PlayStation 5 Outpaces PlayStation 4 in Circana’s March 2023 U.S. Games Industry Sales Report

DomsPlaying

Can you believe the year is a quarter over? At least it’s beautiful springtime here in the States.

Which means, most importantly of course, it’s time to spring into another monthly sales report!

Industry tracking firm Circana, formerly The NPD Group, recently published its March 2023 games industry report which tracks trends and tidbits on spending habits of domestic gamers.

Both March and the first three months showed common themes, while the PlayStation 5 hit a major milestone compared to its predecessor plus Capcom has another REmarkable hit on its hands.

Overall consumer buying on games and related categories declined 5% in March, leading to a modest 1% drop for the first quarter. Underlying this movement was weakness in mobile and certain software areas, which offset sizeable gains in the hardware segment.

Generally this indicates industry sales normalizing towards pre-pandemic levels, as consumers get back to other forms of entertainment and face certain external pressures like continued inflation. Better hardware supply is providing a much-needed boost, because those looking to buy a current generation box at retail can find one.

Circana’s monthly announcement tells a mixed story on the Content side as mobile and premium software continued downward pressure, even as new launches hit market. Within premium, Capcom’s Resident Evil 4 Remake was the month’s best seller.

On the console front, Sony’s PlayStation 5 has been on market now for 29 months. This is worth mentioning because it’s (finally) outpaced 2013’s PlayStation 4 on a launch-aligned basis. Until now, the recent cycle was lagging its predecessor. In fact, PlayStation 5 also set a new March unit sales record for the brand, a month after it did the same for a February month, implying that Sony might be able to meet its lofty goals towards this the end of its fiscal year.

“PlayStation 5 lifted hardware spending in March,” said Circana’s Mat Piscatella on Twitter. “However this growth was offset by a decline in content spending, where increases in non-mobile subscription as well as digital add-on console content were offset by lower spend across premium games, PC add-on content and mobile.”

Scroll down for more reactions to the commercial standing of the U.S. games industry in Q1.

United States Games Industry Sales (February 26th – April 1st, 2023)

During the last month, total games industry spending moved down 5% to $4.63 billion. This means the first quarter equaled $13.58 billion, down 1% to date.

The largest contributor of Video Game Content made $3.83 billion in March, a decline of 7% as it comprised 83% of the overall figure. In the same month last year, it made up 85% mainly because of softness in hardware at the time. Q1 purchasing on Content this year lowered 4% to $11.51 billion, whereas in 2022 it reached $12 billion by now.

Mobile was a driving force, moving down yet again in March albeit it’s unclear to what extent as Circana doesn’t share specifics. The report still claims mobile spend was “strong” during March, led by the casual sub-category having its best month since a year ago, outpacing even the holiday period. Top mobile earners last month were Candy Crush Saga, Roblox, Royal Match, Coin Master and Pokémon Go.

Circana said premium software also exhibited a year-on-year decline in March, despite a handful of higher profile releases. Keep in mind last year was the first full month of Elden Ring sales, a title which proved to be a bellwether throughout the first quarter and beyond, plus featured launches in the Gran Turismo and Kirby franchises.

The reanimated Resident Evil 4 Remake won March by revenue, making it the 3rd best-selling game of the entire quarter with only a week of sales in consideration. As compared to earlier titles, Resident Evil Village also topped its debut month of May 2021 while Resident Evil 3 Remake started in 6th during April 2020.

This is an impressive beginning for the beloved Resident Evil 4 Remake that parallels its global success, whereby it’s the second fastest-selling franchise game behind only Resident Evil 6 in 2012. Resident Evil 4 Remake moved 3 million copies in its first two days, and has since sold over a million more.

Beneath Hogwarts Legacy at #2 was the next new release in MLB The Show 23, which scored a third place start. The past couple incarnations of Sony San Diego’s multi-platform baseball sim have performed in this range during their debut months, hitting 4th and 1st in 2022 and 2021, respectively. This year’s title is already the 4th best-seller of 2023, made even more impressive by the fact that it only counts digital on select platforms.

The final new title on March’s list was WWE 2K23 at #7. This was a great result for Take-Two’s latest wrestling game, notably because the publisher doesn’t share its download portion. All of this is from physical sales. Its predecessor entered the arena in the same spot in March 2022 after the storied series took a much-needed year off.

Otherwise, last month’s premium ranks were occupied by titles launched in earlier periods. Major movers included Metroid Prime Remastered jumping from #21 to #13 and Lego Star Wars: The Skywalker Saga launching up to 20th from down in 41st.

Across the first three months of 2023, Hogwarts Legacy was the top-selling title followed by Call of Duty: Modern Warfare 2. The two new entries in March bumped Dead Space Remake a bit to 5th. Further down, Octopath Traveler II was probably the most notable, moving from outside the Top 20 into the 17th slot.

Here’s the full rundown of premium software sellers for March and the first quarter.

Top-Selling Games of March 2023, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Resident Evil 4 Remake
  2. Hogwarts Legacy
  3. MLB: The Show 23^
  4. Call of Duty: Modern Warfare 2
  5. The Last of Us Part 1
  6. FIFA 23
  7. WWE 2K23*
  8. Elden Ring
  9. Madden NFL 23
  10. Mario Kart 8*
  11. Minecraft
  12. Octopath Traveler II
  13. Metroid Prime Remastered*
  14. Pokémon Scarlet & Violet*
  15. God of War: Ragnarök
  16. Kirby’s Return to Dreamland*
  17. Dead Space Remake
  18. NBA 2K23*
  19. Sonic Frontiers
  20. LEGO Star Wars: The Skywalker Saga

Top-Selling Games of Q1 2023, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Hogwarts Legacy
  2. Call of Duty: Modern Warfare 2
  3. Resident Evil 4 Remake
  4. MLB The Show 23^
  5. Dead Space Remake
  6. Madden NFL 23
  7. FIFA 23
  8. Elden Ring
  9. The Last of Us Part 1
  10. God of War: Ragnarök
  11. Mario Kart 8*
  12. Pokémon Scarlet & Violet*
  13. Fire Emblem Engage*
  14. Minecraft
  15. Forspoken
  16. Sonic Frontiers
  17. Octopath Traveler II
  18. NBA 2K23*
  19. Monster Hunter Rise
  20. One Piece Odyssey

Sales within the Video Game Hardware category moved up 10% in the U.S. last month, settling at $566 million, which proved to be a substantial figure in a historical context.

“This is the second highest video game hardware spend for a March month in U.S. history, trailing only the $680 million reached in March 2021,” noted Piscatella.

That sort of near historic momentum drove Q1 sales upwards 21% to $1.5 billion. For comparison, its contribution was $1.2 billion between January and March 2022.

This signals not just a healthy supply of consoles in market, but a better-than-expected amount coming off a challenging 2022. I’ve written about how I was skeptical of Sony’s bullishness on its console business even now that supply lines are shored up. I’m beginning to think executives were onto something.

Why? In addition to PlayStation 5 now selling faster than PlayStation 4 domestically, it also set a new unit sales record last month for the PlayStation brand during a March month. Looking back historically, PlayStation Plus moved 620K units around its first month in 2005. The latest box from Sony outsold this number.

Naturally, PlayStation 5 was the best-selling console of March by both units and revenue as it gained ground compared to last year. It’s unclear if we’re looking at a record first quarter of unit sales after both February and March were both all-time PlayStation records. All Circana did was call year-on-year growth in Q1 “significant.”

Something else that’s significant, even if less so, was how Xbox Series X|S again secured second place during March as measured by dollar sales. This is the second month in a row where Microsoft’s latest console family has outpaced Nintendo on revenue. Still, Nintendo Switch continues to move off shelves in its seventh year as the runner-up during March by unit sales.

Similar to March itself, when considering the first quarter, Switch secured second place on units. Xbox Series X|S is runner-up right now on dollars. Circana tells me that the difference between the two platforms vying for second place is “very close.” Basically, it’s anyone’s game!

Rounding out the spending categories was Video Game Accessories, which didn’t move much in March or Q1 in either direction. Purchasing rose 1% last month to $239 million, making the year-to-date essentially flat at $617 million.

Game pads boosted March’s result, earning more than any other sub-segment in Accessories. Sony’s PlayStation 5 DualSense Edge Wireless controller in black was the month’s top-seller, benefiting from that premium price point.

As for the year-to-date best-seller, I have a question out to Circana to see if they might be able to share it. I’d imagine it’s one of the PlayStation 5 DualSense models, based on how well the corresponding console is doing lately.

Separately, fitting with the broader narrative of a slower start for PlayStation VR2, I asked Circana specifically if they could share anything about the headset’s performance or how it compares to the first iteration back in 2016. They weren’t able to comment. Seeing this segment where it is means that I don’t think virtual reality is moving the needle, even during the first full month of sales for a premier product launch from one of the industry’s biggest players.

While somewhat disappointing, it matches my expectation that virtual reality has niche appeal, both in the past and future, until the technology catches up with where it needs to be and headsets can be standalone. There’s also the high barrier to entry on cost for something that requires a console connection.

While domestic industry sales trended downward during both March and the first quarter, there are plenty of bright spots including hardware, big budget title sales and even accessories moving in a good direction. PlayStation 5 hitting a couple major milestones is reassuring, given where supply has been for most of this generation.

“Engagement is returning to pre-pandemic levels, but spending is holding significantly above,” noted Piscatella.

Mobile is still the unknown, showing weakness for a while now, and Xbox Series X|S continues to lag where it should be against its biggest peer. Perhaps Microsoft isn’t as concerned. Circana did specifically say that subscription spending, like that on Xbox Game Pass, is still growing at this phase, although slower than it has in recent years because of cycle maturation.

I’ll now cover the first month of the new quarter before I go. April is a curious month, continuing with blockbuster releases on the premium side. Plenty of which will help with console demand.

I’m anticipating overall spending to be flat year-on-year, with upside depending on if console inventory holds up and where mobile goes.

Within Content, I’m expecting a massive debut from Star Wars Jedi: Survivor. However, there’s a caveat. The latest from Respawn Entertainment and Electronic Arts launches on April 28th, the day before the April tracking period ends. Even so, I’m betting it’s the month’s best-seller.

Dead Island 2 releases later this week, and it’s a curious one in this context. I can see a Top 10 start, though not a Top 5. EA Sports PGA Tour can be a quiet seller, with Top 15 potential. Minecraft Legends will absolutely have its audience on brand alone, yet I’m not expecting a high chart position because a number of fans will access it via Xbox Game Pass and strategy is more of a focused genre. Lastly, Horizon Forbidden West has its Burning Shores expansion out, so that should reappear in a solid position.

For the console space, it’s impossible to bet against Sony right now. At least until Nintendo’s next Zelda game in May. Expect another win for the PlayStation 5 in April.

Thus officially ends the first quarter, a fun one at that. I greatly appreciate everyone visiting the site. Check out Piscatella’s social media post for further details directly from Circana. Be well, all!

*Digital Sales Not Included

^Xbox & Nintendo Switch Digital Sales Not Included

Note: Comparisons are year-over-year unless otherwise noted.

Sources: Bloomberg, Capcom, Circana.

-Dom

Hogwarts Legacy & PlayStation 5 Unit Sales Record Boost U.S. Games Sales Growth in February 2023 Circana Report

DomsPlaying

It’s the season to Spring into a new video game sales report.

Yup, the jokes really bloom around these parts and can blossom into something special.

Anyways, I’m here to cover the latest U.S. games industry spending report. For a bit of background, industry tracking firm The NPD Group merged with Information Resources, Inc (IRI) last year. Now, the two firms have rebranded into: Circana.

Fun new name, same sales data!

Within this announcement, Circana shared that consumer spending here in the States is back to growth after a lackluster January. In fact, February’s 6% growth rate was the best result since October 2021’s 13% increase amidst certain macro elements easing and console inventories returning to retail.

Total monthly spend reached $4.6 billion, boosted mainly by the massive launch of Hogwarts Legacy and ongoing PlayStation 5 stock meeting its consistent demand. All three primary categories of Content, Hardware and Accessories showed gains last month, the latter two in double-digit territory.

For Content, while mobile spending continued to lag, the premium side proved healthy especially as it relates to new releases. There were seven new launches among the Top 20 best-sellers, including four within the Top 10. Earning the top spot was Hogwarts Legacy, published by Warner Bros.

Note: Harry Potter author J.K. Rowling wasn’t directly involved in making Hogwarts Legacy, though she undoubtedly benefits from it financially. I want to make it utterly clear that trans rights are human rights, and I think her transphobic comments are despicable.

PlayStation 5 continued to drive an upward trajectory within the Hardware segment, which saw spending jump nearly 70% in February. Sony’s latest was the best-selling console by both units and revenue. Even further, it sold more units last month than any prior individual PlayStation platform. Previously, the PlayStation 2 held this record back in 2005.

