No, not the 2024 Olympics. Although it’s arguably just as important. Earnings season is here!
Much like the Summer games, there’s a rich tradition around this time. It’s when I draft up and post a calendar with all the dates on which companies across gaming, media and technology provide an update on their businesses, and often look ahead to future prospects.
The list is a robust one, steadily approaching 120 companies strong. For added benefit, I’ve added the date and fiscal quarter associated with the latest report, along with investor websites for easy access. Note that all dates are listed in local time zones.
Quick note around the initial public offering of Shift Up, the South Korean developer of 2024’s hottest, and most controversial for certain crowds, titles Stellar Blade. I’ll have the company included next quarter since I didn’t see concrete info right now.
Check below for a full Google Sheets link, then descriptions of three key companies to watch in the upcoming weeks. Enjoy, and be well!
The mention of the American publisher is mainly an excuse to talk about EA Sports College Football 25, which technically launched in July after its Q1 of 2025 time frame ended. This return to the glory days of college football video games, the first franchise game in over a decade, is showing great early success, selling-thru 2.2 million copies of its deluxe edition alone! I’d love if Electronic Arts shared more details around its kick-off, including overall unit sales or player stats, plus if there’s any upside impact to its current guidance. I’m estimating 7 million units, if not more, by the time the fiscal year ends in March 2025. Talk about a score.
Nintendo Co., Ltd (NTDOY): Friday, August 2nd
It’s a rare Friday announcement for Nintendo when it shares first quarter performance early in August. Sure, I’ll be interested to learn more about early momentum for new old games like May’s Paper Mario: The Thousand Year Door and Luigi’s Mansion 2 HD, a late June launch, or any updates around annual hardware guidance (which I don’t expect just yet). The Japanese company’s inclusion on this list is mostly obligatory in light of this year being the Switch’s swan song, and the impending reveal of its successor being firmly on the horizon. Last quarter, President Shuntaro Furukawa shared the sweetest of morsels that the Super Switch would be revealed by March 2025. Might he bless us with another taste this time as well?
Nexon (3659): Thursday, August 8th
The Seoul-based publisher, which reports second quarter 2024 numbers in a couple weeks, isn’t as widely known as certain peers, focusing more on regional PC and mobile titles. It’s one of many making big investments related to international expansion, an effort that has seemingly produced a breakout global hit with The First Descendant. The action shlooter attracted an impressive 10 million players during its first week earlier this month, and I assume a larger proportion of them are outside the Asia Pacific region compared to its other products. The question is how this translates to the bottom line, considering the title is free-to-play. Now, it also features hundred dollar cosmetics, and the model can be highly lucrative if the player base is engaged, which appears to be the case here.
Keeping with my new tradition, I’m here with a quick-hitting recap of Nintendo’s latest annual results.
I’ll then look ahead to its current fiscal year, the 12 months ending March 2025, during which the company will officially reveal its next hardware.
Don’t worry. I’ll have my usual charts and reactions, just in an easier format!
Here’s the highlights for Nintendo’s 2024 financial report:
Both revenue and profit bounced back to growth in the single digits.
Annual Switch shipments were 15.7M, above its latest guidance.
During the latest quarter, Switch passed 140M sold lifetime.
Over half of software sales were digital for the first time ever.
While unit sales for consoles and software declined last year, Nintendo saw financial growth due to a depreciating yen, a shift to the premium Switch OLED model, shifting spending towards digital content and a sizeable impact from April’s The Super Mario Bros. Movie.
“For hardware, by continuing to convey the appeal of Nintendo Switch, we try to not only put one system in every home, but several in every home, or even one for every person,” management wrote. “Another objective is to continually release new offerings so more consumers keep playing Nintendo Switch even longer and we can maximize hardware sales.”
Scroll ahead for the full rundown and predictions for an exciting, and crucial, time in the company’s history.
Top level, these are the main stats for Nintendo’s annual results during the year ending March 2024.
Fair warning: Get ready for numbers!
Revenue up 4% to ¥1.67T ($11.57B).
Currency impact on revenue of ¥94.4B ($653M).
Operating profit rose 5% to ¥528B ($3.66B).
Currency impact on operating profit of ¥35B ($242M).
