Within that, 73% were first-party sales. Last year, it was 89%.
Digital represented 59% of the total, compared to 47% prior year.
Now, the regional sales ratios for its largest locales.
The Americas made up 45%, about the same year-on-year.
Japan saw a sizeable increase, from 20% to 26%.
Europe dropped to 21%, from 23%.
Due to the massive success of the Mario film starting April 2023, quarterly sales for Nintendo’s mobile and IP-related segment dropped 54% to $94M.
The below charts show sales and profit metrics for both this latest quarter and on a trailing 12-month basis for broader context.
Annual revenue is currently $9.34B, down from $11.86B.
Operating profit over that time is $2.55B, compared to $3.95B.
Both of these are the lowest since late in Fiscal 2020.
I’ll now shift focus over to the Hardware part of the first quarter report, where Nintendo shares how many units shipped and gives insight into sell-thru to consumers as well.
Switch saw 2.1M units shipped between April and June 2024.
That’s down 46%, and the lowest Q1 output since Fiscal 2019.
OLED experienced the largest drop of 56% to 1.24M.
Its older Lite version sold 330K, a decline of 23%.
“There were no such special factors in the first quarter of this fiscal year,” executives said. “And with Nintendo Switch now in its eighth year since launch, unit sales of both hardware and software decreased significantly year-on-year.”
This quarterly total brings lifetime Switch shipments to 143.42M, maintaining its spot as the third best-selling console ever, and bringing into question its ability to surpass Nintendo’s own DS (154.02M) and Sony’s PlayStation 2 (155M).
Beyond units shipped, management shared some insight into consumer sell-thru of the hybrid console. Over its life span starting in 2017, Switch has reached an impressive sell-thru milestone of 140M units.
It doesn’t take an enthusiast analyst to explain why a console in its eighth year, without a system seller, is on such a downward trajectory to start this financial year. Even if Nintendo achieves its shipment target, this will be the lightest full year of hardware sales during the Switch era.
Let’s look at the software categories, including new title performance for Nintendo during the last three months.
Switch game copies shipped in this period reached 30.64M, down 41% from 52.21M.
There are currently three million sellers, two of which are Nintendo’s.
This pushes lifetime Switch software units to nearly 1.27B.
The first million-seller to highlight was Paper Mario: The Thousand–Year Door debuting at 1.76M shipped during the quarter. As a remake, it’s tricky to make comparisons. The GameCube original sold 1.91M units in around three years. The other mainline series game on Switch, Paper Mario: The Origami King, started with 2.82M in 2020.
Luigi’s Mansion 2 HD was that second million-seller, moving 1.19M within just a few days in late June. The base game hit market in 2013 for Nintendo 3DS, selling 750K units in the United States alone within three months. The Switch title Luigi’s Mansion 3 released in October 2019 to 5.37M units its first quarter, albeit with a couple months on sale in that period.
Here’s an observation that shows how the Switch has saturated the market: Neither of those million sellers were called Mario Kart 8 Deluxe. This is the first quarter since back in July to September 2017 during which the console’s best-selling title didn’t hit a million copies sold. It did sell 930K all these years later, quite a strong Q1 compared to most games, and is now approaching 63M lifetime.
In terms of other lifetime milestones, The Legend of Zelda: Breath of the Wild trended above 32M, while Pokémon Scarlet & Violet became the third mainline franchise title to surpass 25M sold.
When it comes to units sold-thru to consumers (rather than shipments), Paper Mario: The Thousand-Year Door topped 1.3M units within six weeks of release, while Princess Peach: Showtime, which originally shipped 1.22M during the prior quarter, also moved past 1.3M by this metric.
Nintendo’s engagement statistics of Annual Playing Users hit a milestone at 128M, up from 121M a year back. The company didn’t share anything on Switch Online memberships, which were 38 million at last count in November 2023.
Nintendo suffered a double whammy as it entered fiscal 2025. This same quarter last year was massive on the strength of its biggest franchises and the Switch continues to show its age with a less compelling line-up than years past, featuring a portfolio titled towards refreshed older titles that aren’t as appealing as brand new entries. Combine that with a console that is present in many a household already, and there isn’t much upside on the financial side right now.
Speaking of that, management maintained its full-year outlook in these latest results. For now, at least.
Revenue expected down 19% to $8.7B.
Operating profit could decline 24% to $2.6B.
Annual Switch units off 14% to 13.5M.
Software units 17% lower to 165M.
These seem mostly reasonable to me, and I believe Nintendo can achieve all but one of them, even if barely.
It’s the hardware shipment figure where I remain skeptical. In order to hit a 13.5M annual target, Nintendo has to ship 11.4M more Switches over the next 9 months. Last year, when there was both a mainline Zelda and Mario among others to entice new buyers, it moved under 12M across the same nine month span! I’m maintaining a 12.5M to 13M forecast for the year, leaning towards the lower end.
Still, even assuming the lower end, that would put Switch around 154 million lifetime by March 2025. It’s going to be in contention at least for best-selling hardware of all time.
For a console in its home stretch, I’ll admit Nintendo is presenting an appealing line-up leading into the back half of its fiscal year. There’s The Legend of Zelda: Echoes of Wisdom in September, Super Mario Party Jamboree in October then Mario & Luigi: Brothership in November. Donkey Kong Country Returns HD is also slated for January 2025.
Plus, as we’ve entered the latter months of calendar 2024, might we hear about Super Switch? There’s a good chance, however I’m betting it happens right after the Switch’s final holiday season. Full reveal in January, launch April 2025 or later.
That ends the week, and another full recap on the earnings schedule. Hop over to social media for more coverage, and check back soon for more articles. Thanks for stopping by!
Note: Comparisons are year-over-year unless otherwise noted.
Exchange rate is based on reported average conversion: US $1 to ¥155.93.
Sources: Company Investor Relations Websites, Nikkei Asia (Photo Credit).