“The February results, and really those going back to October of last year, show a stabilization of trends, both in purchasing and engagement,” said Circana’s Mat Piscatella on Twitter. “We’re well into the ‘new normal’ and are no longer subject, for now, to the wild swings we’d seen in the market starting in March 2020.”

Here’s a deeper dive into the data incoming!

United States Games Industry Sales (January 29th – February 25th, 2023)

Consumers in the U.S. spent upwards of $4.6 billion on gaming last month, 6% higher than this time last year. That means year-to-date is trending up almost 1% to $8.95 billion.

Slowness in mobile was offset by digital strength on both console and PC, plus subscription spending on non-mobile platforms went up. Alongside this, the launch of Sony’s PlayStation VR2 led to higher sales within peripherals, even if there’s limited detail on its actual impact.

Digging into the report, Content category spending in February rose 1% to $3.89 billion, making up 85% of the broader total. Last year, it contributed 88%. This means for 2023 right now, spending is down a modest 2% to $7.68 billion.

Circana didn’t share much in the way of specifics on mobile, other than to highlight that it declined during the month. According to data partner Sensor Tower, the best performing mobile titles were Candy Crush Saga, Roblox, Royal Match, Pokémon Go and Coin Master. In particular, Pokémon Go had a resurgence, seeing in-game spend up 23% compared to January, indicating a 10% increase year-on-year, as it reentered the Top 5 biggest monthly earners.

Within premium software, the aforementioned Hogwarts Legacy concocted a recipe for success, outselling all other titles during its debut month thus securing the top spot of 2023 so far. The ever-present Call of Duty: Modern Warfare 2 and Dead Space, January’s winner, rounded out the Top 3 respectively. After a couple sports titles in Madden NFL 23 and FIFA 23, The Last of Us Part 1 moved back into Top 10 at #6 on the back of the hugely popular HBO show.

Rounding out the Top 10 were three more new releases. Wild Hearts started in 8th, which means Electronic Arts published four of the eight best-selling titles in February. Next up were two Japanese titles in Sega’s Like a Dragon: Ishin! and Square Enix’s Octopath Traveler II finishing up the Top 10. As a comparison for the latter, Octopath Traveler was the best-selling title of July 2018. In fairness, the sequel had only a couple days of tracking last month, however it also launched on more platforms than strictly Nintendo Switch.

Moving down the list to look at other new games, Kirby’s Return to Dream Land started at #15. The Kirby brand has seen a nice boost from the Switch effect this generation, as last year’s Kirby and the Forgotten Land was the fastest-selling game in franchise history. We’ll know more about its performance during Nintendo’s upcoming results.

Company of Heroes 3 debuted at #16. That’s a solid showing from the latest mainline entry in the real time strategy series, as Company of Heroes 2 didn’t chart back in 2013. This also means that Sega had three games among the best-sellers ranks in February. Finally, Theatrhythm Final Bar Line landed right at #20, the second game from Square Enix on the list.

It’s way early in the year, so the annual ranks look a lot like February’s. Hogwarts Legacy entering the list at #1 is the headliner, of course. Sony’s The Last of Us Part 1 bumps up into the Top 10, at #9. Electronic Arts still has three titles within the Top 5, and also boasts Need for Speed: Unbound at #18 and Wild Hearts sneaking in at #20.

Check below for a complete rundown of recent best-sellers.

Top-Selling Games of February 2023, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Hogwarts Legacy
  2. Call of Duty: Modern Warfare 2
  3. Dead Space Remake
  4. Madden NFL 23
  5. FIFA 23
  6. The Last of Us Part 1
  7. Elden Ring
  8. Wild Hearts
  9. Like a Dragon: Ishin!
  10. Octopath Traveler II
  11. God of War: Ragnarök
  12. Minecraft
  13. Mario Kart 8*
  14. Pokémon Scarlet & Violet*
  15. Kirby’s Return to Dream Land*
  16. Company of Heroes 3
  17. Sonic Frontiers
  18. The Last of Us Part 2
  19. NBA 2K23*
  20. Theatrhythm Final Bar Line

Top-Selling Games of 2023 So Far, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Hogwarts Legacy
  2. Call of Duty: Modern Warfare 2
  3. Dead Space Remake
  4. Madden NFL 23
  5. FIFA 23
  6. Elden Ring
  7. Fire Emblem Engage*
  8. God of War: Ragnarök
  9. The Last of Us Part 1
  10. Forspoken
  11. Pokémon Scarlet & Violet*
  12. Minecraft
  13. Mario Kart 8*
  14. One Piece Odyssey
  15. Sonic Frontiers
  16. Monster Hunter: Rise
  17. NBA 2K23*
  18. Need for Speed: Unbound
  19. Marvel’s Spider-Man: Miles Morales
  20. Wild Hearts

Last month, domestic Hardware segment sales jumped a staggering 68% to nearly $500 million. After January’s resilience, it’s returned to growth amidst continued supply improvements and people’s general interest in buying consoles. A major third-party software launch in Hogwarts Legacy didn’t hurt, either.

In fact, Circana pointed out the latest monthly result was the highest hardware spend during a February month in well over a decade. Last month’s $495 million figure was the best since 2009, back when it reached $534 million.

Expanding to the current yearly number, console spend is trending 29% higher to $888 million.

Leading the charge here is Sony’s latest generation of PlayStation 5 devices. This family repeated its win from January, indicating the company’s supply lines are shored up and retail boxes are available for folks to purchase as desired. In fact, PlayStation 5 unit sales last month set a record February level compared to all other individual PlayStation platforms in history. Better availability alongside pent-up demand and tent-pole AAA title was the perfect storm for a record month.

While Circana doesn’t share exact unit sales, we can estimate based on historical data. Using older data from The NPD Group results back during February 2005, PlayStation 2 unit sales domestically were roughly 533K at the time. PlayStation 5’s output last month must have been even higher for it to set a record. Over half a million sold in a single, non-holiday month!

What about something non-PlayStation? Such as Nintendo Switch? Or Xbox Series X|S?

Well then, Switch was second in February on unit sales while Xbox Series X|S generated the second most dollars. As for 2023, Nintendo Switch was second on dollars generated while Xbox Series X|S slots in third by that metric.

Accessories was the other segment that rose double-digits in February, moving up 13% to $212 million. It’s now essentially flat for the year, down 1% to $377 million in aggregate across the first two months.

Circana attributed the monthly gain to a greater contribution from virtual reality headsets, which offset lower controller buying. The main reason for that was, clearly, the launch of PlayStation VR2. To what extent is unclear, because Sony hasn’t shared results on its new product and this report isn’t specific on how it compares to its predecessor or peers. It’s hard to say where indicators point when there aren’t any.

Update: I’ve chatted with Piscatella from Circana. He confirmed the best-selling accessory of February was Sony’s DualSense Midnight Black wireless controller. Additionally, Sony also secured second place with its DualSense Gray Camo game pad iteration. I have my eye on future releases to get a sense of how PlayStation’s premium DualSense Edge version fares.

February’s showing for U.S. spending was a solid recovery from January, and the best year-on-year growth in around 18 months. It helped to have an uber-popular franchise like Harry Potter launch, not to mention how people can actually find consoles to buy which led to PlayStation 5 setting a new February unit sales high within the brand’s history.

There’s also the general impact from easing inflation, allowing consumers to spend a bit more on entertainment. Having console supply or major games on market is great; there’s also the buying power and ongoing demand side of the equation.

“Improved PS5 supply has certainly helped, as have strong sales performances across both new releases and catalog titles,” noted Piscatella. “Some areas are still in the process of normalizing such as mobile, and we’re still seeing delays that might not have happened in other times.”

Looking ahead to March, it’s already almost the end of another quarter! Note the Circana sales report tracks from February 26th to April 1st.

I’m upbeat, especially for the likes of new releases, software holdovers from February and PlayStation hardware. Mobile remains iffy. Even considering last year when March had the bulk of Elden Ring sales, this year there’s the equally impressive Hogwarts Legacy, which I expect might repeat as the month’s top-seller.

The other AAA title that will compete for March’s prime position is Resident Evil 4 Remake, which shipped 3 million units during its first two days according to Capcom. It will be among the Top 3, and I’m Leoning towards predicting it will win.

Then there’s additional bigger budget releases that will chart, including MLB The Show 23, Wo Long: Fallen Dynasty and WWE 2K23. I’m expecting a great opening day (and month) from MLB The Show in particular, and there’s upside to WWE 2K after last year’s return to form.

On the hardware front, it’s difficult to bet against the PlayStation 5 right now. So I won’t, at least not until May when The Legend of Zelda: Tears of the Kingdom hits Switch. Speaking of, have you seen that footage? Wow!

In general for the upcoming March monthly announcement, I see spending up slightly since last year, with hardware showcasing a double-digit bump. Content will be closer to flat, depending on how mobile goes.

In the meantime, I recommend checking out Piscatella’s thread on Twitter (even though he doesn’t like us dark mode users!) for more details on February’s results. Feel free to drop a line here or on social media with any questions or comments. Thanks for visiting! Be safe, all.

*Digital Sales Not Included

Note: Comparisons are year-over-year unless otherwise mentioned.

Sources: Capcom, Circana, Nintendo, Warner Bros.

-Dom

PS5 & Dead Space Headline January 2023 NPD Group U.S. Sales Report During 1st Decline Since September

DomsPlaying

I’m back to the domestic sales beat!

Yesterday, The NPD Group posted its first monthly report of 2023 showcasing January’s consumer spending across the games industry. Since this currently matches year-to-date, this recap will be shorter than usual. There’s still a lot of juicy data to uncover.

January’s results were mixed, moving down 5% since last year’s near all-time overall spending high which occurred in 2021. Ever since that peak, it’s been slowly reverting towards pre-pandemic levels.

In the context of recent figures, January was the first spending decline since September 2022 when it dipped 4%. This modest downward move was mainly due to the strong comparable last year, during which the massive launch of Pokémon Legends Arceus on Nintendo Switch.

Within the segments of Video Game Content, Video Game Hardware and Video Game Accessories, Hardware was the only category that didn’t show a reduction since this time last year. Still, console sales were flat, which limited the category’s upside push on the total even amidst inventory improvement.

The Content side often goes as mobile does, since it contributes upwards of the category’s sales. While the group’s report didn’t quantify mobile spending, it did cite a decline in this major area.

“Drops in mobile content, physical console content, and gamepad spending drove the January shortfall,” noted The NPD Group’s Mat Piscatella.

Call of Duty: Modern Warfare 2, as expected, continued to lead the overall premium software sales chart. As for new titles, the Dead Space Remake from Electronic Arts was the headliner in the second spot.

Within Hardware, just as Sony’s PlayStation 5 did during 2022 measured by dollar sales, it was the top-selling console in January. This time by both revenue and units, meaning Sony’s production ramp-up is in full swing in an attempt to offset shortages earlier in this latest generation.

I always say it’s crucial to keep historical context in mind when looking at monthly shifts. Consumer spending last January was down 1% from a best-ever result the prior year in the States. Which means that even though last month was the first decline in some time, this movement isn’t as poor a result as headlines might indicate.

That said, here’s a full recap of the numbers underlying this latest report.

United States Games Industry Sales (January 1st – January 28th, 2023)

Unfortunately, The NPD Group’s public report for January was more sparse than usual in terms of charts and graphs. The above graphic shows last month’s numbers.

Overall U.S. spending on games lowered 5% to $4.35 billion. Compare that to last year’s $4.59 billion, and 2021’s record of $4.8 billion. People are spending a bit less now, whether due to macro pressure like inflation or choosing other entertainment forms as they venture outside the house.

Content sales dipped to $3.79 billion, or a similar decline of 5%. Currently, this segment that includes software sales, mobile and subscriptions alike, makes up 87% of the country’s total. During the holiday season in December, this portion was 73% due to higher relative hardware output. It was recently much closer to 2022’s January contribution of 88%.

Mobile weakness continued, and this year’s new premium titles weren’t quite enough to match the performance of a major Pokémon franchise release back in January 2022.

Activision Blizzard’s Call of Duty: Modern Warfare 2 led the premium ranks for the fourth consecutive month since its start in November, now moving into a new season for the ongoing multiplayer shooter.

Next was the re-imagined Dead Space from Motive Studios as the first new entry in January, landing in second place. While The NPD Group didn’t share much in the way of comparisons, we can look at earlier rankings. During October 2008, the original Dead Space didn’t chart since it was a new offering. When the much-anticipated sequel Dead Space 2 debuted in January 2011, it was the third best-seller after Call of Duty: Black Ops and Just Dance 2. Lastly, in February 2013, Dead Space 3 secured top billing for the series’ best performance to date.

Back to last month, rounding out the Top 3 was Madden NFL 23, the same exact position it held for 2022 overall. This consistency was in part driven by the lead-up to Super Bowl LVII, during which Kansas City thankfully won over the Philadelphia Eagles. (Giants fan here, as if you couldn’t tell!)