These were enough to log the third best year in the Switch era by both metrics. While impressive given its latest console’s age, having major releases in the Zelda and Mario franchises alongside a blockbuster animated flick were enough to make up for slowing unit sales.
As for product category breakouts:
Software represented 56% of total sales, up from 54%.
81% of software sales were first party, up from 79%.
The proportion of digital software sales was 50%, up from 48%.
Regional splits were as follows:
The Americas at 44%, same as last year.
Europe was 24%, down slightly from 25%.
Japan reached 22%, compared to 23%.
Underlying a larger-than-usual portion of Nintendo’s growth was its mobile, IP and licensing segment. On the strength of the billion-earning The Super Mario Bros. Movie, sales here rose 82% to ¥11.2B ($77M), plus had the knock-on effect of boosting the popularity of Mario-themed titles in subsequent quarters.
I’ll now reflect on the Hardware portion of the report.
Switch shipments from January to March were 1.96M, down from 3.06M.
That brought the year to 15.7M, or 13% lower than fiscal 2023.
This figure was above management’s revised guidance of 15.5M.
OLED model was the only one showing growth, up 1% to 9.32M.
While hardware ended up meeting the latest target that executives set, it came in slightly below my personal forecast of 16M. Management called this “stable” for a console of its age.
Lifetime Switch shipments are now 141.32M, thus retaining its spot as the third best-selling gaming console ever.
Prior to this, figures were based on shipments to retail. Nintendo did provide a slide on sell-thru to consumers, charting it out over the Switch’s full life cycle.
Overall, it was the second lowest year for sell-thru other than 2017’s launch. The premium OLED model experienced its highest sell-thru to date, while the base model continued its steady decline, both as expected.
Moving on to Software results for the full year:
Game unit shipments declined 7% to 199.67M.
Even so, that was above the latest target of 190M.
There were 31 million-sellers. Nintendo produced 20 of them.
Lifetime Switch software unit sales approached 1.24 billion.
In terms of debuts, February’s Mario vs Donkey Kong remake collected 1.12M units. Additionally, Princess Peach: Showtime! moved over a million in a week, reaching 1.22M by the end of March.
Then there’s the ever-growing list of older and evergreen titles in the portfolio.
The Legend of Zelda: Tears of the Kingdom saw 20.61M in less than a year.
Super Mario Bros. Wonder jumped to 13.44M after two quarters.
July 2023’s Pikmin 4 finished the year at 3.48M.
Mario Kart 8 Deluxe raced towards 62M lifetime.
Shifting over to software sales as measured by sell-thru to consumers:
The Legend of Zelda: Tears of the Kingdom at 19.5M.
Super Mario Bros. Wonder was 12.4M.
Pikmin 4 eclipsed 3.3M, meaning most of its copies have been purchased.
November’s Super Mario RPG remake hit 2.6M (out of 3.31M shipped).
“The Legend of Zelda: Tears of the Kingdom, Super Mario Bros. Wonder, and Pikmin 4 all saw sell-through grow at a faster pace than any past titles released on Nintendo Switch in their respective series,” management wrote.
Executives also shared an update to Nintendo’s unique engagement statistic called Annual Playing Users. As of March, it reached an all-time record of 123M, up a million over the prior quarter and 7 million compared to the prior year.
The company might share an update for Switch Online memberships during a corporate briefing in the next few days. The service’s paid membership count was 38M as of September 2023.
It’s another mostly positive annual announcement for Nintendo, showcasing top-line momentum and profitability even as hardware and software units declined. It’s well-known that the market for Switch is saturated, which meant executives had to look for other avenues like film to keep growing, while also supporting the vast audience base with flagship franchises and external partnerships.
What’s to come for the company entering a pivotal time as it plans to bridge the gap between console generations?
Well, I’ll now run through the headlines for Nintendo’s fiscal 2025 targets:
Revenue could be down 19% to ¥1.35T ($9.34B).
Operating profit expected to decline 24% to ¥400B ($2.77B).
Switch anticipated to ship 13.5M units, down 14%.
Guidance of 17% lower Switch software units, or 165M.