This time I’ll be covering both Q4 and annual results for Microsoft, with a specific rundown on the Gaming business, which is currently experiencing growth via acquisition and facing much uncertainty around certain elements of its current strategy.
As expected after spending nearly $70 billion on Activision Blizzard, the inclusion of this new revenue pushed Microsoft Gaming to double-digit growth and record highs for a fourth quarter and 2024, marking the first time this business generated over $21 billion in annual sales.
Well, what’s behind these juicy headline numbers? And how does it compare to my estimate of where I expected them to be? Well, there’s plenty of questions around the Xbox business, and revenue came in below my personal expectations.
Looking beyond the deal impact, there’s a stagnancy setting in for Xbox over the last year, mainly as Game Pass shifts to user retention alongside a hardware business that under-performed and hit its peak this generation with Microsoft’s shift away from the traditional console approach.
“Stronger-than-expected performance in first-party content was partially offset by third-party content performance,” said Chief Financial Officer (CFO) Amy Hood when discussing the core content and services business during Q4. Which somewhat confuses me, as this must be referring to legacy Game Pass additions as opposed to new published titles.
Check below for the numbers themselves, my reactions to them, updated estimates for hardware shipments and some discussion around future forecasting.
Here’s the reported numbers from the filing and slides above, starting with the broader Xbox division.
During the quarter ending June:
Quarterly gaming revenue rose 44% to $5.02B.
In-line with company guidance of low to mid-40s.
That’s an all-time high fourth quarter.
ActiBlizz impact was $1.68B, or 48 points.
Which means “all other Xbox” declined 4% to $3.34B.
Now for fiscal year 2024 revenue stats.
Annual gaming revenue totaled $21.5B.
That’s up 39% from prior year’s $15.5B.
Ended slightly below my expectation.
See the above chart for full historical context.
Underlying the dynamics was a boost in Xbox Content & Services, over 60% growth with most of the growth due to the acquisition, offsetting a substantial drop for Xbox Hardware well into the double-digits.
This certainly reflects the strategy of subscription and expansion beyond a retail box, plus the integration of a business that now has exposure to PC and mobile. Whether or not this is the right direction is the question, especially given how competitors still put a sizeable focus on the console business as a way to reach audience and sell their titles for full price at launch.
So far, I’ve talked about sales. While Microsoft doesn’t report profit for Gaming, we can infer from the broader More Personal Computing (MPC) segment’s movements.
MPC group operating profit rose 5% to $4.92B.
That’s after a 43% increase in expenses with 41 points from ActiBlizz.
The indication being that, for the time being, integration is dragging the bottom line and the core Xbox businesses might not be making up for it.
Now I’ll delve deeper into the individual product categories underlying its latest performance.
Starting with Xbox Content & Services, here are Q4 figures.
Xbox C&S revenue jumped 61% to $4.66B.
This represents 93% of total gaming sales.
Best all time by a wide margin, over $1B.
And that’s due to ActiBlizz contributing 58 points.
Here’s the content segment for the full financial year.
Gained 52% up to $18.55B.
Its contribution to the total was 86%.
It’s larger than total gaming revenue in FY 2023.
Last year Xbox C&S was $12.18B.
Then there’s the struggling Xbox Hardware category, with June quarter results detailed below.
Declined 42$ to around $345M.
The lowest Q4 result since FY 2020.
Again, now the annual figures for Xbox Hardware.
Annual console sales declined 13% to $2.86B.
Similar to above, the worse since FY 2020.
I’ll move on to a portion where estimates come into play, since Microsoft stopped reporting hardware unit sales ages ago.
Last quarter, my guesstimate was 29.7M to 30.3M Xbox Series X|S lifetime.
I have quarterly shipments again under a million, say 750K to 800K in the June quarter.
If so, I believe it would be the lowest quarter this generation.
Which means I have current Xbox Series X|S lifetime around 31M.
As part of the company’s conference call, Chief Executive Officer (CEO) Satya Nadella provided a couple breadcrumbs around engagement.
500M monthly active users (MAUs) across all platforms.
Hour played on Fallout titles rose 5x quarter-on-quarter after Amazon Prime’s Fallout.
And, that’s pretty much it.
It’s difficult to even decipher the meaning of monthly actives in this context, other than that mobile is massive and Microsoft purchased an entry point into that audience base.
Oh, and what’s missing? Game Pass subscriber numbers! Last we heard, it was 34 million as of February, conveniently after converting people away from Xbox Live Gold.
I always say one can learn as much from what a company doesn’t say as what it does. The distinct lack of transparency is another indicator of potential stagnation and uncertainty around elements of the business model, at least to me.
Here’s an angle I’d like to take before concluding. What might revenue look like if aggregating Microsoft Gaming and Activision Blizzard historically, then using that to calculate growth stats?
Granted, I had to make some assumptions. Mainly around the double-counting and the move from third-party to first-party. I still think it’s illustrative of the true history for the now combined entity, which tells more than seeing huge increases from the pre-acquistion days..
My forecast initially put FY 2024 combined revenue upwards of $22 billion.
As a reminder, the actual result was slightly below that: $21.5B.
The key is that last year’s number, when combined, was $22.2B, implying a 3% decline.
I can attribute this to a few things. Either the revenue was lower, there were more synergies that impacted the post deal ActiBlizz portion, or my estimates weren’t as accurate as they could have been. Perhaps all of the above. Essentially, this isn’t bible. It’s illustrative and shows a more realistic barometer of the company’s recent trajectory.
Switching gears towards the future, here’s a look at Microsoft’s guidance for FY 2025 Q1.
Gaming sales growth expected in the mid-30s.
That includes 40 points of ActiBlizz Impact.
Yes, so “everything else” will be down around 5%.
The company anticipates Xbox C&S to rise in the low to mid-50s.
Hardware will be “down.” (My estimate is in the mid-40s yet again.)