The next new release to chart last month was Fire Emblem Engage on Nintendo Switch at #5. One caveat for this latest mainline entry in the long-running franchise is that Nintendo’s games don’t include digital share for the purposes of these domestic charts. Compare its spot to Fire Emblem: Three Houses in July 2019 when it took home #2 behind only Madden NFL 20.

There were two additional new releases within the Top 10 during January: Forspoken from Square Enix debuted in seventh, while Bandai Namco’s One Piece Odyssey kicked off in ninth. I’d say the former was in-line with modest expectations while the latter undoubtedly out-performed in that position.

Lower down the list, big movers for existing titles included The Last of Us Part 1 which jumped up from 36th to 11th on the heels of its HBO show’s popularity. Monster Hunter: Rise skyrocketed from 68th to 13th as its PC version hit market.

Check below for the full software chart for January.

Top-Selling Games of January 2023, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Call of Duty: Modern Warfare 2
  2. Dead Space Remake
  3. Madden NFL 23
  4. FIFA 23
  5. Fire Emblem Engage*
  6. Elden Ring
  7. Forspoken
  8. God of War: Ragnarök
  9. One Piece Odyssey
  10. Pokémon Scarlet & Violet*
  11. The Last of Us Part 1
  12. Sonic Frontiers
  13. Monster Hunter: Rise
  14. Mario Kart 8*
  15. Minecraft
  16. Need for Speed Unbound
  17. Just Dance 2023
  18. NBA 2K23*
  19. Marvel’s Spider-Man: Miles Morales
  20. NHL 23

Spending on Hardware ended up virtually flat year-on-year during January, at $393 million. The implication being supply is generally getting better, however the lower-priced Switch is still a significant portion of the pie while Sony and Microsoft still aren’t where they would like to be on manufacturing.

“Growth in PlayStation 5 and Switch hardware spending was offset by declines across other platforms,” said Piscatella.

At the top end, PlayStation 5 won the month using both revenue generated and unit sales as barometers. On the dollar sales side, this is the same theme from 2022 when Sony’s platform dominated most months due to its higher average price point. The more impressive part is Sony outpacing all others by units, meaning that its suppliers are increasing inventories at market and consumer demand is steady even after the holiday months.

This sort of result also confirms Sony executives stating recently that it’s easier than even to find a PlayStation 5. Just a couple weeks back, during a record third fiscal quarter report, the Japanese consumer tech company raised its annual unit sales guidance for the family of devices. It now expects to ship 19 million globally for the fiscal year ending next month, up a million from the previous forecast. At present, it’s at 12.8 million through the first three quarters.

Refocusing on the U.S., Nintendo Switch slotted in second place on both metrics. Based on Piscatella’s comments, its console sales actually grew last month as it approaches its sixth birthday in March. While it’s a small tidbit in the general report, and it’s not specific on the amount of growth, this is a notable accomplishment for the aging platform.

Microsoft’s Xbox Series X|S family continues to lag its peers, seeing as it’s the remaining of the big three and falls into the group of consoles that did not grow in January. This echoes Microsoft’s latest financial results during which hardware sales reduced 13%. Even in the holiday quarter, when demand is at its highest. This signals a couple of points to me: it’s having difficulties getting quantities to market, and that demand might not be as strong as Sony’s offering. It also reflects Microsoft’s broad gaming strategy of reaching players with the appeal of ecosystem and subscription, being where they are with existing devices like mobile as opposed to requiring an Xbox for access. This model diverges compared to competitors, thus local hardware sales seem to be suffering for it.

The NPD Group’s final tracked segment of Accessories saw the most precipitous decline in January, the only one to fall in the double-digits, dipping 14% to $165 million. This comes after a 15% decline last year. In fairness, January 2021 was an all-time high. Still, peripheral spending is showing more severe declines than the other two categories.

Pushing this down was a stark decline in spending on game pads, which is a somewhat unfortunate result considering hardware’s more modest reduction. Game pad spending was the reason behind most of the segment’s softness last month.

Sony’s PlayStation DualSense Wireless Controller in midnight black started 2023 as the year’s best-selling accessory by dollar sales, outpacing all other peripherals in January.

Taking January’s report as a whole, it was a mixed bag coming off better spending during the beginning of 2022. There were positive signs, of course, in terms of PlayStation 5 availability and a more robust release calendar for premium gaming that will continue in future months. Mobile continued to be a main area of caution, as it was in the back half of 2022, along with retail software sales and peripheral spending putting downward pressure on the domestic industry.

Looking ahead to February, the Content side is tricky. Last year saw the record-breaking start for Elden Ring and the great debut of Horizon Forbidden West. Still, all signs point to a spectacular launch for Hogwarts Legacy from Warner Bros last week, which will stand up even against a high comparable and easily be the month’s best-selling premium title. There’s also a pair of “hearts” games in Wild Hearts and Atomic Heart that will bolster ranks here, plus Destiny 2’s Lightfall expansion. Thus, I’m thinking Content will be effectively flat year-on-year. Within 1 to 2% on either side. (Yes, it’s a wishy-washy prediction. Hogwarts Legacy is that huge.)

I’m more upbeat on Hardware for a few reasons, namely better supply and a weaker result last year when the category declined almost 30%. Potential PlayStation 5 buyers weren’t able to find one around then, and now they are seeing more at retail. Nintendo Switch is proving to be resilient. Even with Xbox’s tepid inventory, I’m seeing Hardware rising between 5% to 10% this month as PlayStation 5 will lead the charge as top-seller. As it will often throughout 2023.

I’ll even mention Accessories, mainly because of Sony’s PlayStation VR2 hitting market next week. While I’m mostly bearish on its commercial prospects over the short to medium term, I do expect an early boost in this context. I believe the category will see higher spending than February 2022.

That about wraps up the January wrap-up. What do you think of the latest results? Do you agree with my predictions for February? Are you picking up any new games or PlayStation VR2? I’d love to hear about it at the site or on social media.

As for suggested reading, I recommend Piscatella’s thread on Twitter. Thanks for reading through the first sales recap of 2023! Be well, everyone.

*Digital Sales Not Included, ^Xbox & Switch Digital Sales Not Included

Note: Comparisons are year-over-year unless otherwise mentioned.

Sources: Activision Blizzard, Electronic Arts, The NPD Group, Sony Corp.

-Dom

Nintendo 2023 Q3 Report Shows Switch Lifetime Sales Passing 122M to Become 3rd Best-Selling Gaming Hardware Ever

DomsPlaying

It’s time for the last holiday recap of the big three gaming console makers, as I’ve previously covered a shaky quarter for Microsoft and Sony’s record-setting result.

Nintendo posted its third quarter fiscal 2023 announcement in Japan today. The company’s still exhibiting strength when compared to most recent years, though exercising caution going forward into the same tricky macroeconomic environment that many consumer tech firms are facing.

While hardware shipments are slowing as Switch moves towards its sixth birthday next month, the hybrid reached a new milestone this quarter and passed the sales of two legendary devices in the process.

The company shipped 8.25 million Switch units in the three months ending December, now achieving 122.55 million across its lifetime. That moves it above Sony’s PlayStation 4 and Nintendo’s own Game Boy/Game Boy Color which reached 117.2 million and 118.69 million, respectively.

It’s now behind only PlayStation 2 and Nintendo’s DS handheld line on the all-time list, making it the 3rd best-selling gaming hardware to date. It’s technically 2nd on both home console and portable lists if breaking them out individually. I don’t remember anyone saying this would happen when it launched back in 2017. I was among the most upbeat on its prospects. This is the type of monumental run that’s near impossible to predict.

Also contributing to Nintendo’s solid quarter was the historic launch of Pokémon Scarlet & Violet. After shipping an unreal 10 million units during its first three days on market, it’s now crossed another milestone at 20.61 million shipped between its November start and year-end.

Not only is this the fastest-selling Pokémon release ever, it has better initial sales than any game ever released on a dedicated Nintendo device. This monstrous start makes it already seventh place on the Switch best-sellers list, outpacing huge catalog titles like Super Mario Party and Ring Fit Adventure.

“For the months of October through December 2022 which encompass the holiday season, the effects of shortages of semiconductors and other components was largely resolved, and shipments generally went according to plan,” management said in prepared remarks. “However, unit sales were down compared to the same period last year, when Nintendo Switch – OLED Model was released.”

“Shipment volumes for software generally went according to plan. The release of new titles including Pokémon Scarlet and Pokémon Violet contributed to unit sales, but overall software unit sales declined year-on-year, affected to an extent by the decline in hardware sales.”

Even with generally softer hardware output, Nintendo’s top-line is proving resilient when scanning the past decade. Especially considering the sort of inflationary pressures facing consumers and a lineup lacking major titles outside of Pokémon. I’ll now move into the underlying numbers, then a look ahead to guidance and predictions for the months ahead.

I pulled the above gallery of slides from Nintendo’s Q3 report, where it showcases 9-month performance in the period ending December. I’ll back into the quarterly figures, then illustrate trends over a longer period of time as well.

Revenue for the three months ending December 2022 came in at $4.68 billion, down 8% since last holiday. Operating profit experienced a more precipitous dip, moving down 25% to $1.39 billion. Two of my charts in the next section map out movement over time.

Taking this into account, sales for the fiscal year to date have declined a modest 2% to $9.5 billion. Income from operations is trending down 13%, to $3 billion.

Executives said sales dipped slightly despite the yen’s depreciation, primarily because of semiconductor shortages in the earlier quarters and component parts impacting hardware supply. Still, that top-line figure is more resilient than expected, achieving the second best Q3 sales since back in fiscal 2010. Even quarterly operating profit is the third best since that same year, despite the recent double-digit decline. Demand for a spanking new Pokémon generation certainly helped.

I’ll now dig into the current product category mix that impacted last quarter. Leading the charge was Hardware, at nearly 51% of the split. Compare that to 54% this time last year, when Nintendo was shipping more units to retailers. This means software moved from 46% during last year’s December quarter to 49% now, bolstered by the proportion from first-party being 85% of the total. From a geographic standpoint, Americas is 43%, the same as last year. Nearly 25% of Nintendo’s sales came from Europe, down from 27%. Japan made up most of the difference, contributing 24% versus last year’s 21%.

Expanding to see how the latest quarter affects annual sales, check out the second set of charts in the next gallery. Nintendo’s annual sales are currently trending towards $12.25 billion, effectively flat year-on-year. It’s been hovering around a similar value since mid-fiscal 2021. Which proves that, even with a down quarter, annual revenue has been consistent. On the other hand, annualized operating profit dipped to its lowest level in ten quarters, at $3.9 billion. Higher expenses and the yen’s movement are its biggest headwinds.

Similar to recent articles, I’ll list a quick comparison to industry peers. Tencent is the world’s biggest gaming company by sales, currently at $25.8 billion. PlayStation’s record holiday led to $22.84 billion in annualized revenue, its best to date. Microsoft ranks next at $15.56 billion, though could be upwards of $19 billion to $20 billion if it acquires Activision Blizzard this year. That’s based on the latter’s $7.53 billion annual figure reported yesterday, accounting for overlap and redundancies. Nintendo slots here at $12.25 billion, noticeably hamstrung by recent exchange rate shifts. However, Nintendo is currently more profitable than Sony’s PlayStation division when using the latest 12 months, earning $3.9 billion compared to $2.11 billion. Likely due to the cost of producing more PlayStation 5’s and developing AAA titles like God of War Ragnarök.

On the hardware front, this segment continues to cool. Although Switch is showing its age from both a commercial and spec standpoint, it’s still not quite near the end of its life just yet. Nintendo is committed to this device, and is still planning out its transition to the next one.

Unit shipments for Switch during the three months ending December totaled 8.25 million, compared to 10.67 million last holiday, or 23% lower. That brought the current 9-month total for this fiscal year to 14.91 million. At this same point in fiscal 2022, the figure was 18.95 million which implies a 21% decline. Interestingly, that’s the same percentage decline between 2021 and 2022.

Out of the units shipped through Q3 this year, 5.22 million were base model Switch. That’s down a whopping 56%, mainly because of the shift towards the OLED model being the standard version. The OLED model shipped 7.69 million in the last 9 months, nearly double the 3.99 million of its debut year since it started in October 2021. As for the Lite counterpart, sales through the third quarter declined 37% to 2 million units.

Referencing the aforementioned lifetime figure of 122.55 million, it’s approaching all-time best-selling gaming console territory. Can Switch really become the top seller? Well, it would have to beat out two devices in order to earn the crown. Which is a tall order.