“Switch has entered its eighth year since launch,” management mentioned. “While it will be challenging to sustain the same sales momentum as before, we will work to maintain high user engagement with the hardware and invigorate the platform so that more consumers continue to play Switch for longer.”
If that last bullet point is achieved:
Switch will compete for best-selling console ever at roughly 154.82M sold.
Nintendo DS is in second at 154.02M to date.
Sony’s PlayStation 2 is currently tops at 155M.
I see the financial forecasts as fine and achievable. On the other hand, Nintendo’s hardware plan is ambitious. Especially given the lighter release slate, chock full of remakes and reissues, and people waiting anxiously for that new announcement. I’m more around 12.5M to 13M, at most.
Speaking of Super Switch, the reveal is officially imminent!
Nintendo President Shuntaro Furukawa took to Twitter to announce that the announcement of Switch’s successor will happen this fiscal year. Though not at a June Direct, which will focus more on the slate of games for the back half of this calendar year.
Based on the guidance and an aggressive target for existing hardware, I expect a full-blown Super Switch reveal to happen around January 2025 with a subsequent launch sometime in or after April 2025.
That about does it for my latest reaction piece. What did you think? Predictions for Super Switch?
Hit me up here or on social media to chat and stay tuned for more coverage of earnings season soon. Thanks for reading!
Note: Comparisons are year-over-year unless otherwise noted.
Exchange rate is based on reported average conversion: US $1 to ¥144.52.
Sources: Company Investor Relations Websites, Nintendo Twitter.
United States Games Industry Sales (March 3rd to April 6th, 2024)
It’s time to cover another U.S. games industry spending report from Circana, this one for the month of March and the end of 2024’s first quarter.
Here’s the quick hits for March consumer spending on video games here in the States:
Overall spending increased 4% to $4.89 billion.
Content grew 9% to $4.25 billion.
Hardware declined 32% to $391 million.
Accessories moved up 9% to $242 million.
Content, which made up 87% of total spending in March, contributed solid sales momentum for the domestic market, boosted by double-digit mobile growth and a slew of new launches. At the same time, Hardware continued to drag without a huge catalyst or fancy new product offering in sight.
“Mobile’s strong performance was supplemented by a 3% increase in Console Content spend, along with a 2% gain in the PC, Cloud and Non-Console VR Content segment,” said Circana’s Mat Piscatella on Twitter. “Mobile accounted for 89% of the total year-on-year growth in video game content spending during the month.”
Highlighting the announcement was Dragon’s Dogma 2 as the month’s best-selling premium title, highest of the six new releases among the Top 10. Monopoly Go stacked up yet again as mobile’s top grossing game, while Fortnite and Helldivers 2 led platform engagement charts. PlayStation 5 came out on top for console sales by both dollars and units, as it has most months recently.
Scroll down for more on product categories, best sellers, most played games, first quarter results and my predictions for future reports.
In terms of Content, mobile retained its driving force status, growing 15% in March.
On the premium side, Dragon’s Dogma 2 from Capcom debuted at numero uno on the overall chart. It’s already the year’s 3rd best-selling title, and took less than a month to eclipse lifetime sales of 2012’s Dragon’s Dogma and its Dark Arisen expansion combined.
February’s winner Helldivers 2 came in second, solidifying its spot as the top seller for Q1. The latest from Arrowhead Game Studios already ranks 7th ever for Sony-published titles, an extraordinary feat mostly due to its PC success, and it’s been among the most-played games on both PlayStation and PC since its launch.
Perennial sales beast MLB The Show 24 scored a third place start, right around where it usually begins during its launch month, inserting itself as the 5th best-selling title of 2024 to date.
Rise of the Ronin from Koei Tecmo started at #5 in March, and #14 for the Q1 chart. Globally, the publisher claims it’s tracking above Nioh. This tracks here, since that game charted at #9 in the U.S. during its February 2017 launch.
Nintendo’s latest Princess Peach: Showtime! slotted in 6th, excluding digital, while Sega’s Unicorn Overlord had a fantastic start in 8th. Rounding out the new titles among the top ranks was Take-Two’s WWE 2K 24 in 9th, again without its digital portion included.