Here are these in dollar amounts, for the 3 months ending September.
Q1 gaming revenue of $5.29B. Another record.
For comparison, last year was $3.92B.
Xbox C&S output would be $4.86B.
Which means Hardware down to around $410M to $430M.
“The real goal here is to be able to take a broad set of content to more users in more places, and really build what looks more like to us, the software annuity and subscription business,” Hood said in response to a question. “With enhanced transactions and the ownership of IP, which is quite valuable long term.”
This is all well and good on an analyst call. As they say, proof is in the pudding.
Why close a valuable studio like Tango Gameworks, among other layoffs, if a quality pipeline is the key? What about the immediate portfolio, and where is the upside? It’s a light quarter upcoming for first-party, even with ActiBlizz. (I will note October to December will be more active in this regard.)
It’s more about older titles being added to Game Pass, including Call of Duty: MW3 this month, that could move the needle. Note the service’s structure changes took effect in July, and a price increase for existing users hits in September. Without that, I’m not sure these numbers could be achieved.
There is the busy release schedule for third party ramping up starting in August, such as perennial sports titles from Electronic Arts, which already has a certified hit with EA Sports College Football 25, plus there’s Ubisoft’s Star Wars Outlaws which I expect will be Massive.
That said, I think Microsoft meets the mid range of its outlook, with a little bit of upside for consoles as bigger third party blockbusters hit market.
It’s officially now a wrap on my first earnings recap of the season. Bookmark that calendar and stay tuned for more coverage soon! Be well, and stay safe everyone.
Note: Comparisons are year-over-year unless otherwise noted.
Sources: Company Investor Relations Websites, Xbox Support.
No, not the 2024 Olympics. Although it’s arguably just as important. Earnings season is here!
Much like the Summer games, there’s a rich tradition around this time. It’s when I draft up and post a calendar with all the dates on which companies across gaming, media and technology provide an update on their businesses, and often look ahead to future prospects.
The list is a robust one, steadily approaching 120 companies strong. For added benefit, I’ve added the date and fiscal quarter associated with the latest report, along with investor websites for easy access. Note that all dates are listed in local time zones.
Quick note around the initial public offering of Shift Up, the South Korean developer of 2024’s hottest, and most controversial for certain crowds, titles Stellar Blade. I’ll have the company included next quarter since I didn’t see concrete info right now.
Check below for a full Google Sheets link, then descriptions of three key companies to watch in the upcoming weeks. Enjoy, and be well!
The mention of the American publisher is mainly an excuse to talk about EA Sports College Football 25, which technically launched in July after its Q1 of 2025 time frame ended. This return to the glory days of college football video games, the first franchise game in over a decade, is showing great early success, selling-thru 2.2 million copies of its deluxe edition alone! I’d love if Electronic Arts shared more details around its kick-off, including overall unit sales or player stats, plus if there’s any upside impact to its current guidance. I’m estimating 7 million units, if not more, by the time the fiscal year ends in March 2025. Talk about a score.
Nintendo Co., Ltd (NTDOY): Friday, August 2nd
It’s a rare Friday announcement for Nintendo when it shares first quarter performance early in August. Sure, I’ll be interested to learn more about early momentum for new old games like May’s Paper Mario: The Thousand Year Door and Luigi’s Mansion 2 HD, a late June launch, or any updates around annual hardware guidance (which I don’t expect just yet). The Japanese company’s inclusion on this list is mostly obligatory in light of this year being the Switch’s swan song, and the impending reveal of its successor being firmly on the horizon. Last quarter, President Shuntaro Furukawa shared the sweetest of morsels that the Super Switch would be revealed by March 2025. Might he bless us with another taste this time as well?
Nexon (3659): Thursday, August 8th
The Seoul-based publisher, which reports second quarter 2024 numbers in a couple weeks, isn’t as widely known as certain peers, focusing more on regional PC and mobile titles. It’s one of many making big investments related to international expansion, an effort that has seemingly produced a breakout global hit with The First Descendant. The action shlooter attracted an impressive 10 million players during its first week earlier this month, and I assume a larger proportion of them are outside the Asia Pacific region compared to its other products. The question is how this translates to the bottom line, considering the title is free-to-play. Now, it also features hundred dollar cosmetics, and the model can be highly lucrative if the player base is engaged, which appears to be the case here.
As earnings season marches on, I’ll wrap up this week with my final recap of the big three gaming manufacturers.
Sony, the largest of the group by sales, has reported its fiscal year 2023 results. In this piece, I’ll cover mostly the annual financials to give a broad perspective of where the PlayStation division has been recently and will be soon.
If any of the data is quarterly, I’ll point that out.
That said, here’s the big headlines from PlayStation’s portion:
Achieved record annual revenue above $29B.
Reported double-digit operating profit growth.
Biggest year of unit sales for a PlayStation device despite missing target.
Breakout success of Helldivers 2 across both console and PC.
Underlying the record top-line and profit performance was a boost in third party sales, including downloadable content, headlined by the likes of surprise hit Helldivers 2 from Arrowhead Game Studios and Insomniac Games with Spider-Man 2, the former highlighting the benefit of adopting PC and the sizeable upside of live service risk.
Additionally, yen depreciation had a tangible impact on annual growth, as I’ll illustrate shortly. This currency effect is amplified for Japanese companies operating globally.
Throughout this time frame, PlayStation 5 hardware closed the lifetime sales gap with its predecessor and passed another milestone on the global best-seller list. On the software side, unit sales increased while shifting towards a digital split.
“During the PlayStation 4 generation, we were able to significantly grow profits in this segment thanks to rapid digitalization and the expansion of network services,” management wrote.
“In the PlayStation 5 generation, which has capitalized on the established PlayStation 4 user base, the trend is hard to see due to the impact of stay-at-home demand and acquisition-related expenses, but, since the launch of the PlayStation 5, we have continued to achieve a high level of, and more stable, profit growth.”