After launching in 2004, Nintendo DS ended its life years later as the best-selling handheld device ever, achieving 154.02 million in sales. Almost two decades later, no portable has even come close. Then, the all-time leader right now is Sony’s PlayStation 2, which hit stores in 2000 and skyrocketed to 159 million throughout its tenure. Thus, Nintendo has to ship between 31.47 million and 32.45 million more Switch to reach these heights. If Switch’s successor launches in Late 2024 or Early 2025, that leaves seven to eight quarters for this to happen. An average of 4 to 4.5 million per quarter. While I do think it’s probably attainable, I don’t think I’d bet on it.

Shifting back to this recent report, Nintendo shared insight into numbers around Switch sell-thru to consumers. (Until now in this article, I’ve been talking about units shipped to retailers.) Executives say that people continue to have a “diversification of motives” for purchase, which includes first-time buyers or upgrades to OLED. Even so, sell-thru declined compared to last year, as it did in 2022 as well since it’s been trending downward after peaking during quarantine days.

It stands to reason that, while there’s still an appeal to grab a Switch especially at a retailer discount, fewer people are doing so which signals a nearly saturated market. Combine that with inventory difficulties and a lower average selling price, and we’re seeing a natural downswing in units produced plus revenue generated.

Software shipment data held stronger than hardware for Nintendo, mainly because of just how much demand there was for Pokémon and certain legacy titles reached new sales thresholds.

During the quarter, Switch software sales totaled 76.71 million. Compare that to 85.41 million units last year, thus a 10% decline. Across the three quarters ending December, software units were 172.11 million, down 4% against last year’s 179.29 million.

Software sales over Switch’s lifetime are drawing toward an incredible milestone. Last quarter, overall Switch software was at 917.59 million. Now, it’s 994.3 million. Nearly one billion games sold for the device since 2017! It’s likely cleared that by now, and we’ll know by exactly how much when the company reports next quarter.

During the latest 9-month period, the hybrid featured 27 titles that have sold a million units or more within that time period. Out of that, 19 were published by Nintendo. The remainder were third-party titles. Over the same length of time in fiscal 2022, the amount was 29 in total, 22 of which were Nintendo. Quality software remains the major appeal for Switch, even if existing users are purchasing them as opposed to new console owners.

November’s Pokémon Scarlet & Violet drove today’s results, as mentioned. It’s sold-thru 18.2 million copies to consumers over seven weeks. As if it wasn’t clear how ridiculous its start was, this stat will really put it into perspective: After mere weeks on sale, these are already the fourth best-selling titles ever in the franchise. That’s across all releases since Pokémon Red & Blue kicked things off in the mid-90s! I expect by the end of Switch’s time, it could be the best-selling Pokémon to date. We’re talking one of the biggest entertainment franchises in history! Truly unreal.

Bayonetta 3 hit stores in October as the other new release, and it’s officially a million seller. Developed in conjunction with Platinum Games, the action title started at a hair over 1 million, reaching 1.04 million during the period. That’s equivalent to lifetime sales of its predecessor’s port onto Switch, which hit the platform in February 2018.

Beyond the brand new games, Nintendo provided updates to those launched in earlier quarters during fiscal 2023. Splatoon 3, which splattered series records with its 7.9 million unit start back in September, has since passed the 10 million milestone, settling at 10.13 million. June’s Nintendo Switch Sports sold-in an additional 2.46 million units in the holiday months, scoring 8.61 million to date.

Additionally, the best-selling racing game ever in Mario Kart 8 Deluxe sped past yet another mile marker this quarter. This time it’s the 50 million mark! Shipping 3.59 million units in Q3, it’s now at exactly 52 million lifetime. Two other high sellers achieved new milestones as Super Smash Bros. Ultimate smashed 30 million and Super Mario Odyssey jumped past 25 million, to 30.44 million and 25.12 million respectively.

Beyond software sales numbers, Nintendo tends to give tidbits around engagement and user base statistics. Back in September, Nintendo Switch Online reached 36 million paid members. I’ll update this section if the company shares an updated figure. Otherwise, the “statistic” of Annual Playing Users, which measures the number of accounts that have opened a single Switch game over the past 12 months, rose to an all-time high of 112 million in December. It was 106 million in Q2. So, the vast majority of Switch owners still use it at least once a year. Shocking revelation!

Despite the outlined financial and unit sales reductions, Nintendo had quite an impressive third quarter as compared to recent years. Especially for revenue. Nintendo Switch beat out two iconic gaming device families for lifetime sales and Pokémon Scarlet & Violet had a frankly ridiculous performance. No doubt there are signals that parts of its business are coming down off recent highs, yet Nintendo has the sort of quality software lineup to soften the blows of hardware slowdowns.

Moving into the final quarter of its fiscal 2023 period, management shared updated guidance in today’s announcement. This is where a bit of nervousness creeps in, yet I’m not as concerned for the overall health of Nintendo’s trajectory. Especially given where it was during the dire straits of the Wii U years, this looks almost as rosy as ever.

Intriguingly, just after raising financial targets last quarter, executives reverted back to lower estimates this period. They adjusted their revenue forecast down 3% to $11.73 billion, implying a 6% decline since last fiscal year. Similarly, operating profit guidance was revised downward 4% to $3.52 billion. Even so, these updated figures would be the third best annual results since fiscal 2010.

Then for the second quarter in a row, Nintendo reduced annual Switch shipment guidance. Management now anticipates 18 million shipments, down 5% from Q2’s 19 million. That means the firm has to produce 3.09 million between January and March to end the fiscal period. Personally, I think it’s now a bit too conservative. My bet is it beats the target, moving upwards of 19 to 19.5 million, which is slightly below my target from three months ago.

Along the same lines, Nintendo lowered its annual software estimate 5 million units, or 2%, to 205 million. This is where I’m more skeptical, mainly because of a light slate in the three months ending March. A good portion of the 32.89 million needed this quarter to achieve that target has to be follow-on sales of things like Pokémon and Mario Kart. New releases that will also drive this include Fire Emblem Engage, which launched a couple weeks back, Kirby’s Return to Dream Land Deluxe later this month then March’s Bayonetta Origins: Cereza and the Lost Demon. These aren’t chart-toppers or anything.

One lingering question of course is might Advance Wars 1+2: Re-Boot Camp launch in the coming months? While Nintendo still has it as TBA in its reporting, alongside the likes of Metroid Prime 4, there’s speculation recently based on retailers that it could hit market soon, which could bump up software results. I remain cautious, the same way I’m thinking Nintendo will narrowly miss its latest annual software sales guidance.

“Sell-in of hardware units during the third quarter was generally in line with expectations,” management said. “However, hardware sell-through during the holiday season did not perform as expected, and therefore the unit sales forecast for the fourth quarter has been modified. The software unit sales forecast has been modified as well, largely due to taking into consideration the modification of the hardware unit sales forecast.”

Near the beginning of next fiscal year, May’s The Legend of Zelda: Tears of the Kingdom is clearly the biggest launch for Nintendo in quite some time. It will be a massive success and compete for best-selling premium title of the year globally and in areas like Japan, though perhaps not domestically on The NPD Group’s lists since Nintendo doesn’t share digital sales here.

In an exceptional bit of news that bucks the industry trend lately, as many firms are laying off workers, Nintendo plans to raise employee salaries by 10% for those that work in Japan. Reuters reports this decision by management as inflation grips the local economy. While it will certainly increase costs, it’s the right way to maintain talent that drives its best-in-class output.

To showcase that output, the company is hosting its first Nintendo Direct of 2023 tomorrow. The 40-minute long presentation will primarily focus on Switch titles launching in the first half of the calendar year. I’m looking forward to seeing what’s there for Zelda, which ports Nintendo announces and any indication of future first-party announcements in what might very well be the final year of Switch.

Time flies!

Speaking of having fun, thus ends my latest big results recap of the season. What is your initial reaction to Nintendo’s results? Have you bought a Switch and contributed to that lifetime total? Will it reach that annual target? Are you betting it will be the best-selling console of all time eventually?

For now, feel free to leave a comment or hit me up on social media. Remember my earnings calendar thread for companies reporting this quarter across gaming, technology and media. Thanks as always for reading! All the best.

Note: Comparisons are year-over-year unless otherwise mentioned. Exchange rate is based on reported average conversion: US $1 to ¥136.39.

Sources: Company Investor Relations Websites, NBC News (Image Credit), Reuters.

-Dom

PlayStation Achieves Record Holiday Sales & Profit in 2022 Q3 & Raises PS5 Annual Hardware Target

DomsPlaying2 Comments

What a quarter for PlayStation. Talk about bucking the trend!

I’ve been writing recently how this past holiday will be a mixed bag for many consumer technology firms, including gaming hardware manufacturers and software publishers. Sony is both of these things, and management is masterfully navigating the murky waters of our economic environment.

This fact is clearly illustrated when it reported third quarter fiscal 2022 results earlier today in Japan, in which the overall business grew double-digits and the PlayStation business unit achieved record Q3 sales and operating profit. The prior record-holder was this same quarter last year.

Within the report, it showcased growth across all PlayStation product categories. Hardware output more than doubled since last year, as did retail software, and digital content rose substantially. As I’ll show in a later chart.

PlayStation 5 (PS5) hardware had its best quarter to date measured by shipments, by a wide margin. Sony shipped 7.1 million PS5 units between October and December, up a whopping 82% compared to last holiday’s 3.9 million. That brings lifetime PS5 unit sales to 32.1 million. It’s now outsold the Sega Genesis, which peaked at 30.75 million overall.

Not only that, Sony actually increased its annual hardware guidance! While PS5’s better availability is impressive given higher input costs and supply chain disruptions of calendar 2022, it’s worth noting the console is still tracking below PlayStation 4 (PS4) at this same point in the early life cycle.

Partially driving demand for the new console was a suite of AAA games around this time. Third-party hits Call of Duty: Modern Warfare 2 and annualized sports games plus a system-seller like God of War Ragnarök alongside a supplementary title like Gran Turismo 7 significantly bolstered software, as both physical units and digital downloads soared.

“We are seeing steady results from the various measures we have taken in terms of both hardware and software,” management said in prepared remarks. “And we believe that we have created positive momentum to re-accelerate the growth of the game business centered on the expansion of the penetration of PlayStation 5.”

Here’s a deeper dive into the numbers behind this all-time holiday season, then a look at the company’s guidance and my predictions. Including a new chart format for the category mix!

Across the broader corporation, as shown in the above slides, Sony generated 13% more revenue this quarter up to $24 billion. Operating profit however declined 8%, to $3 billion. That second figure was the second best result in company history in local currency, behind only Q3 last year.

Shifting focus to the PlayStation segment alone, which is called Game & Network Services (G&NS) in Sony’s reporting. Sales increased a staggering 53% to $8.8 billion. Operating profit rose a more modest, yet still impressive, 25% to $820 million.

PlayStation exhibited exceptional top-line and profit growth that led to both of these figures being all-time records. Now it’s partially due to foreign exchange movement in a volatile rate environment, yet it’s mainly due to improving underlying fundamentals in its gaming business. Better hardware sales due to supply being there and demand staying strong, plus a big boost from first-party software. Even rising costs related to network business and acquisitions couldn’t hold profit back.

This was an astounding quarter. Looking at product category sales, nearly all of them moved up double-digits in Q3. Quite literally off the chart, as shown in the last one in the above gallery. Hardware was the biggest contributor at 35% of the total, since it more than doubled since last holiday. Add-On Content was the next biggest segment at 21%, even if it “only” increased 5%. Digital software comprised 20% of the PlayStation business, improving its sales 35% year-on-year. Physical Software proved to be the biggest mover from a growth standpoint, more than tripling.

Factoring in this latest record quarter, annualized revenue for G&NS is upwards of $22.84 billion right now. That’s the highest in history, tracking towards a best-ever year of sales. In fact, it’s $3 billion more than it’s ever been. I can’t overplay how well gaming is doing from a revenue standpoint, approaching a ridiculous $23 billion.

Profitability over the last 12-month period is a bit more tempered, as annual operating income totals $2.11 billion at present. It’s certainly recovering from where it was last quarter, trending towards pandemic highs.

Running down a quick comparison to industry peers, Sony is still in second place from a revenue standpoint. Tencent reports in March; for now, its annual sales are around $25.8 billion. PlayStation slots in here at the $22.84 billion. In Microsoft’s report last week, which I covered here, revenue over the last 12 months equaled $15.56 billion. Lastly, Nintendo is at $13 billion, though it has also yet to report and will do so next week. Keep in mind that a combined Microsoft and Activision Blizzard entity could eventually compete with Sony for second place, though I’d estimate it’s not above $20 billion to $21 billion just yet.

Now I’ll dig more into additional info from Sony on unit sales, network results and engagement stats for its gaming vertical.

Full game software sales declined in Q3, from 92.7 million to 86.5 million. That accounts for both internal teams and external publishers, including bellwethers like Call of Duty, Madden NFL and FIFA.