As measured by monthly active users, Fortnite was the most played on both PlayStation 5 and Xbox Series X|S, followed by Call of Duty and Grand Theft Auto V. On the PC side, it was Helldivers 2, Counter-Strike 2 and Baldur’s Gate 3. Also, huge shout out to poker roguelite Balatro in 4th on PC!
Check below for March’s best-seller ranks for premium and mobile.
Top-Selling Premium Games of March 2024, U.S. (Physical & Digital Dollar Sales):
Dragon’s Dogma 2
Helldivers 2
MLB The Show 24^
Call of Duty: Modern Warfare 3
Rise of the Ronin
Princess Peach: Showtime!*
Final Fantasy VII: Rebirth
Unicorn Overlord
WWE 2K24*
Hogwarts Legacy
Madden NFL 24
EA Sports FC 24
Minecraft
Horizon Forbidden West
Tekken 8
Rainbow Six Siege
Elden Ring
Mario Kart 8*
Marvel’s Spider-Man 2
Mortal Kombat 1
Top-Selling Mobile Games of March 2024, U.S.:
MONOPOLY GO!
Royal Match
Roblox
Candy Crush Saga
Coin Master
Whiteout Survival
Last War Survival
Pokémon Go
Township
Clash of Clans
Here’s the scoop on Hardware’s tough time last month:
All three major console families saw spending decline over 30%.
PlayStation 5 was the leader by both units and dollars.
The digital edition of PlayStation 5 contributed 39% of unit sales.
Nintendo Switch was #2 measured by units.
Xbox Series X|S secured runner-up by dollars.
Flipping over to Accessories as a segment:
Spending moved up almost double-digits.
The headset and headphone sub-segment rose 8%.
PlayStation 5’s Dual Sense Edge was March’s best seller.
Sony’s high-end controller was also Q1’s winner.
Expanding to results for the January to March 2024 time frame:
Overall spending grew 6% to $14.67 billion.
Content increased 9% to $12.84 billion.
Hardware dropped 24% to $1.12 billion
Accessories jumped up 25% to $707 million.
Within premium gaming, Helldivers 2 was the quarter’s top earner. That was followed by Call of Duty and newcomer Dragon’s Dogma 2. Other standouts include Final Fantasy VII: Rebirth in 4th, Persona 3 Reload in 9th, last year’s winner Hogwarts Legacy at #10.
Similar to March, PlayStation 5 was the leading console in Q1 by units and revenue while Nintendo Switch came in the second spot by units, and Xbox Series X|S slotted at #2 by dollars.
“Total U.S. Video Game spending being up 6% in Q1 2024 despite a 24% drop in hardware spending.. shows how diversification has made the market more resilient,” said Piscatella.
Here’s the list of best-selling premium titles for 2024 to date.
Top-Selling Premium Games of Q1 2024, U.S. (Physical & Digital Dollar Sales):
Helldivers 2
Call of Duty: Modern Warfare 3
Dragon’s Dogma 2
Final Fantasy VII: Rebirth
MLB The Show 24^
Tekken 8
Suicide Squad Kill the Justice League
Madden NFL 24
Persona 3 Reload
Hogwarts Legacy
EA Sports FC 24
Skull & Bones
Marvel’s Spider-Man 2
Rise of the Ronin
Super Mario Bros. Wonder*
Elden Ring
Minecraft
Like a Dragon: Infinite Wealth
The Last of Us Part 2
Mortal Kombat 1
In summary, March and 2024’s first quarter had comparable dynamics when it comes to category results, where both Content and Accessories went up, notably bolstered by mobile and surprise launches in previously-unheralded franchises like Helldivers and Dragon’s Dogma, while Hardware faces a number of headwinds and can’t find a catalyst to growth right now.
Looking ahead, I’ll now run through my thoughts on April and a quick mention of my annual forecast.
I’m thinking we’ll see total April sales rise in the single-digits.
Content will go up, more impacted by older titles rather than new launches.
I expect Hardware to decline in the low to mid double-digits.
I certainly expect there to be fewer new titles in April ranking high on the premium list, compared to more than half of the Top 10 this past March, because there weren’t many triple-A flagships.