Read on for more detail around Sony’s latest numbers and predictions for the next year!
The above slides show Sony’s Game & Network Services (G&NS) division results for the year overall.
Annual revenue increased 17% to $29.55B.
This included $1.9B of currency impact.
Operating profit rose 16% to $2.01B.
This includes $267M of currency impact.
I’d point your attention to the above gallery, namely the operating income chart I compiled which illustrates the Helldivers 2 effect, and more broadly shows what happens when Sony’s live service effort pays off. Quite literally.
Until the final quarter of its fiscal year, operating profit was trending down 25%. After January to March, the year ended up as a double-digit increase!
Moving on to products categories within G&NS, here are select annual revenue and growth stats:
Hardware was $8.39B, up 8%.
Add-On Content hit $7.5B, up 26%.
Digital Software at $5.89B, up 29%.
Network Services reached $3.78B, up 17%.
On the strength of newer launches and evergreen titles, Add-On Content surpassed Hardware in Q4 alone, though the latter became the leading segment for the full year as PlayStation 5 reached the middle of its life cycle (yes, already!).
Within the console side of the business, it was a banner year for shipments even if Sony’s forecast was too ambitious (as I wrote since they first posted it). Hardware results were:
PlayStation 5 shipped 4.5M units in the March quarter, down from 6.3M.
This led to a fiscal year shipment total of 20.9M, compared to 2022’s 19.1M.
Slightly below Sony’s 21M target, and well below its original guidance of 25M.
Still, it’s above PlayStation 4’s 20M in the same year, which was its best.
Check out the image below for a full comparison of the last two Sony console generations, showing that PlayStation 5’s current 59.3M lifetime was less than a million off PlayStation 4 at 60.2M, much closer than other points in their launch-aligned history.
As for the broader industry, PlayStation 5 officially surpassed the lifetime unit total of Microsoft’s Xbox One, which launched in 2013 and ended at 58M. The next milestone will be Nintendo Entertainment System at 61.91M, which I’d imagine it might have already reached as I write this.
Here’s further insight into how software did for the G&NS segment during fiscal 2023.
Unit sales reached 286.4M, up from 264.2M prior year.
Sony-made titles made up 39.7M of that, down from 43.5M.
Digital downloads comprised 70%, up from 67%.
The clear winners were a pair of sequels in October’s Spider-Man 2 and February’s Helldivers 2, the latter being PlayStation’s fastest-selling game ever amassing 2M units in 12 weeks. For context, 2022’s God of War Ragnarök sold 10M in 10 weeks.
Can’t forget about the likes of Blizzard’s Diablo IV and Capcom’s Street Fighter 6, plus the continued benefit of annualized sports and shooter titles, even on an off year with the lackluster Call of Duty: Modern Warfare 3.
Then, to a lesser extent, there was contribution from Square Enix’s Final Fantasy titles. In recent investor materials, Square Enix pointed out Final Fantasy 16 and Final Fantasy 7 Rebirth, both PlayStation exclusives, missed expectations (what else is new). With Square’s move to multi-platform, the days of third-party exclusives are clearly dwindling.
We also heard a bit from Sony on engagement, driven a lot by evergreen titles that dictate the market leader’s success here. As I mention in recent Circana U.S. sales recaps, tons of people play console primarily for experiences including Fortnite, Roblox, Minecraft and Grand Theft Auto V.
Sony reported that Monthly Active Users (MAUs) across PlayStation Network ended the year at 118M. While that’s no longer an all time high, which was achieved the prior quarter with 123M, it was still up 10M year-on-year.
The final stretch of fiscal 2023 was a fantastic one for Sony, pushing it to all-time revenue and generating higher income when it seemed like the year might be a down one for profitability.
A surprise multi-platform hit and PC’s contribution bumped up that profit growth, along with an all-time year for hardware shipments plus ongoing engagement in various legacy games.
Sony has recently backed off its live service push, to focus more on fewer titles in the space. A game like Helldivers 2 proves that all it takes is a single game capturing the zeitgeist to drive financial growth and keep an audience coming back for more.
It doesn’t hurt to have a simultaneous PC launch, a platform with a notoriously passionate user base. (Better or worse.)
I’ll quickly look ahead to Sony’s expectations for the coming year. Here’s the PlayStation forecast:
Revenue will be down 2% to $29.1B.
Operating profit to increase 7% to $2.15B.
PlayStation 5 shipments of 19M, down almost 2 million.
“As we enter the second half of the console cycle, we expect the number of new PlayStation 5 units sold to gradually decline,” management wrote in its remarks.
“However, by steadily maintaining and expanding the consistently increasing number of active users and user engagement, while also strengthening control over business costs, we believe that we will be able to steadily increase sales and profits from the PS platform going forward.”
Overall, I’m guessing G&NS will achieve these goals, and perhaps even increase the console shipment guidance to 20M. I’m expecting a lot of consumers upgrading and new buyers for Grand Theft Auto VI, expected to launch in calendar 2025.
Executives also reiterated that its new sci-fi multiplayer IP Concord will be out in this same time frame, as it aggressively moves to improve margins and incorporate the PC market. Could there be others launching by the fiscal year end?
Speaking of executives, Sony announced the replacement for exiting PlayStation boss Jim Ryan. Or should I say replacements, and both are internal hires. Hermen Hulst (my prediction back when the Ryan news broke) and Hideaki Nishino be co-leaders, heading up new respective groups within Sony Interactive Entertainment.
With that done, this concludes my latest recap. I recommend checking out socials for more coverage of earnings season and everything across the games industry landscape. Thanks for reading, be well!
Note: Comparisons are year-over-year unless otherwise noted.
Exchange rate is based on reported average conversion: US $1 to ¥144.4.
Sources: Circana, Company Investor Relations Websites, Sony Interactive Entertainment.