For first-party titles, this is where the real boost occurred. It nearly doubled from 11.3 million last year to 20.8 million. The bulk was, of course, driven by God of War Ragnarök which started at 5.1 million units during its launch week in November and has since reached the 11 million milestone. It’s the fastest-selling platform exclusive in PlayStation history across both of these time periods, a ridiculous result for the sequel to God of War (2018).

Within software, digital downloads compromised 62% of total game sales on PlayStation. That’s the exact same figure as last year, and only down slightly from 63% last quarter. The aforementioned growth of retail sales certainly affected this split.

Sony’s rebranded PlayStation Plus service now has 46.4 million subscribers, down compared to last year’s 48 million. Still, it’s higher than the 45.4 million last quarter thus showing sequential growth.

The other major user stat of Monthly Active Users (MAUs) edged up a million in Q3 to 112 million. It’s also 10 million higher than Q2, since the holiday season tends to attract new users and returning players alike. Sony also cited the transition to current generation hardware as a reason for user acquisition. The percentage of that 112 million that were solely on PS5 moved up to 30%, or roughly 33.6 million individual accounts.

“Engagement metrics of users who transitioned from PS4 to PS5, such as their PS Plus subscription rate, gameplay time, and average spending amount are significantly higher than those when they played on PS4,” executives said. “So we will continue to focus on accelerating the transition of PS4 users to PS5.”

Sony points out that almost 30% of MAUs on PS5 are users that never had a PS4, thus it’s attracting various new players, and payers, to the ecosystem. An essential part of any console business.

Intriguingly, for PlayStation players, total gameplay time declined 3% versus last Q3. Compared to the quarter ending September, it was up 6%. Focusing strictly on the month of December, hours jumped 14% compared to November.

“We believe that user engagement is on a recovery trend due to the penetration of PS5 and the contribution of hit titles,” management said. Based on the way hardware is trending, how high revenue has grown and its excellent title lineup last year, I certainly see that same trend.

It’s hard to overstate how exceptionally PlayStation performed in the months between October and December 2022.

To secure record revenue and profit during this macro environment, when people are facing inflation and returning to other activities, it’s truly the exception within consumer tech and gaming. Quite literally moving the opposite direction of a major peer like Microsoft. Even Apple is facing revenue challenges as it reports 5% decline in sales just this afternoon. Related publishers around the globe are struggling to outpace last year’s results. I’m supremely impressed with the leadership executing on its strategies, namely how it secured enough consoles to satiate pent-up demand.

Moving into the last quarter of its current fiscal year, management provided updated guidance for a variety of numbers. It slightly reduced total sales guidance down 1%, then bumped up operating income by 2 percentage points. These now imply around $81.2 billion in revenue and $8.33 billion in profit for fiscal 2022.

As for PlayStation, management reiterated its annual sales forecast which would be a record of $25.6 billion. It also raised guidance for gaming operating profit by around 7%, now expecting $1.7 billion for the year mainly because of currency movement. I think the top-line figure is fine for PlayStation as a segment, though firmly believe that operating profit forecast will be easily achieved. It feels too conservative given the latest holiday performance.

On the flip side, management is being even more aggressive on its PS5 unit sales outlook for the year. It’s raising the already high forecast by a million units, up to 19 million. Which would bring lifetime shipments to 38.3 million. All I can say is: Wow. Talk about upbeat! Right now, PS5 sales for fiscal 2022 are at 12.8 million thru 3 quarters. Sony needs to ship a massive 6.2 million in the 3 months ending this March in order to accomplish this target.

Now, I thought they were out of their collective mind last quarter. And I remain my usual skeptical self, considering 6.2 million is more than literally any other quarter in the PS5 life cycle other than this past holiday season. Management’s confidence must be rubbing off on me, as I think Sony will get close: I’m bumping my annual forecast to 17.5 million to 18 million.

What else could drive results into March? Well, PlayStation VR2 launches in a few weeks though I’m tepid on its commercial upside. Virtual reality remains a niche market, and the cost to entry is high for a peripheral that requires a pricey base console. I expect 1 million units to ship in the quarter ending March, yet a marginal impact on the bottom line considering it’s also costly to make headsets.

There’s also Sony’s transmedia push, which is paying dividends for both gaming and its Pictures division. In particular, the collaboration with HBO on The Last of Us is a smash hit and having broader audience appeal beyond any expectation. It’s attracting massive viewership and driving sales of September’s console release of The Last of Us Part 1, which is also launching on PC before fiscal year-end, and June 2020’s The Last of Us Part 2.

Well, talk about a lot to cover! It’s been a busy season already. Thanks for checking out another recap. Head on over to the latest earnings calendar for more dates to come, and I’ll have a full rundown of Nintendo’s results after the company publishes them next week.

Until then, be safe everyone!

Note: Comparisons are year-over-year unless otherwise noted. Exchange rate is based on reported average conversion: US $1 to ¥141.7.

Sources: Company Investor Relations Websites, HBO Max (Image Credit), USA Today (Image Credit).

-Dom

Microsoft Gaming Sales Decline in 2023 Q2 Despite Xbox Monthly Active Users Reaching Record 120 Million

DomsPlaying2 Comments

First up on the new year’s earnings calendar is Microsoft, which reported its fiscal 2023 second quarter results last week.

Results were mixed in the holiday period for the software giant and its Xbox business, mostly expected coming off last year’s all-time highs. Just last quarter, gaming had its best Q1 ever.

That’s not the case for Q2, where normalization towards pre-pandemic levels has started in earnest. Even so, it was still one of the best quarters in Xbox history, which is important to keep in mind as headlines are often gloomier than reality.

In the three months ending December, Microsoft’s gaming revenue showed a double digit decline for the first time in three years. Mainly due to a sparse exclusive game slate, lower third-party monetization and ongoing hardware challenges. From a dollar standpoint, it was still the third best Q2 ever for Xbox, as I’ll illustrate soon. The sky isn’t anywhere near falling.

Executives tried to paint a picture around engagement and Xbox Game Pass while not providing any updated subscription numbers for its flagship service. On the bright side, they did share an updated figure for Monthly Active Users (MAUs) across the Xbox ecosystem as it passed a major milestone by year-end.

“In gaming, we continue to pursue our ambition to give players more choice to play great games wherever, whenever, and however they want,” said CEO Satya Nadella. “We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices.”

I’ll now move into the underlying numbers for the latest quarter, then provide a look ahead to the back half of Microsoft’s fiscal year.

Between October and December, Xbox generated $4.76 billion in revenue which is 13% lower than the same time last year. That was in-line with guidance. While this number is the lowest it’s been in three years, it’s the third best Q2 in history only behind the latest two.

This historical context really illustrates the sort of impact quarantine spending had on the industry, as just last year Xbox recorded an all-time second quarter revenue high of $5.44 billion.

Executives pointed to this strong comparable as the main reason Xbox suffered declines across first and third-party content plus lower hardware sales output. I wouldn’t necessarily call it an outright disappointing holiday season; it’s just not nearly as good as last year.

One caveat is currency impact on this figure. You’ll see in the above slides that total gaming sales were down 9% in “constant currency.” This implies a 4% impact from exchange rate movement. I tend to report the overall figure because global companies must navigate these shifts, while also noting this particular point when fluctuations are especially drastic.

Taking into account the latest quarter, current annual gaming revenue stands at $15.56 billion. As shown in my chart, Xbox segment sales have been slowing lately after peaking around a year ago. It was bolstered by last holiday’s record quarter until now. This chart also keeps quarterly movement in context as it smooths out the results, displaying how well gaming has been faring versus the Xbox One generation.

Within these articles I like to run a quick comparison to industry peers, even this early in the season. Tencent currently has the most annual revenue from gaming, at upwards of $25.8 billion. Sony reached $20 billion. Here is where Microsoft’s $15.56 billion slots in, while Nintendo rounds out the list at $13 billion. If accounting for Activision Blizzard’s latest $7.4 billion in annual sales and assuming roughly $2 billion in redundancies and overlap, the combined entity could have between $20 billion to $21 billion in annual gaming output, potentially matching PlayStation depending on where exchange rates go.

Now, revenue isn’t the sole metric by which a division’s health is measured. Microsoft doesn’t share specifics on Xbox’s profitability, so we’re left to infer here based on its More Personal Computing (MPC) business segment results. Gross margin dollars reduced by 29%, driven by a mix towards lower margin businesses that include gaming. Expenses rose 6%, thus segment operating income dropped 47% to $3.32 billion. All of this implies profitability dropped in the quarter for Xbox, consistent with its lower sales output.

Moving over to category mix to show the underlying dynamics. Within the Xbox business, both sub-segments of Xbox Content & Services and Xbox Hardware experienced comparable double-digit declines as the business cooled.

The larger contributor Content & Services, which includes software and subscriptions, lowered 13% in the quarter. Right at company guidance. It accounted for $3.38 billion in sales, or 71% of Xbox’s total. Nearly the same contribution as last year, and lower than recent quarters since its hardware counterpart has been inconsistent.

During the last 12 months, Content & Services has generated $12 billion in revenue, making up 77% of annual gaming sales. It’s been at that same exact percentage for the last six consecutive quarters.

As has been tradition, Microsoft yet again didn’t share an update on Xbox Game Pass subscription figures. The latest of 25 million is way outdated, from back around September 2021. I often say that we learn just as much, if not more, from what a company doesn’t share. This is one of those cases. I assumed Microsoft would boast when it passed 30 million subscribers, so I assume it’s below that right now. In my predictions piece for 2023, I said it could reach that threshold by Microsoft’s fiscal year-end in June and move higher in the back half on the strength of new releases. I just hope Microsoft is more transparent, at some point.

Thankfully executives did provide another engagement stat: MAUs for the Xbox network overall. Finally. Two years ago, this figure crossed the 100 million user threshold. Now, according to Nadella, it’s at a record 120 million. Thus recently averaging 10 million per year in user growth and nearly double the 65 million achieved back in fiscal 2019. It makes sense that management would point to this within its strategy that emphasizes ecosystem over hardware, expanding its offering to more devices than ever and making a play that stacks up accounts as opposed to unit sales.

Rounding out the category mix with Xbox Hardware, this segment declined 13% to $1.38 billion. The slides cited both a lower average price and number of units sold compared to last holiday, which I’d call somewhat of a concern at this early life cycle stage. Also concerning is the dollar output, which is less than the second quarter in both 2018 and 2019 during the middle of last generation. It shows a few things: hardware is less important to the overall Xbox business than ever before, the lower-priced Xbox Series S is contributing a substantial share plus supply constraints continued into the quarter as competitors were able to better navigate the cost environment.

On an annualized basis, Xbox Hardware is tracking at $3.6 billion in sales right now. The lowest in six quarters. It bucks the trend of a traditional console cycle, where sales should be increasing in the early years. Note that the Xbox Series X|S family of devices launched in November 2020.

It begs the question: How many Xbox Series X|S consoles have shipped to date? Last quarter, I estimated between 17.5 million and 18 million. Given the revenue indicators and supply situation, I guess it’s approaching 21.5 to 22 million at this point, implying around 4 million shipped in the holiday quarter. This would be virtually in-line with Xbox One at this point in the life cycle (22.1 million). My estimate is partially because I notice Nadella is no longer boasting the family as the fast-selling in Xbox history. And it’s nowhere near its current generation counterpart. Sony’s PlayStation 5 recently passed 30 million sold-thru to consumers, and was already at 25 million lifetime shipped in September, showing strength in availability towards the latter parts of calendar 2022.

Fitting the general themes of macro pressure on tech in particular, Microsoft overall had its slowest quarterly growth in six years and missed analyst estimates. Top-line sales rose 2% to $52.7 billion, while analysts thought it would be above $53 billion. Microsoft Cloud alone increased 22% to $27.1 billion in sale, which met expectations. MPC was the only segment to decline, moving down almost 20% to $14.2 billion on PC market weakness and high output last year.

On the profit side, operating income declined 8% to $20.4 billion. Profitability was impacted by a $1.2 billion charge related to laying off 10,000 employees, or 4.5% of its workforce, which the company announced earlier this month. That’s a lot of talented people losing their jobs, notably in a shift towards artificial intelligence businesses, and I hope they are able to find success elsewhere.

General slowdowns hit both Microsoft and its Xbox division during the holiday period, even if it was still one of Xbox’s best quarters when compared to recent history. Higher Xbox Game Pass subscriptions propped up weakness elsewhere, especially the first-party game lineup, and hardware results reveal that the Xbox Series X|S family needs to ramp up supply as soon as possible.

I’ll finish up here with guidance for the next quarter, ending this March, according to Chief Financial Office (CFO) Amy Hood.

Management expects gaming revenue to decline in the “high-single digits.” Assuming it’s down 8%, that implies quarterly Xbox revenue of $3.44 billion. Its lowest in three years.