The controversial Stellar Blade has a solid chance at competing for a Top 5 debut, even being a PlayStation 5 exclusive. Otherwise, we’ll likely see movement for Microsoft-owned brands. This includes Sea of Thieves hitting a new audience and Bethesda games creeping back into the Top 20 or higher due to the uber-popularity of Amazon’s Fallout series, which already attracted 65 million viewers according to Variety.
In terms of an annual forecast for all of 2024, Piscatella is maintaining his guess for a 2% drop in spending. Personally, I’ll maintain my latest forecast of “virtually flat to slightly down” based on signs pointing to the more enthusiast PlayStation 5 Pro hitting market instead of a Super Nintendo Switch, the latter of which would drive Hardware to much better performance and have a system-selling title alongside it.
The start of a new earnings season, complete with my usual calendar, means it’s time to start up recaps as well.
I’m going to try something new and tighten up these recap articles!
More concise, same great quality. I hope.
Today, that means covering Microsoft’s recent 2024 Q3 results. I’ll focus mostly on Xbox during this January to March time frame, where there was major sales growth solely due to the impact from Activision Blizzard, as other areas within gaming declined including things like content, subscription and hardware offerings.
Still, Xbox segment sales outpaced guidance, mainly due to out-performance of Call of Duty.
Microsoft’s gaming division also hit a major milestone this quarter. Feeling the boost from the acquisition being included for two quarters now, annualized Xbox sales reached $20 billion for the first time ever.
I mean, this is why Microsoft spent all that dough. Plus, executives expect this to continue in the immediate future, according to guidance I’ll highlight later in this article, as that annual sales number is likely to move above $21 billion to close the fiscal year.
Now I’ll move right into a rundown of the numbers and a look ahead into the future of a somewhat shaky time for Xbox’s output.
Here’s a quick summary of Microsoft’s quarterly gaming sales, as shown in the slides above.
Q3 revenue rose 51% to upwards of $5.45 billion.
This was above management’s, and my, expectations.
It’s an all-time Q3 record, and Xbox’s second best quarter ever.
Out of that percentage gain, 55% was due to ActiBlizz impact.
Implies all other areas like Xbox, Bethesda etc saw a decline of 4%.
These quarterly sales move gaming back to fourth place in terms of Microsoft’s major product categories, trailing Windows at $5.93 billion.
Expanding now to current annualized Xbox revenue to get a broader sense of the business:
Overall annual gaming revenue is $19.97 billion.
Compare that to $18.13 billion as of last quarter.
The chart in the above gallery shows these in context.
I’ve long written about how this was the strategy around Microsoft’s merger and acquisition activity, to push past the $20 billion per year mark and approach its largest peers, like Sony and even Tencent, especially by leveraging ongoing services and breaking more into mobile.
Which is why I don’t think Microsoft is done buying, even after spending so much on the world’s largest formerly third party publisher.
Similar to my earlier coverage of Xbox, I’ll mention that Microsoft gives limited visibility into the profitability, or lack thereof, of its gaming business. Two points on that:
The More Personal Computing (MPC) segment saw operating profit rise 16% to $4.92 billion.
The ActiBlizz deal boosted expenses, as its net impact in Q3 was an operating loss of $350 million.
This implies that Xbox, despite seeing a big top-line boost, was likely less profitable this quarter.
Here’s where I’ll highlight the underlying dynamics, by way of discussing product categories.
First up is the larger of the two, Xbox Content & Services (Xbox C&S):
Q3 Xbox C&S revenue increased 62% to $5.03 billion.
Same as games revenue, this is also a Q3 record and second best ever.
ActiBlizz growth contribution was 61%, thus a 1% gain for everything else.
Then, on an annual basis:
Current annual Xbox C&S revenue is $16.86 billion, or 84% of the total.
That’s up from $14.86 billion last quarter, when it was 82% of the total.
On the flip side, Xbox Hardware had another tough time, without much to drive its fundamentals right now, as lower unit sales weren’t enough to offset gains from higher pricing:
Q3 Xbox Hardware revenue declined 31% to $350 million.
The lowest 3rd quarter dollar sales of the Xbox Series X|S generation.
Looking at the last 12 months:
At present, Xbox Hardware annual sales are $3.11 billion.