Keeping with my new tradition, I’m here with a quick-hitting recap of Nintendo’s latest annual results.
I’ll then look ahead to its current fiscal year, the 12 months ending March 2025, during which the company will officially reveal its next hardware.
Don’t worry. I’ll have my usual charts and reactions, just in an easier format!
Here’s the highlights for Nintendo’s 2024 financial report:
Both revenue and profit bounced back to growth in the single digits.
Annual Switch shipments were 15.7M, above its latest guidance.
During the latest quarter, Switch passed 140M sold lifetime.
Over half of software sales were digital for the first time ever.
While unit sales for consoles and software declined last year, Nintendo saw financial growth due to a depreciating yen, a shift to the premium Switch OLED model, shifting spending towards digital content and a sizeable impact from April’s The Super Mario Bros. Movie.
“For hardware, by continuing to convey the appeal of Nintendo Switch, we try to not only put one system in every home, but several in every home, or even one for every person,” management wrote. “Another objective is to continually release new offerings so more consumers keep playing Nintendo Switch even longer and we can maximize hardware sales.”
Scroll ahead for the full rundown and predictions for an exciting, and crucial, time in the company’s history.
Top level, these are the main stats for Nintendo’s annual results during the year ending March 2024.
Fair warning: Get ready for numbers!
Revenue up 4% to ¥1.67T ($11.57B).
Currency impact on revenue of ¥94.4B ($653M).
Operating profit rose 5% to ¥528B ($3.66B).
Currency impact on operating profit of ¥35B ($242M).
These were enough to log the third best year in the Switch era by both metrics. While impressive given its latest console’s age, having major releases in the Zelda and Mario franchises alongside a blockbuster animated flick were enough to make up for slowing unit sales.
As for product category breakouts:
Software represented 56% of total sales, up from 54%.
81% of software sales were first party, up from 79%.
The proportion of digital software sales was 50%, up from 48%.
Regional splits were as follows:
The Americas at 44%, same as last year.
Europe was 24%, down slightly from 25%.
Japan reached 22%, compared to 23%.
Underlying a larger-than-usual portion of Nintendo’s growth was its mobile, IP and licensing segment. On the strength of the billion-earning The Super Mario Bros. Movie, sales here rose 82% to ¥11.2B ($77M), plus had the knock-on effect of boosting the popularity of Mario-themed titles in subsequent quarters.
I’ll now reflect on the Hardware portion of the report.
Switch shipments from January to March were 1.96M, down from 3.06M.
That brought the year to 15.7M, or 13% lower than fiscal 2023.
This figure was above management’s revised guidance of 15.5M.
OLED model was the only one showing growth, up 1% to 9.32M.
While hardware ended up meeting the latest target that executives set, it came in slightly below my personal forecast of 16M. Management called this “stable” for a console of its age.
Lifetime Switch shipments are now 141.32M, thus retaining its spot as the third best-selling gaming console ever.
Prior to this, figures were based on shipments to retail. Nintendo did provide a slide on sell-thru to consumers, charting it out over the Switch’s full life cycle.
Overall, it was the second lowest year for sell-thru other than 2017’s launch. The premium OLED model experienced its highest sell-thru to date, while the base model continued its steady decline, both as expected.
Moving on to Software results for the full year:
Game unit shipments declined 7% to 199.67M.
Even so, that was above the latest target of 190M.
There were 31 million-sellers. Nintendo produced 20 of them.
Lifetime Switch software unit sales approached 1.24 billion.
In terms of debuts, February’s Mario vs Donkey Kong remake collected 1.12M units. Additionally, Princess Peach: Showtime! moved over a million in a week, reaching 1.22M by the end of March.
Then there’s the ever-growing list of older and evergreen titles in the portfolio.
The Legend of Zelda: Tears of the Kingdom saw 20.61M in less than a year.
Super Mario Bros. Wonder jumped to 13.44M after two quarters.
July 2023’s Pikmin 4 finished the year at 3.48M.
Mario Kart 8 Deluxe raced towards 62M lifetime.
Shifting over to software sales as measured by sell-thru to consumers:
The Legend of Zelda: Tears of the Kingdom at 19.5M.
Super Mario Bros. Wonder was 12.4M.
Pikmin 4 eclipsed 3.3M, meaning most of its copies have been purchased.
November’s Super Mario RPG remake hit 2.6M (out of 3.31M shipped).
“The Legend of Zelda: Tears of the Kingdom, Super Mario Bros. Wonder, and Pikmin 4 all saw sell-through grow at a faster pace than any past titles released on Nintendo Switch in their respective series,” management wrote.
Executives also shared an update to Nintendo’s unique engagement statistic called Annual Playing Users. As of March, it reached an all-time record of 123M, up a million over the prior quarter and 7 million compared to the prior year.
The company might share an update for Switch Online memberships during a corporate briefing in the next few days. The service’s paid membership count was 38M as of September 2023.
It’s another mostly positive annual announcement for Nintendo, showcasing top-line momentum and profitability even as hardware and software units declined. It’s well-known that the market for Switch is saturated, which meant executives had to look for other avenues like film to keep growing, while also supporting the vast audience base with flagship franchises and external partnerships.
What’s to come for the company entering a pivotal time as it plans to bridge the gap between console generations?
Well, I’ll now run through the headlines for Nintendo’s fiscal 2025 targets:
Revenue could be down 19% to ¥1.35T ($9.34B).
Operating profit expected to decline 24% to ¥400B ($2.77B).
Switch anticipated to ship 13.5M units, down 14%.
Guidance of 17% lower Switch software units, or 165M.
“Switch has entered its eighth year since launch,” management mentioned. “While it will be challenging to sustain the same sales momentum as before, we will work to maintain high user engagement with the hardware and invigorate the platform so that more consumers continue to play Switch for longer.”
If that last bullet point is achieved:
Switch will compete for best-selling console ever at roughly 154.82M sold.