Xbox Content & Services revenue will decline in the “low-single digits.” Hood claims Xbox Game Pass user growth will outpace “lower monetization per hour” in both first and third-party games. It’s a corporate way to say subscriptions will rise while active engagement, and thus spending, will be down. Let’s assume the decline is 5%, implying Q3 sales of $2.86 billion from Xbox Content & Services.

Microsoft didn’t actually provide an outlook for Xbox Hardware. Based on the above, signals are pointing to another double-digit drop that might be upwards of 20%. The current quarter is a continuation of last year, where first-party output is light and the supply of Xbox Series X in particular will be hamstrung.

Still, the calendar will pick up soon as Xbox Game Studios will publish Minecraft Legends in April then Redfall in May. Thing is, I’m not expecting either of these to move the needle in a major way on the financial side. Certainly not as much as something like Starfield or Forza Motorsport, both of which are slated for this year without a concrete window. Personally I’d be surprised if Starfield makes it out by the fiscal year-end in June.

Speaking of June, Microsoft management reiterated on the conference call that, while its guidance doesn’t include any impact, they continue to anticipate the $69 billion Activision Blizzard deal will close by then. I’m way more skeptical on that front, as displayed in my aforementioned predictions article.

Thus ends my first big recap of 2023, in what will be a shaky quarter for many public companies across the games industry and related sectors. Check back soon for more analysis and a full rundown of results for platform holders Sony and Nintendo. Thanks for reading! Be well, all.

Note: Comparisons are year-over-year unless otherwise noted.

Sources: Company Investor Relations Websites.

-Dom

Annual U.S. Games Industry Consumer Spending Declines 5% in Final NPD Group Sales Report of 2022

DomsPlaying

Better late than never!

Data firm The NPD Group has shared its final games industry sales report for 2022 tracking spending in the United States. Within, it showed a modest sales decline since last year. Mostly expected during the start of a regression towards pre-pandemic values after an all-time best the prior year. There was resilience in the final quarter as bigger games hit market and supply concerns eased, minimizing the downward movement and making 2022’s $56.6 billion the second best year on record behind 2021’s $59.6 billion.

Not bad, all things considered.

During this piece, I’ll recap both the most recent monthly results and annual figures. Buckle up for an in-depth read.

December was one of the brighter reports compared to earlier months, ending a fourth quarter recovery that made full year figures look much better. The big holiday period was the second straight month where total spending increased, after a number of months either down or flat.

That’s even considering a very slight decline in the major category of Video Game Content, which measures software, mobile, subscriptions and related spending. Call of Duty, Pokémon and Madden NFL led the charge here, as often happens. For Video Game Hardware, the only category that grow in 2022 to a best-ever result, Sony’s PlayStation 5 console and Nintendo’s hybrid Switch both spent time atop the monthly rankings.

“Factors impacting 2022 spending included continued supply constraints of console hardware, a relatively light slate of new premium releases and macroeconomic conditions,” said The NPD Group’s Mat Piscatella.

As I’ve covered in the past, 2021 was the height of pandemic spending for many regions, including the States. 2022 proved to be the anticipated regression towards more normalized results, exacerbated by mobile weakness and inflationary pressure on people’s wallets. Still, Q4 showed there’s still substantial demand for big budget premium games and new hardware when it’s actually available at retail.

There’s also the cultural touchstone that was Elden Ring, nearly out-earning Call of Duty, which broke into the mainstream zeitgeist more than any FromSoftware game could ever do in the past. Combine that with annualized sports releases, a dual launch year for Pokémon and exceptional showings from Sony-published exclusives, and premium gaming helped offset mobile’s under-performance.

Check below for a full recap of each category last year and a look forward towards 2023.

United States Games Industry Sales (November 27th, 2022 – December 31st, 2022)

Total consumer spend on gaming within the U.S. rose 2% in December, to $7.58 billion. Driven by double-digit gains in the hardware category that more than offset losses elsewhere. This fits the growing trend along with October’s plateau and November’s increase towards growth.

That strength in the final quarter pumped up full year spending to $56.6 billion, which ended up being down 5% compared to 2021. Growth areas like console and subscriptions weren’t enough to out-gain losses in premium software and mobile, also hurting due to macro pressures like inflation.

The largest category of Content dipped a modest 1% in December, down to $5.55 billion. Which means it made up 73% of overall monthly spending, compared to 75% in November. Holiday demand and mobile regaining footing contributed towards the upside.

Speaking of mobile, this sub-segment returned to growth in December as geolocation, simulation, action and shooters gained ground. Still, 2022 became the first 12 months in tracked history where people spent less than the prior year on mobile. Shooters exhibited a most precipitous decline at 26% while casino gains proved popular, moving up 1%. Candy Crush Saga, Roblox and Coin Master were the year’s Top 3 earners here.

Call of Duty: Modern Warfare 2 repeated as December’s best-seller on the premium list, which it’s done each month since October’s launch. This led to Activision Blizzard’s military shooter earning the top spot on 2022’s overall rankings as well, as I predicted. That marks a staggering 14 consecutive years where a Call of Duty game was the country’s best-selling title.

Familiar faces continued on the premium best-sellers list for December as Pokémon Scarlet & Violet and God of War: Ragnarök generated the 2nd and 3rd most dollar sales, in that order. Elden Ring benefited from solid demand during the holiday season, returning to the Top 10 at #7.

Late year launches Need for Speed: Unbound and Crisis Core: Final Fantasy VII: Reunion started in 8th and 10th, respectively, a quite good showing considering the heavy hitters around it. The only other new title Callisto Protocol under-performed in 17th place, partially because its digital portion was not included. Even if downloads were considered, I’m skeptical it would have cracked the Top 10.

As mentioned before, Call of Duty: Modern Warfare 2 was the year’s best-seller. In fact, there were two Call of Duty entries among the Top 12 as people somehow retained interest in 2021’s Call of Duty: Vanguard. Then, Elden Ring and Madden NFL 23 rounded out the Top 3 for 2022. Sony’s PlayStation publishing arm had a sensational year with three single-platform games in the Top 13 and another developed title in the Top 10. God of War: Ragnarök finished ahead of bellwethers like Pokémon and FIFA while Horizon Forbidden West and MLB: The Show 22 scored Top 10 spots. Other observations include over-performance of Nintendo’s Kirby and the Forgotten Land floating to #14 and Sega’s Sonic Frontiers speeding up to #16.

Here’s a full look at the software lists for December and 2022 overall, including our first look at the top-grossing mobile titles.

Top-Selling Games of December 2022, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Call of Duty: Modern Warfare 2
  2. Pokémon Scarlet & Violet*
  3. God of War Ragnarök
  4. Madden NFL 23
  5. FIFA 23
  6. Sonic Frontiers
  7. Elden Ring
  8. Need for Speed Unbound
  9. Mario Kart 8*
  10. Crisis Core: Final Fantasy VII: Reunion
  11. NBA 2K23*
  12. Just Dance 2023
  13. Mario + Rabbids: Sparks of Hope
  14. Minecraft
  15. Super Smash Bros. Ultimate*
  16. Nintendo Switch Sports*
  17. The Callisto Protocol*
  18. Animal Crossing: New Horizons*
  19. Splatoon 3*
  20. Gotham Knights

Top-Selling Games of 2022, U.S., All Platforms (Physical & Digital Dollar Sales):

  1. Call of Duty: Modern Warfare 2
  2. Elden Ring
  3. Madden NFL 23
  4. God of War Ragnarök
  5. Lego Star Wars: The Skywalker Saga
  6. Pokémon Scarlet & Violet*
  7. FIFA 23
  8. Pokémon Legends Arceus
  9. Horizon Forbidden West
  10. MLB: The Show 22^
  11. Mario Kart 8*
  12. Call of Duty: Vanguard
  13. Gran Turismo 7
  14. Kirby and the Forgotten Land*
  15. NBA 2K23*
  16. Sonic Frontiers
  17. Gotham Knights
  18. Minecraft
  19. Nintendo Switch Sports*
  20. Super Smash Bros. Ultimate*

Top-Selling Games of 2022, U.S., Mobile (Top Grossing):

  1. Candy Crush Saga
  2. Roblox
  3. Coin Master
  4. Royal Match
  5. Pokémon Go
  6. Evony
  7. Clash of Clans
  8. Homescapes
  9. Bingo Blitz – BINGO Games
  10. Jackpot Party – Casino Slots

The Hardware category is up next, as December generated upwards of 16% growth to $1.53 billion. I believe this might have been a record December month for the console category as inventories flooded the market during the holiday rush, notably from Sony’s suppliers. It also proves that demand is constant at this point in the cycle, which it really should be.

Expanding to the last 12 months as a whole, Hardware sales reached $6.57 billion, jumping up from $6.1 billion in 2021. The NPD Group did say this amount was an all-time best, an incredible achievement considering how slow this segment began the year.

PlayStation 5 leveraged better inventory to become the best-selling console by dollar sales during both December and 2022 as a whole. It was the first year since the new console generation in 2020 that Nintendo Switch didn’t lead on revenue. Big budget IP like God of War and Horizon plus a premium racing game in Gran Turismo 7 bolstered the console, alongside its higher price point that lifted up the revenue side. In the back half especially, Sony’s suppliers seemed to be the best at adapting in this supply environment to secure enough shipments to satisfy pent-up demand.

Even so, Nintendo Switch did win December and 2022 when measured by units, boosted by its more attractive cost and appeal to households that want more than one gaming device. While it didn’t have any pure flagship titles outside of Pokémon, a series which somehow launched two best-sellers in Pokémon Legends Arceus and Pokémon Scarlet & Violet, Nintendo always produces high quality titles that strengthen system sales as series like Kirby and Switch Sports amplified the lineup.

While the Xbox Series X|S came in third place during December and the year on all metrics, it held its own during a tough time for consoles. Microsoft continually cited how it had the best start of any Xbox console in history, albeit at a global scale. There were a few months in 2022 when it achieved second place, though its Series X model in particular seemed to be hit especially hard by supply challenges. The Series S doesn’t generate as much revenue, so Xbox doesn’t compete as much when it comes to monthly best-sellers even in its home market. Not to mention, its slate of first-party software was sparse, which didn’t help.

The general tone of the console business turned quite upbeat as the year went on, ending with a great December and up nearly double-digits for 2022. It’s also a positive sign of things to come, as I’m turning bullish on this portion of the market.

The final segment of Video Game Accessories saw the biggest declines during both December and 2022 as a whole. Last month, spending here dipped 2% to $503 million.

Unfortunately, The NPD Group didn’t share which accessory was the best-selling of the month. Lately it’s been a version of the PlayStation 5 DualSense controller, however there’s a chance that an Xbox game pad took home the win. I have a question out to the team for comment.

It follows that for the year, spending in this category fell 8% to $2.51 billion. Microsoft’s Xbox Elite Series 2 Wireless Controller ended 2022 as the year’s best-seller here, a popular upgrade choice for core players that benefits in comparisons like this because of a hefty price tag.

That’s a wrap on the final domestic sales report of 2022. It was a transitory year for the industry, as certain areas returned towards the mean while others under-performed. Mobile weakness, less premium AAA launches and a seemingly lower tie rate for peripherals all put pressure on the final figures. That said, historically it was still the second best annual spending in history so the industry is doing just fine. Easing supply concerns in the latter parts of the year and select premium titles helped keep the result high compared to prior years, even the likes of 2020.

“2022 finished strong, with improving performance in the category compared to a year ago following the May 2022 lows.” Piscatella said on LinkedIn. “With improving supply of console hardware – and a highly anticipated slate of new releases – 2023 looks like it could be a great year for the market.”

Looking ahead to the coming months, I wrote up a general 2023 predictions article earlier in the month. I’ll recap some of those points and touch on more domestic predictions.

When it comes to the overall consumer spending number for this year, I’m looking at virtually flat or an increase in the low single-digits. Assuming a 3% rise would bring 2023 sales to around $58.3 billion. I’m not anticipating another down year for mobile, and a more robust content calendar for AAA releases will bump premium output. Combine this with hardware availability and I’m thinking buyers will spend about what they did last year.

I’m forecasting Content will also be flat or up slightly. It starts with mobile, which should rebound, and continues with a busier software lineup than 2022. On the premium side, depending who you believe, there might be another annual Call of Duty title which I expect to be the best-seller if it does come out. Shoot, Call of Duty: Modern Warfare 2 could even repeat if it has a substantial expansion attached to it instead.

Other contenders include sports titles, of course. This year’s Madden game, in particular. In the next couple months, Hogwarts Legacy and Star Wars Jedi: Survivor will be massive and both will compete for a Top 5 finish. Nintendo’s major release is The Legend of Zelda: Tears of the Kingdom, slated for May, and should be Switch’s annual best-seller even if another Pokémon hits market. Sony’s flagship is Marvel’s Spider-Man 2, listed for launch in the Fall, which will set records for a PlayStation exclusive launch and will certainly be part of the year’s Top 5.