That’s down from $3.27 billion sequentially, and $3.37 billion last year.
Since Microsoft doesn’t tell us anything about lifetime Xbox Series X|S unit sales, I’ll keep up with my guesstimates.
I had the family at 29 million to 29.5 million last quarter.
It’s now likely hovering right around the 30 million milestone.
I forecast it moved 700K to 800K in the three months ending March.
Which lands it around 29.7 million to 30.3 million to date.
When it comes to supplemental stats like engagement, player counts etc, Xbox management didn’t have much to say.
Chief Executive Officer (CEO) Satya Nadella did note the following on the firm’s conference call:
Q3 records for “game streaming hours, console usage and monthly active devices.”
The first ActiBlizz title on Game Pass Diablo IV was one of the service’s biggest launches.
Players clocked over 10 million hours during its first 10 days.
This month, Xbox had 7 games among the Top 25 on the PlayStation store.
Which is a distinct lack of specifics, especially as it relates to Game Pass subscribers or total monthly active users, which unfortunately is a common theme here from management.
Before closing out, I’ll mention Microsoft’s overall results.
Company revenue jumped 17% to $61.9 billion.
Operating profit moved up 23% to $27.6 billion.
Microsoft Cloud sales increased 23% to $35.1 billion.
Slipping into the future, management provided guidance for the final quarter of fiscal year 2024.
Here are the expectations shared by Chief Financial Officer (CFO) Amy Hood for Q4 gaming performance.
Total gaming revenue growth in the low to mid-40s.
50 points of that via ActiBlizz impact.
Xbox C&S expected to grow in the high 50s.
60 points there from ActiBlizz, thus implying everything else will be down 10%.
Xbox Hardware will “decline again.” Based on my math, it will be down 24%.
Using these to make certain assumptions, that translates to the following in dollar terms:
Total gaming revenue around $5 billion.
Xbox C&S revenue upwards of $4.55 billion.
Xbox Hardware hitting $450 million.
These feel right to me, with upside for content based on Senua’s Saga: Hellblade II launching in May, certain games like Sea of Thieves accessing additional audiences and a good effect from Amazon’s Fallout show (which is awesome).
Really, it’s going to go as ActiBlizz games go, notably as they are added to Game Pass.
If Xbox hits these targets, it would shatter a record for fiscal year sales, approaching $21.5 billion. For comparison, this number was at $15.5 billion at the end of fiscal 2023!
I hope you enjoyed the new format experiment, where I’m balancing analysis with word count to make it easier to follow and fun to read.
I’ll be back soon with more articles, and feel free to reach out on social media in the interim. Thanks for reading. Until next time, be well!
Note: Comparisons are year-over-year unless otherwise noted.
Sources: Company Investor Relations Websites, Xbox Wire.
I’m back, with a brand new season. Nope, I’m not referring to Spring, as it’s now here in the States. Though I’ll take the nicer weather, at least looking out my window while playing games.
It’s earnings season!
Which means I’m sharing what I like to call one of the most comprehensive lists of gaming, media and technology earnings dates on the internet. Now approaching 120 companies strong, it will give a sense of when companies are reporting, and where they are in their fiscal cycles. And when an exact date isn’t known yet, I try to estimate based on previous announcements.
As you’ll notice in the above image and the below Google Sheets link, the week of Monday, May 6th is going to have a lot action, including almost a dozen companies reporting on May 9th. Get ready, everyone.
In order to prepare for the next busy season, feel free to bookmark, save, share and post of course.
I also recommend keeping an eye out for my recaps both here and on social media. Plus, here’s three companies to watch over the next few weeks. Enjoy!
After one of the biggest IPOs of the year, Reddit is poised to publish its first quarterly report as a public company when it shares fiscal year 2024 Q1 results. The “front page of the internet” saw its stock price jump in March, yet has cooled to settle below its listing price in April. Within its prospectus, the company boasted 73 million average daily active unique users and generated over $800 million in annual sales, however it’s also currently operating at a loss. I’m mostly curious to see if its business model will expand as the firm matures, and if executives expect to become profitable any time soon.