Nintendo DS is in second at 154.02M to date.
Sony’s PlayStation 2 is currently tops at 155M.
I see the financial forecasts as fine and achievable. On the other hand, Nintendo’s hardware plan is ambitious. Especially given the lighter release slate, chock full of remakes and reissues, and people waiting anxiously for that new announcement. I’m more around 12.5M to 13M, at most.
Speaking of Super Switch, the reveal is officially imminent!
Nintendo President Shuntaro Furukawa took to Twitter to announce that the announcement of Switch’s successor will happen this fiscal year. Though not at a June Direct, which will focus more on the slate of games for the back half of this calendar year.
Based on the guidance and an aggressive target for existing hardware, I expect a full-blown Super Switch reveal to happen around January 2025 with a subsequent launch sometime in or after April 2025.
That about does it for my latest reaction piece. What did you think? Predictions for Super Switch?
Hit me up here or on social media to chat and stay tuned for more coverage of earnings season soon. Thanks for reading!
Note: Comparisons are year-over-year unless otherwise noted.
Exchange rate is based on reported average conversion: US $1 to ¥144.52.
Sources: Company Investor Relations Websites, Nintendo Twitter.
United States Games Industry Sales (March 3rd to April 6th, 2024)
It’s time to cover another U.S. games industry spending report from Circana, this one for the month of March and the end of 2024’s first quarter.
Here’s the quick hits for March consumer spending on video games here in the States:
Overall spending increased 4% to $4.89 billion.
Content grew 9% to $4.25 billion.
Hardware declined 32% to $391 million.
Accessories moved up 9% to $242 million.
Content, which made up 87% of total spending in March, contributed solid sales momentum for the domestic market, boosted by double-digit mobile growth and a slew of new launches. At the same time, Hardware continued to drag without a huge catalyst or fancy new product offering in sight.
“Mobile’s strong performance was supplemented by a 3% increase in Console Content spend, along with a 2% gain in the PC, Cloud and Non-Console VR Content segment,” said Circana’s Mat Piscatella on Twitter. “Mobile accounted for 89% of the total year-on-year growth in video game content spending during the month.”
Highlighting the announcement was Dragon’s Dogma 2 as the month’s best-selling premium title, highest of the six new releases among the Top 10. Monopoly Go stacked up yet again as mobile’s top grossing game, while Fortnite and Helldivers 2 led platform engagement charts. PlayStation 5 came out on top for console sales by both dollars and units, as it has most months recently.
Scroll down for more on product categories, best sellers, most played games, first quarter results and my predictions for future reports.
In terms of Content, mobile retained its driving force status, growing 15% in March.
On the premium side, Dragon’s Dogma 2 from Capcom debuted at numero uno on the overall chart. It’s already the year’s 3rd best-selling title, and took less than a month to eclipse lifetime sales of 2012’s Dragon’s Dogma and its Dark Arisen expansion combined.
February’s winner Helldivers 2 came in second, solidifying its spot as the top seller for Q1. The latest from Arrowhead Game Studios already ranks 7th ever for Sony-published titles, an extraordinary feat mostly due to its PC success, and it’s been among the most-played games on both PlayStation and PC since its launch.
Perennial sales beast MLB The Show 24 scored a third place start, right around where it usually begins during its launch month, inserting itself as the 5th best-selling title of 2024 to date.
Rise of the Ronin from Koei Tecmo started at #5 in March, and #14 for the Q1 chart. Globally, the publisher claims it’s tracking above Nioh. This tracks here, since that game charted at #9 in the U.S. during its February 2017 launch.
Nintendo’s latest Princess Peach: Showtime! slotted in 6th, excluding digital, while Sega’s Unicorn Overlord had a fantastic start in 8th. Rounding out the new titles among the top ranks was Take-Two’s WWE 2K 24 in 9th, again without its digital portion included.
As measured by monthly active users, Fortnite was the most played on both PlayStation 5 and Xbox Series X|S, followed by Call of Duty and Grand Theft Auto V. On the PC side, it was Helldivers 2, Counter-Strike 2 and Baldur’s Gate 3. Also, huge shout out to poker roguelite Balatro in 4th on PC!
Check below for March’s best-seller ranks for premium and mobile.
Top-Selling Premium Games of March 2024, U.S. (Physical & Digital Dollar Sales):
Dragon’s Dogma 2
Helldivers 2
MLB The Show 24^
Call of Duty: Modern Warfare 3
Rise of the Ronin
Princess Peach: Showtime!*
Final Fantasy VII: Rebirth
Unicorn Overlord
WWE 2K24*
Hogwarts Legacy
Madden NFL 24
EA Sports FC 24
Minecraft
Horizon Forbidden West
Tekken 8
Rainbow Six Siege
Elden Ring
Mario Kart 8*
Marvel’s Spider-Man 2
Mortal Kombat 1
Top-Selling Mobile Games of March 2024, U.S.:
MONOPOLY GO!
Royal Match
Roblox
Candy Crush Saga
Coin Master
Whiteout Survival
Last War Survival
Pokémon Go
Township
Clash of Clans
Here’s the scoop on Hardware’s tough time last month:
All three major console families saw spending decline over 30%.
PlayStation 5 was the leader by both units and dollars.
The digital edition of PlayStation 5 contributed 39% of unit sales.
Nintendo Switch was #2 measured by units.
Xbox Series X|S secured runner-up by dollars.
Flipping over to Accessories as a segment:
Spending moved up almost double-digits.
The headset and headphone sub-segment rose 8%.
PlayStation 5’s Dual Sense Edge was March’s best seller.
Sony’s high-end controller was also Q1’s winner.
Expanding to results for the January to March 2024 time frame:
Overall spending grew 6% to $14.67 billion.
Content increased 9% to $12.84 billion.
Hardware dropped 24% to $1.12 billion
Accessories jumped up 25% to $707 million.