For Xbox, the story is Starfield which some people think will still be out before June. (Spoiler: It won’t.) It’s hard to predict where an Xbox Game Pass release ranks; I could see it as part of the Top 10. Elsewhere, Diablo IV will be a huge hit when it starts in June. I just don’t know if it competes for a Top 3 spot at the end of the day. Final Fantasy XVI is a wildcard. Ubisoft has a couple chances in Assassin’s Creed Mirage and Avatar: Frontiers of Pandora if they actually launch this year. Then there’s always a surprise or two.

Moving over to Hardware, it’s Sony’s year by a comfortable margin. I bet PlayStation 5 will be 2023’s best-seller on both revenue and units. It will lead most months by dollar sales, and split with Nintendo Switch on units depending on supply and titles i.e. May when Zelda debuts and whenever Marvel’s Spider-Man comes out. I also don’t expect a Switch hardware announcement, and I do think it will land in second place. Xbox can compete for second, I just remain hesitant on Microsoft’s conversion strategy.

Well, that about does it. What stands out to you during December and 2022? Surprised by any of the results? How did your predictions go? What’s in store for 2023? Drop a line here or social media!

I highly recommend checking out Piscatella’s thread on Twitter and the full report at the website here. Thanks for reading these throughout the year! Check back for the first recap of 2023 in a few weeks. All the best, everyone.

*Digital Sales Not Included, ^Xbox & Switch Digital Sales Not Included

Note: Comparisons are year-over-year unless otherwise mentioned.

Sources: GeekWire (Image Credit), The NPD Group, Rokas Tenys (Image Credit), Video Games Chronicle.

-Dom

Earnings Calendar Jan & Feb 2023: Gaming, Media & Tech Companies

DomsPlaying1 Comment

New year, same old calendar. It’s the first earnings season of 2023!

Long-time fans of the site know this is the place for the most comprehensive calendar of earnings dates covering companies across gaming, media and technology. The perfect post for any bookmarks bar.

My calendar’s grown over the years, now boasting over a hundred companies including content publishers, consumer electronic manufactures, software developers, cloud giants, media providers, independent game makers and internet conglomerates. I guarantee there’s something here for everyone.

The latest quarter of results will include sales from the highly-coveted holiday season for those involved in pushing products or attracting eyeballs. In general, it was a challenging quarter across these industries coming off highs of 2021, including a number of record-setting reports. Cost inflation, geopolitical issues and supply disruptions are all still present in the market, among other macroeconomic pressures. This year is off to a tough start for many folks in the tech industry in particular, as layoffs at major firms like Alphabet, Microsoft and Amazon impact talented people whom I hope land on their feet.

In order to track everything, I’ve organized the above image and the below Google Sheets document for easy usage. I’ve also listed out three key companies to watch in the coming weeks within these industries. Thanks for visiting!

Working Casual Earnings Calendar Jan & Feb 2023: Gaming, Media & Tech Companies

Activision Blizzard (ATVI): Monday, February 6th

When Activision Blizzard reports its fiscal fourth quarter report in February, the big story remains the pending acquisition by Microsoft which has potentially hit snags in key regulatory markets. There’s also the tenuous relationship between management and workers during ongoing unionization efforts, plus workplace condition improvements that executives claim are happening. I don’t expect much in this department, though it would be ideal to hear more about how executives plan to make it a better place to work.

In terms of results, all signs point to Call of Duty: Modern Warfare 2 having a massive holiday, so I expect Activision’s contribution to be sizeable which will boost the overall company on a growth trajectory. On the other hand, I’m bearish on Overwatch 2 and Blizzard’s recent output. Looking ahead, forecasts should be strong as Diablo IV launches in June and there’s still the mysterious language around this year’s “premium” Call of Duty release. Could this be an opportunity to say if it’s a new annualized title or an expansion for the latest game? While I’d welcome it, color me a skeptic.

Embracer Group (EMBRAC B): Thursday, February 16th

During mid-February, when Embracer Group reports its third fiscal financials of 2022, the big question will loom: Are there any companies soon to be embraced by its acquisition touch? All has been quiet lately on the purchasing front for Embracer since snatching up Square Enix assets last year, curious for a company known to gobble up studios big and small to expand its robust portfolio and add to the “quantity over quality” strategy. As of its recent Q2 update, the broader group has 12 operating groups, almost 16 thousand employees, 132 internal studios and a whopping 234 projects in the pipeline. Twenty five of which are supposedly AAA level launches due by March 2026.

Still, partially on lackluster reception of key titles like Saints Row and the recent delay of Dead Island 2 yet again, the company reduced its full-year forecast. Combine that with a major structural change in Volition, the team behind Saints Row, becoming a part of Gearbox Publishing, and I’m curious about the viability of big budget releases for Embracer as opposed to targeting that mid-cost tier like SpongeBob SquarePants and Goat Simulator alongside select re-releases of legacy game properties. Its business is now diversified enough to weather storms, yet I’m still waiting for the sort of organic growth that comes from buying companies over a number of years.

Ubisoft (UBI): Thursday, February 16th

Out of all the big third-party gaming publishers, Ubisoft had a tough go in 2022. Even before its upcoming third quarter earnings announcement, it preemptively shared a gloomy financial update and outlook change just a couple weeks back. In addition to blaming macroeconomic conditions, the same ones its peers are operating under, management pointed to costs associated with cancelling three more unannounced projects on top of four it already killed back in July. Part of the rough patch is under-performance from Mario + Rabbids: Sparks of Hope and Just Dance 2023, the former being the most baffling considering how well Nintendo Switch titles tend to sell.

In what’s turned into a meme, Ubisoft also yet again delayed pirate game Skull & Bones to an undetermined time in “early fiscal 2023 – 2024.” Reports recently point to the company experimented with upwards of a dozen battle royale projects, following its theme of chasing trends instead of setting them. CEO Yves Guillemot and team claim that upcoming releases like Assassin’s Creed Mirage and Avatar: Frontiers of Pandora will bolster the business and help its return to growth, yet I’m skeptical this can actually be a bounce-back year for Ubisoft. I wouldn’t be surprised if it’s been quietly shopping itself around to potential buyers, perhaps garnering interest from Tencent or Amazon, because its model hasn’t been working lately. 2023 is as important a year as ever in the company’s history, and its future as a going concern.

Sources: Company Investor Relations Websites.

-Dom

Seven Major Games Industry Predictions for 2023

DomsPlaying

Now that the calendar has turned to January, it’s time to say goodbye to 2022. Which means it’s also time to, yet again, claim that I can accurately predict the future!

As I’ve done in recent years, I tend to kick off the new year by listing out a few predictions for the games industry across the next 12 months. These expectations can range across a number of topics: hardware, software, services, acquisitions, workplace trends and the value of the global games market.

Before diving into the new piece, I like to check back to hold myself accountable for the prior year. Here were my main predictions for 2022, where I successfully called that there would be more unionization, Nintendo wouldn’t announce a new Switch, Sony would rebrand PlayStation Plus and the impact of NFTs and blockchain would be felt in various places.

Misses included the sequel to The Legend of Zelda: Breath of the Wild, now known as Tears of the Kingdom, launching (which it didn’t), the global games market would grow slightly (it declined slightly) and a new BioShock being announced (total long shot, I admit).

Focusing on the future, here’s a list of seven predictions, and a little bonus, for 2023. Let’s see how I fare this time around!

Microsoft & Activision Blizzard Deal Closes in Calendar 4th Quarter

I’ll rip the band-aid off right away. Apologies to everyone who is sick of hearing about Microsoft’s pending purchase of Activision Blizzard: This story isn’t going anywhere anytime soon. Especially now that regulators around the globe have sunk their teeth into the details. Rightfully so, for a deal worth upwards of $69 billion. Currently, the companies still expect the deal to close in June. Personally, I’m skeptical and think it moves back to around an October to December window.

Why? Inquisitive regional regulators in the United Kingdom and United States combined with a glacial legal system. The Competition and Markets Authority (CMA) in the U.K. will publish the results of its investigation in April. The U.S. Federal Trade Commission (FTC) is taking action to potentially block the acquisition, kicking off a legal battle that will commence trial in August. These things alongside delays due to likely appeals if the decisions go against Microsoft mean that I don’t think it meets the current estimate. I do, however, think it ultimately will close before year-end.

Nintendo Goes Another Year Without Announcing a Switch Successor

Continuing my main hardware prediction from a year ago, I’m not betting on Nintendo announcing any major Switch hardware in the upcoming four quarters. One of the best-selling consoles ever is still moving units quite well for this point in the life cycle. It’s trending towards being the top-selling console of 2022 in the United States by units according to The NPD Group as demand continues, especially from households that want multiple devices and a record-setting November start for Pokémon Scarlet & Violet.

While Nintendo reduced its fiscal year shipment target from 21 million to 19 million, plus the technology is certainly outdated, I don’t see much upside in executives revealing a new device in a year where The Legend of Zelda: Tears of the Kingdom and potentially other flagship titles (Mario? Pokémon?) hit market. The transition to a successor will take a delicate touch, notably when it comes to backwards compatibility with the current library of games and usage of accessories. I’m targeting an announcement for what I hope is called Nintendo Super Switch sometime in 2024, with a release in first calendar quarter of 2025.

Global Games Industry Value Returns to Growth & Passes $188 Billion

Last year, I was more optimistic on the global games market value than I should have been when I thought it could increase a bit. According to NewZoo, the industry’s annual value is trending down 4% to $184.4 billion. This is driven by downward pressure from mobile and console segments, declining 6% and 4% respectively. The weakness in mobile is what I didn’t anticipate, and this category has an outsized impact on the overall figure since it makes up half of the total. Then there’s the limited supply of hardware throughout most of 2022, which didn’t really recover until the fourth quarter.

I expect the industry’s worldwide value to bounce back towards growth over the next 12 months. I could see 2% to 3% growth, which would translate to roughly $188 billion to upwards of the $190 billion milestone. Underlying this recovery will be a reversal of trends including a mobile spending rebound, improved hardware inventory, demand for consoles continuing, PlayStation VR 2 and a much more robust AAA software calendar due to previously-delayed games hitting storefronts. Indicators point to strong console demand alongside titles from major publishers, especially Xbox Game Studios, including various holdovers from the past couple years such as Hogwarts Legacy, Star Wars Jedi: Survivor, Street Fighter 6, Final Fantasy XVI, The Legend of Zelda: Tears of the Kingdom and, hopefully, Starfield.

PlayStation 5 Wins Best-Selling Console in the U.S. Yet Misses Sales Targets

While we won’t know until this week’s full-year report from The NPD Group, PlayStation 5 is currently on track to be 2022’s best-selling console in the United States by revenue. GfK Entertainment said Sony’s latest was the top-selling device in the United Kingdom by units. I expect PlayStation 5 to outpace all peers and earn the win for both dollar sales and units in 2023 in key markets (other than Japan, where Switch is dominant). Supply data shows drastic improvement in the fourth quarter of 2022, and Sony’s own comments point towards further growth. Microsoft’s latest Xbox family isn’t generating as much in dollar sales because its high-end Xbox Series X is still tough to find, and Nintendo’s Switch is in its twilight years.

On the flip side, I’m skeptical Sony can reach its fiscal hardware shipment targets for the next couple years. I don’t see how it achieves a highly ambitious forecast of 18 million for the year ending March. At last count back in September, PlayStation 5 lifetime shipments were at 25 million. Sony announced during last week’s Consumer Electronics Show (CES) the PlayStation 5 family passed 30 million sold-through to consumers, implying at least 5 million shipped in the quarter ending December. That would bring the current year to 10.7 million, requiring upwards of 7.3 million during this month through March. Which isn’t going to happen. Going forward, speculation points to an even higher target for April 2023 to March 2024, where executives might guide to 30 million shipped in the year alone. Even if its suppliers are ramping up production as much as Sony claims, and consumers keep showing interest, that’s too lofty of a goal. I’m much closer to a 22 million to 23 million annual range.

Xbox Game Pass Price & Subscription Base Increases

Here’s a classic two-for, combining a couple of big Xbox predictions in a single entry. At first, these may seem at odds with one another since I believe both the monthly cost and overall user base for Xbox Game Pass will increase in 2023. Starting first with the bad news, it’s inevitable that Microsoft bumps the price of its subscription service. The last time Microsoft raised the monthly price of Game Pass was during 2020, when the PC version doubled from $5 to $10. Recently, Microsoft said full-game prices for Xbox Game Studios releases are going up to $70 this year. I’m thinking the Ultimate tier moves to $18, from $15, while the base version moves from $10 to $13 by next holiday season.