Capcom Co. Ltd: Monday, May 13th
I’ve been upbeat on Capcom for what seems like a decade now, and the Japanese publisher will report its latest annual results in a few weeks. Just today, the firm revised both sales and profit forecasts upwards, a rarity right before reporting. This signals management is even more optimistic as it’s on track for yet another year of growth, assuredly on the strength of March’s Dragon’s Dogma 2 shipping 2.5 million units right out of the gate. Between that and continued momentum for its Resident Evil and Street Fighter franchise sales, I’m guessing Capcom will beat even its updated guidance, then move into a year where we could see another flagship launch in Monster Hunter Wilds soon enough.
Ubisoft Entertainment SA: Wednesday, May 15th
It feels like Ubisoft, which also reports annual results in May, has been quiet lately even though it’s had a few releases and continues as the caretaker of a big intellectual property portfolio. It produced a couple commercial snoozers like Avatar: Frontiers of Pandora in December then February’s Skull & Bones. And while Prince of Persia: The Lost Crown is amazing, it’s not a blockbuster. So I’m cautious on its latest results. However, I’m quite upbeat on its near-term future as its slate for the upcoming year starts to take shape with Star Wars Outlaws, a game I believe will sell well, officially announced for August while the impending Assassin’s Creed Codename Red could also be out in the next six months or so, a nice one-two punch as far as triple-A tent-poles go.
It’s already my third major recap of this latest earnings season! Time flies when we’re having fun. And earnings season is the most fun.
Now it’s Sony’s turn. The Japanese consumer tech maker reported fiscal 2023 third quarter results recently and PlayStation set yet another revenue record.
Of course, that’s not the whole story. It’s time to go beyond the “all-time high” headlines to talk about why it’s a really intriguing report and time for Sony’s gaming division, including how profitability is taking a hit even as sales soar, its supplemental material shared some updated stats and executives have again adjusted future expectations.
It’s true Sony’s Gaming & Network Services (G&NS) recorded a best-ever quarterly revenue in the period ending December 2023. Around $10 billion! As it has done a lot recently, driven not just by organic growth due to add-on content and digital downloads, but also continued impact of a weakening yen that works in favor of companies that mainly operate globally.
On the flip side, quarterly operating profit moved down over 25% during the holiday period and is trending towards the worst annual profit of the PlayStation 5 era. There’s both macro and micro reasons for this, including interest rates and high costs alongside weaker internal output and worse hardware losses.
During October to December, Sony shipped 8.7 million PlayStation 5 consoles. While that’s the best single quarter for the console, well above last holiday’s 7.1 million, it’s a million fewer than PlayStation 4 did at the same time and missed estimates enough for them to substantially reduce annual guidance. It’s hard to believe PlayStation 5 is entering the middle phase of its life cycle now trailing its predecessor by a wider margin than even last quarter.
The major story on the software side continues to be Marvel’s Spider-Man 2, which swung above 10 million units sold-through to buyers this month after reaching the 5 million milestone back in October. It carried first-party, and also helped drive Monthly Active Users (MAUs) growth even as PlayStation Plus memberships fell.
These led to management again revising its forecast, this time downward for both revenue and hardware. They even provided a look ahead to next fiscal year, clearly signalling PlayStation 5 annual sales are peaking and will shrink in the back half of its life. As far as games and its tent-pole studios, there are no plans for “major franchise” first-party launches until at least April 2025.
Addressing concerns of profit margins during the company’s conference call, Sony’s President Hiroki Totoki cited at least two reasons: difficulty in cutting prices for hardware and needing to create better opportunities for first-party software on more platforms, including PC.
“How can we, given the situation, put our product lines together to make it affordable, without relying on steep discounts, to reasonably sell them to continue our commercial journey on a sustainable basis?” Totoki said. “I personally think that’s important, and there is an opportunity in that.”
Now into the full rundown of numbers and my current predictions. Buckle up!
Sony’s total revenue moved up 22% in the quarter, to a record amount of $26.19 billion. Operating profit reached $3.24 billion, up 10% and the second highest in its history. Growth here came mainly from Entertainment, Technology & Services (ET&S), Financial Services and G&NS.
Zooming into the gaming division, sales rose 16% to a record $10.1 billion driven by third-party software, downloadable content and exchange rate movement. To illustrate the last point, the impact from yen fluctuation alone was $531 million. This implies “true” dollar sales growth around 10%.