Within premium gaming, Helldivers 2 was the quarter’s top earner. That was followed by Call of Duty and newcomer Dragon’s Dogma 2. Other standouts include Final Fantasy VII: Rebirth in 4th, Persona 3 Reload in 9th, last year’s winner Hogwarts Legacy at #10.
Similar to March, PlayStation 5 was the leading console in Q1 by units and revenue while Nintendo Switch came in the second spot by units, and Xbox Series X|S slotted at #2 by dollars.
“Total U.S. Video Game spending being up 6% in Q1 2024 despite a 24% drop in hardware spending.. shows how diversification has made the market more resilient,” said Piscatella.
Here’s the list of best-selling premium titles for 2024 to date.
Top-Selling Premium Games of Q1 2024, U.S. (Physical & Digital Dollar Sales):
Helldivers 2
Call of Duty: Modern Warfare 3
Dragon’s Dogma 2
Final Fantasy VII: Rebirth
MLB The Show 24^
Tekken 8
Suicide Squad Kill the Justice League
Madden NFL 24
Persona 3 Reload
Hogwarts Legacy
EA Sports FC 24
Skull & Bones
Marvel’s Spider-Man 2
Rise of the Ronin
Super Mario Bros. Wonder*
Elden Ring
Minecraft
Like a Dragon: Infinite Wealth
The Last of Us Part 2
Mortal Kombat 1
In summary, March and 2024’s first quarter had comparable dynamics when it comes to category results, where both Content and Accessories went up, notably bolstered by mobile and surprise launches in previously-unheralded franchises like Helldivers and Dragon’s Dogma, while Hardware faces a number of headwinds and can’t find a catalyst to growth right now.
Looking ahead, I’ll now run through my thoughts on April and a quick mention of my annual forecast.
I’m thinking we’ll see total April sales rise in the single-digits.
Content will go up, more impacted by older titles rather than new launches.
I expect Hardware to decline in the low to mid double-digits.
I certainly expect there to be fewer new titles in April ranking high on the premium list, compared to more than half of the Top 10 this past March, because there weren’t many triple-A flagships.
The controversial Stellar Blade has a solid chance at competing for a Top 5 debut, even being a PlayStation 5 exclusive. Otherwise, we’ll likely see movement for Microsoft-owned brands. This includes Sea of Thieves hitting a new audience and Bethesda games creeping back into the Top 20 or higher due to the uber-popularity of Amazon’s Fallout series, which already attracted 65 million viewers according to Variety.
In terms of an annual forecast for all of 2024, Piscatella is maintaining his guess for a 2% drop in spending. Personally, I’ll maintain my latest forecast of “virtually flat to slightly down” based on signs pointing to the more enthusiast PlayStation 5 Pro hitting market instead of a Super Nintendo Switch, the latter of which would drive Hardware to much better performance and have a system-selling title alongside it.
The start of a new earnings season, complete with my usual calendar, means it’s time to start up recaps as well.
I’m going to try something new and tighten up these recap articles!
More concise, same great quality. I hope.
Today, that means covering Microsoft’s recent 2024 Q3 results. I’ll focus mostly on Xbox during this January to March time frame, where there was major sales growth solely due to the impact from Activision Blizzard, as other areas within gaming declined including things like content, subscription and hardware offerings.
Still, Xbox segment sales outpaced guidance, mainly due to out-performance of Call of Duty.
Microsoft’s gaming division also hit a major milestone this quarter. Feeling the boost from the acquisition being included for two quarters now, annualized Xbox sales reached $20 billion for the first time ever.
I mean, this is why Microsoft spent all that dough. Plus, executives expect this to continue in the immediate future, according to guidance I’ll highlight later in this article, as that annual sales number is likely to move above $21 billion to close the fiscal year.
Now I’ll move right into a rundown of the numbers and a look ahead into the future of a somewhat shaky time for Xbox’s output.
Here’s a quick summary of Microsoft’s quarterly gaming sales, as shown in the slides above.
Q3 revenue rose 51% to upwards of $5.45 billion.
This was above management’s, and my, expectations.
It’s an all-time Q3 record, and Xbox’s second best quarter ever.
Out of that percentage gain, 55% was due to ActiBlizz impact.
Implies all other areas like Xbox, Bethesda etc saw a decline of 4%.
These quarterly sales move gaming back to fourth place in terms of Microsoft’s major product categories, trailing Windows at $5.93 billion.
Expanding now to current annualized Xbox revenue to get a broader sense of the business:
Overall annual gaming revenue is $19.97 billion.
Compare that to $18.13 billion as of last quarter.
The chart in the above gallery shows these in context.
I’ve long written about how this was the strategy around Microsoft’s merger and acquisition activity, to push past the $20 billion per year mark and approach its largest peers, like Sony and even Tencent, especially by leveraging ongoing services and breaking more into mobile.
Which is why I don’t think Microsoft is done buying, even after spending so much on the world’s largest formerly third party publisher.
Similar to my earlier coverage of Xbox, I’ll mention that Microsoft gives limited visibility into the profitability, or lack thereof, of its gaming business. Two points on that:
The More Personal Computing (MPC) segment saw operating profit rise 16% to $4.92 billion.
The ActiBlizz deal boosted expenses, as its net impact in Q3 was an operating loss of $350 million.
This implies that Xbox, despite seeing a big top-line boost, was likely less profitable this quarter.
Here’s where I’ll highlight the underlying dynamics, by way of discussing product categories.
First up is the larger of the two, Xbox Content & Services (Xbox C&S):
Q3 Xbox C&S revenue increased 62% to $5.03 billion.
Same as games revenue, this is also a Q3 record and second best ever.
ActiBlizz growth contribution was 61%, thus a 1% gain for everything else.
Then, on an annual basis:
Current annual Xbox C&S revenue is $16.86 billion, or 84% of the total.