Even considering this, I bet the audience of Game Pass also grows in 2023. How many users did the service actually have in 2022? Sony claims it’s at 29 million. Microsoft told everyone it’s at 25 million almost a year ago. While it might be ambitious, I think Team Xbox will provide two updates on its flagship service during 2023. It can pass 30 million by its June fiscal year end, then achieve 35 million by December. There’s a number of benefits boosting the user base towards these milestones. It’s the prospect of first party projects like Starfield and Redfall, maybe a suite of Activision Blizzard titles, plus additional external partnerships especially with Japanese publishers that prove value will continue to rise even if the cost does too.

Special Year of Fighting Game Releases & Announcements

When it comes to genres that may define 2023, I expect fighting games to punch their way back into the spotlight. Relevance here will be boosted by a couple massive launches from legendary teams like Capcom and Bandai Namco alongside newcomers like Riot Games, in addition to select announcements of future titles. Starting with games set to launch, Capcom will produce another mainline entry in its Street Fighter series with Street Fighter 6 in June. Based on anecdotal evidence from its beta testing, people are way upbeat on this one after the disappointing predecessor. Then there’s Tekken 8 from Bandai Namco, which debuted a new trailer at The Game Awards and executives said could launch in 2023. Adding to the calendar might also be Riot Games’ Project L, an exciting twist on the League of Legends universe.

In terms of announcements and reveals, SNK said in August that Garou: Mark of the Wolves 2 is currently in development. Of course, the elephant in the room is Warner Bros’ NetherRealm, which hasn’t released a game since Mortal Kombat 11 back in 2019. If it sticks to the usual schedule, its current project should be Injustice 3. Back in October, NetherRealm’s Ed Boon said the team will share information “in due time.” I expect that time to be mid-year. Finally, I’m anticipating a surprise fighting game hit within the casual space, along the lines of last year’s MultiVersus. Could it be the return of PlayStation All Stars Battle Royale? Will Epic Games partner with every single brand and make the ultimate metaverse fighter? Which title will be the next to surprise the FGC and solidify 2023 as the Year of the Fighting Game? Your guess is as good as mine, though I certainly expect at least one breakout banger.

Amazon Games Makes Massive Studio Acquisition

First off, I have no real basis for this. There haven’t been rumors or speculation. It’s not based on inside information. It’s more of a hunch with the way Amazon Games has been aggressively pushing into the space, especially the past couple years with releases like New World and Lost Ark alongside a deal with Glowmade for a game based on original IP. It’s collaborating with the likes of Bandai Namco on the MMORPG Blue Protocol plus Crystal Dynamics for a future entry in the long-running Tomb Raider series. It partnered with Riot Games to host a Valorant event. The multinational retail conglomerate also owns streaming platform Twitch, and its Prime Gaming service continues to offer incentives for gamers to keep up Amazon Prime subscriptions.

I think Amazon’s level of investment accelerates in the next 12 months, during which it might even outright purchase one of the remaining independent gaming companies. Targets could include the likes of Electronic Arts, Square Enix, Take-Two Interactive or even Ubisoft, the last of which already has an acting relationship for streaming service Amazon Luna. If I had to bet, I think Ubisoft is a prime candidate. From a cost perspective, it’s more attractive than the likes of Electronic Arts. Square Enix has been selling off assets and refocusing towards NFTs. Take-Two seems to pride itself on remaining independent with its 2K Games and Rockstar units. It sounds like Ubisoft has fielded offers in the recent past, so Amazon might very well be looking into a potential buy already.

Bonus: Bungie Announces & Launches Destiny Universe Transmedia Property

You know I couldn’t finish the list without a fun bonus prediction! I think there’s a really good chance that we see what non-gaming projects Bungie has been working on within the Destiny universe. It’s no secret the developer is ramping up hiring for its transmedia offerings, including adding former Riot Games animation director Derick Tsai to become Head of Development for Destiny Universe Transmedia. Plus, now that Bungie is owned by Sony, I’d imagine there’s active chatter amongst Sony’s film and television divisions to adapt Bungie’s popular science fiction IP into different types of media.

To make this prediction better, I bet Bungie both reveals and launches a transmedia property based on Destiny in 2023, whether it’s a movie or show. The game has rich lore and great characters which I think could translate well into an episodic format. Similar to how the live game does seasonal content and weekly story drops. I’d love to see its world represented outside of gaming, exposing the excellence that is Destiny to an even broader audience than ever before.

Note: Comparisons are year-over-year and monetary values are quoted in US Dollars unless otherwise mentioned.

Sources: Foureyes Furniture on YouTube (Image Credit), Getty Images, GfK Entertainment, NewZoo, The NPD Group.

-Dom

2022 Year-in-Review: Dom’s Top 10 Games of the Year

DomsPlaying

Happy New Year, everyone!

Before I mentally move into 2023, there’s one last thing for me to do. Write about my favorite games, and rank them for fun!

In my last post of the year and time to run down the best of what turned out to be a busy 12 months across the spectrum of games, even if the AAA calendar was more sparse than usual. Don’t let anyone tell you that the industry had an off year. Mid-tier and indie devs picked up the slack, and launched several memorable experiences. Plus, PlayStation Studios had a great run.

This is probably the most diverse, experimental list in the seven (!) years I’ve been posting them here. There’s everything from sprawling open words, heartfelt mythological journeys, spooky point-and-click titles, immersive full motion video interactions and gorgeous, cutesy adventures. Almost all platforms are represented, from mobile and web to traditional consoles.

For context, I played roughly 50 games in 2022. Check below for which ones made my prestigious Top 10, then a set of five amazing honorable mentions. Toast your glasses to gaming!

Dom’s Top 10 Games of the Year 2022

10. Tinykin (Splashteam Devs, tinyBuild)

Platforms: PlayStation, Xbox, Nintendo Switch, PC.

Admittedly I didn’t have Tinykin on my radar coming into the year, and boy am I glad I played this 3D platformer with its distinct visual styling, smart progression elements and cute creature collecting. Splashteam crafted a beautiful, realized setting and knocked the character dialogue out of the park.

9. Card Shark (Nerial, Devolver Digital)

Platforms: Nintendo Switch, PC.

I have a feeling the historical “cheating simulator” Card Shark won’t be on many year-end lists, which is quite disappointing considering how excellent its artwork, mechanics and writing proved to be. Shuffle those in with a great tutorial system and an on-the-run story with plenty of twists and turns, and developer Nerial loaded up the deck with plenty of aces here.

8. Citizen Sleeper (Jump Over the Age, Fellow Traveller)

Platforms: Xbox, Nintendo Switch, PC.

Dabbling in everything from consciousness and artificial intelligence to capitalism and community, Citizen Sleeper expertly captures the desolation of existing within a scary society and navigating one’s course with limited resources. Its introduction of randomness via dice rolls eerily echoes the crapshoot that is life, and the game’s constant ticking clocks combined with fragile relationships make its decisions as affecting as any across gaming in 2022.

7. Wordle (Josh Wardle)

Platforms: Web Browser.

The internet set ablaze in January when Wordle skyrocketed in popularity, filling up social media feeds everywhere with intriguing blocks and competitive spirit. Considering I’m still playing Josh Wardle’s wonderful love-letter to his partner Palak Shah all these months later reinforces the brilliance of its “one chance per day” setup, a clever way to express how every single choice counts when trying for consistency in one’s ongoing existence.

6. A Plague Tale: Requiem (Asobo Studio, Focus Entertainment)

Platforms: PlayStation, Xbox, Nintendo Switch, PC.

The sequel to 2019’s masterpiece A Plague Tale: Innocence intensifies the plight of brother and sister Hugo and Amicia, pushing its stealth gameplay into new avenues and continuing the stellar narrative navigation throughout the dark times of 14th century France. It’s a technical showpiece, shoving thousands of rats and heaps of prowling guards into most levels, plus shows what perfect pacing can do for the arc of adventure, culminating in a teary, shocking conclusion.

5. High on Life (Squanch Games)

Platforms: Xbox, PC.

Justin Roiland and Squanch Games snuck High on Life in during December, wrapping up 2022 with the industry’s most ludicrous, hilarious release. The first-person shooter-comedy redefines the medium’s boundaries, featuring a suite of talking weapons played by incredible actors, nifty platforming, chunky mechanics, vulgar writing and even a few in-game movies, resulting in one of Xbox’s most eccentric, exceptional and popular titles of the year.

4. Immortality (Half Mermaid, Netflix)

Platforms: Xbox, PC, Android, iOS.

Sam Barlow and Half Mermaid’s entries into the interactive gaming space ingeniously utilize full motion video and awesome acting to tell stories that most games can’t, and Immortality is the team’s magnum opus. It’s a set of film clips and behind-the-scenes glimpses that present as one thing then quickly turn into something extraordinary, peeling back layers as it progresses, to the point where it’s difficult to talk about why it works so well without completely spoiling the story. Suffice to say this master class of design firmly lands among my favorites of 2022.

3. Norco (Geography of Robots, Raw Fury)

Platforms: PlayStation, Xbox, PC.

Starting off my Top 3 is Norco, an adventure set in a supernatural, Southern techno-industrial town that starts as a daughter’s return to her hometown and blossoms into a thrilling search for family, faith, religion and closure. It’s hard to pin down this bizarre game mainly because it’s so unique, always moving in unexpected ways while including robot helpers and cultlike societies, shady characters and folklore galore. Navigation is easy across its user interface, a stark contrast to figuring out where it’s going, and the player can land on a variety of endings depending on how they choose to steer the plot, all of it transformative and downright miraculous.

2. God of War Ragnarök (Santa Monica Studio, Sony Interactive Entertainment)

Platforms: PlayStation.

I’m not sure God of War Ragnarök tops its 2018 predecessor, which totally revamped the series, however its story progression, character movement, mechanical prowess and area design made it come darn near close. It’s a rich take on Norse mythology and the introduction of new characters, notably Richard Schiff’s depiction of Odin, force plenty of rivalries and team-ups that serve as the underpinnings for a sweeping arc.

Its open zone approach entices exploration while it pulls on heartstrings and allows a new perspective other than Kratos by occasionally swapping to control of his now teenage son Atreus, a clever dichotomy that fits mechanically and narratively. Not to mention the art direction and scenery design mesh with solid performance to showcase the PlayStation 5’s power, resulting in a fitting conclusion to this latest God of War saga while simultaneously opening doors to future epics.

1. Elden Ring (FromSoftware, Bandai Namco Entertainment)

Platforms: PlayStation, Xbox, PC.

If you’ve followed me on social media at any point since Elden Ring launched back in February, its position as the year’s best comes as no surprise. FromSoftware has been building to this masterpiece for years, successfully delivering the ideal of traditional soulslike action role-playing within an spacious, ominous open world that boasts some of gaming’s most spectacular art design and general vibes to date. The Lands Between is one of the most realized, enchanting settings ever, providing the backdrop for the player’s rise as Tarnished in this foreign kingdom.

What makes Elden Ring stand out from everything that’s come before is how it’s simultaneously more accessible and just as rewarding as any challenging game in FromSoftware’s portfolio. The introduction of a fast travel system, offering of a speedy mount in Torrent and a plethora of summons available, both non-playable character and human alike, mean there’s rarely a place where players bump up against something that halts progression. That doesn’t mean there aren’t tricky encounters, there’s plenty, it’s just that the team provides more tools to deal with them or take a break when something isn’t going well.

Then it produces an incredible feeling that around every corner, there’s something worthwhile to find. My two favorite parts of Elden Ring both revolved around moments where possibilities seemed endless, and were equally as jaw-dropping. First was stepping into its second main area of Liurnia, overlooking a shallow lake in the middle with a magic academy to my right and rolling hills to my left. I knew the next dozen or so hours would take me to every nook and cranny. Then there’s the famous descent into Siofra River, a seemingly endless elevator ride deep into an underground expanse full of supernatural specters under a ceiling of stars.

These kinds of awe-inspiring moments captured the essence and potential of Elden Ring, a game so massive that I couldn’t believe just how much was on its map. This doesn’t even get into it’s underlying lore, cast of characters, expansive world-building and narrative that forms the ultimate fate of The Lands Between. My time with Elden Ring was the most special I had all year, and it’s one of the single best games I’ve played in my life. It’s beyond worthy of 2022’s Game of the Year.

Honorable Mentions

As Dusk Falls (INTERIOR/NIGHT, Xbox Game Studios)

Platforms: Xbox, PC.

Dying Light 2: Stay Human (Techland)

Platforms: PlayStation, Xbox, Nintendo Switch, PC.

Horizon Forbidden West (Guerilla Games, Sony Interaction Entertainment)

Platforms: PlayStation.

Kirby and the Forgotten Land (Nintendo)

Platforms: Nintendo Switch.

Marvel Snap (Second Dinner, Nuverse)

Platforms: PC, Android, iOS.

There we have it. What a list!

And with that, 2022 Year-in-Review here at Working Casual comes to a bittersweet end. Thanks to everyone for making it another awesome year at the site and on social media. Switch back over to the megapost for all things year-end.

All the best to you in 2023!

Sources: Media Sites.

-Dom