That’s up from $14.86 billion last quarter, when it was 82% of the total.
On the flip side, Xbox Hardware had another tough time, without much to drive its fundamentals right now, as lower unit sales weren’t enough to offset gains from higher pricing:
Q3 Xbox Hardware revenue declined 31% to $350 million.
The lowest 3rd quarter dollar sales of the Xbox Series X|S generation.
Looking at the last 12 months:
At present, Xbox Hardware annual sales are $3.11 billion.
That’s down from $3.27 billion sequentially, and $3.37 billion last year.
Since Microsoft doesn’t tell us anything about lifetime Xbox Series X|S unit sales, I’ll keep up with my guesstimates.
I had the family at 29 million to 29.5 million last quarter.
It’s now likely hovering right around the 30 million milestone.
I forecast it moved 700K to 800K in the three months ending March.
Which lands it around 29.7 million to 30.3 million to date.
When it comes to supplemental stats like engagement, player counts etc, Xbox management didn’t have much to say.
Chief Executive Officer (CEO) Satya Nadella did note the following on the firm’s conference call:
Q3 records for “game streaming hours, console usage and monthly active devices.”
The first ActiBlizz title on Game Pass Diablo IV was one of the service’s biggest launches.
Players clocked over 10 million hours during its first 10 days.
This month, Xbox had 7 games among the Top 25 on the PlayStation store.
Which is a distinct lack of specifics, especially as it relates to Game Pass subscribers or total monthly active users, which unfortunately is a common theme here from management.
Before closing out, I’ll mention Microsoft’s overall results.
Company revenue jumped 17% to $61.9 billion.
Operating profit moved up 23% to $27.6 billion.
Microsoft Cloud sales increased 23% to $35.1 billion.
Slipping into the future, management provided guidance for the final quarter of fiscal year 2024.
Here are the expectations shared by Chief Financial Officer (CFO) Amy Hood for Q4 gaming performance.
Total gaming revenue growth in the low to mid-40s.
50 points of that via ActiBlizz impact.
Xbox C&S expected to grow in the high 50s.
60 points there from ActiBlizz, thus implying everything else will be down 10%.
Xbox Hardware will “decline again.” Based on my math, it will be down 24%.
Using these to make certain assumptions, that translates to the following in dollar terms:
Total gaming revenue around $5 billion.
Xbox C&S revenue upwards of $4.55 billion.
Xbox Hardware hitting $450 million.
These feel right to me, with upside for content based on Senua’s Saga: Hellblade II launching in May, certain games like Sea of Thieves accessing additional audiences and a good effect from Amazon’s Fallout show (which is awesome).
Really, it’s going to go as ActiBlizz games go, notably as they are added to Game Pass.
If Xbox hits these targets, it would shatter a record for fiscal year sales, approaching $21.5 billion. For comparison, this number was at $15.5 billion at the end of fiscal 2023!
I hope you enjoyed the new format experiment, where I’m balancing analysis with word count to make it easier to follow and fun to read.
I’ll be back soon with more articles, and feel free to reach out on social media in the interim. Thanks for reading. Until next time, be well!
Note: Comparisons are year-over-year unless otherwise noted.
Sources: Company Investor Relations Websites, Xbox Wire.
I’m back, with a brand new season. Nope, I’m not referring to Spring, as it’s now here in the States. Though I’ll take the nicer weather, at least looking out my window while playing games.
It’s earnings season!
Which means I’m sharing what I like to call one of the most comprehensive lists of gaming, media and technology earnings dates on the internet. Now approaching 120 companies strong, it will give a sense of when companies are reporting, and where they are in their fiscal cycles. And when an exact date isn’t known yet, I try to estimate based on previous announcements.
As you’ll notice in the above image and the below Google Sheets link, the week of Monday, May 6th is going to have a lot action, including almost a dozen companies reporting on May 9th. Get ready, everyone.
In order to prepare for the next busy season, feel free to bookmark, save, share and post of course.
I also recommend keeping an eye out for my recaps both here and on social media. Plus, here’s three companies to watch over the next few weeks. Enjoy!
After one of the biggest IPOs of the year, Reddit is poised to publish its first quarterly report as a public company when it shares fiscal year 2024 Q1 results. The “front page of the internet” saw its stock price jump in March, yet has cooled to settle below its listing price in April. Within its prospectus, the company boasted 73 million average daily active unique users and generated over $800 million in annual sales, however it’s also currently operating at a loss. I’m mostly curious to see if its business model will expand as the firm matures, and if executives expect to become profitable any time soon.
Capcom Co. Ltd: Monday, May 13th
I’ve been upbeat on Capcom for what seems like a decade now, and the Japanese publisher will report its latest annual results in a few weeks. Just today, the firm revised both sales and profit forecasts upwards, a rarity right before reporting. This signals management is even more optimistic as it’s on track for yet another year of growth, assuredly on the strength of March’s Dragon’s Dogma 2 shipping 2.5 million units right out of the gate. Between that and continued momentum for its Resident Evil and Street Fighter franchise sales, I’m guessing Capcom will beat even its updated guidance, then move into a year where we could see another flagship launch in Monster Hunter Wilds soon enough.
Ubisoft Entertainment SA: Wednesday, May 15th
It feels like Ubisoft, which also reports annual results in May, has been quiet lately even though it’s had a few releases and continues as the caretaker of a big intellectual property portfolio. It produced a couple commercial snoozers like Avatar: Frontiers of Pandora in December then February’s Skull & Bones. And while Prince of Persia: The Lost Crown is amazing, it’s not a blockbuster. So I’m cautious on its latest results. However, I’m quite upbeat on its near-term future as its slate for the upcoming year starts to take shape with Star Wars Outlaws, a game I believe will sell well, officially announced for August while the impending Assassin’s Creed Codename Red could also be out in the next six months or so, a nice one-two punch as far as triple-A tent-poles go.