Operating income declined 26% to $602 million because of worsening hardware losses and lower internally-published game sales. Across this most recent three-month period, the PlayStation business represented nearly 40% of Sony’s sales yet under 20% of its profit.
Most product categories within G&NS saw higher quarterly sales, including Hardware up 8% to $3.3 billion or 33% of the total. Add-On Content rose 33% to $2.44 billion, accounting for a 24% slice. Digital Software jumped up 16% to almost $2 billion, at 20% of the total. Physical Software and Other Software both declined, 7% and 30% respectively.
Expanding to the latest annualized numbers gives us a broader sense of where the business is at right now. For revenue, it’s the best it’s ever been at $29.65 billion. Compare that to last year’s $22.62 billion. On the other hand, PlayStation currently has the lowest trailing 12-month profit since Fiscal 2017. It’s at $1.56 billion, compared to well over $2 billion a year back. The size of this deterioration is truly evident when you view the the second chart in the above gallery.
Seeing as the “Big Three” have now all reported this season, it’s a good time to revisit our industry comparison. Using annual numbers, Sony’s massive $29.65 billion is tops across all players, above even Tencent’s $26 billion with the caveat that the Chinese internet conglomerate doesn’t report until next month. Microsoft’s $18.13 billion now includes Activision Blizzard, and Nintendo currently stacks up to roughly $13 billion.
Again I’ll mention that while Sony’s sales are soaring, PlayStation is not nearly as profitable as the likes of Nintendo which has more than twice as much operating profit (over $4 billion) on less than half the sales. And it’s not like this is a recent phenomenon. Even during Switch’s fourth fiscal year, a similar time period, Nintendo’s margins were better.
Want more stats? Well, either way, you’ll get them.
Taking the latest PlayStation 5 hardware shipments into account, its lifetime figure is now at 54.8 million. As you’ll see in the above launch-aligned chart, its predecessor was at 57.3 million at this time in the cycle. Not only that, the gap between the two is widening at the exact time when PlayStation 5 is hitting a plateau.
As for comparisons outside of Sony, the PlayStation 5 is steadily approaching the 58 million lifetime sales territory of Microsoft’s Xbox One and will likely surpass it by this fiscal year’s end in March. Next up will be Nintendo Entertainment System (NES) at almost 62 million, still a fair ways off.
Out of those 54.8 million shipped to market, Sony announced back in December that PlayStation 5 reached 50 million sold-through to consumers.
Unit sales for PlayStation software moved up slightly from 86.5 million this time last year to 89.7 million, an increase of 4%. The skew was much more towards those published externally, given that only 16.2 million or 18% were first-party games this time versus 24%, at 20.8 million, during last year’s fiscal Q3.
Most of first-party’s movement was due to Insomniac’s Marvel’s Spider-Man series, which has now surpassed a healthy 50 million units sold-through in aggregate, inclusive of sales from PC since the first entry back in 2018.
Engagement across PlayStation Network hit an impressive 123 million MAUs in the quarter ending December, an all-time high up from last year’s 112 million. The influx of active users, driven not just by Sony’s titles but also external free-to-play offerings like Fortnite, led to 13% more hours played across the ecosystem.
While the company hasn’t shared PlayStation Plus membership figures since the end of last fiscal year, management’s prepared remarks did point out that subscriptions declined since last year though service revenue did increase.
“Regarding network services, despite the impact of a slight year-on-year decrease in the number of PlayStation Plus subscribers, revenue increased 11% year-on-year,” the remarks said. “Mainly due to the impacts of a further shift to premium services and price revisions.”
Essentially, dollar sales from PlayStation Plus are going up for now because of users going to the premium tiers and the price increases the company has instituted. From my perspective, I would add that’s not necessarily sustainable and I see this as more of a temporary dynamic. It’s known that gaming subscription services are stagnating, and this is one such example.
Another area lacking in the report was any shipment figures for Sony’s latest product launch in PlayStation Portal, which hit market during November 2023. Anecdotally, it seems like supply was highly controlled. While we don’t know specifics, we can infer from category results. The segment called Others, which covers peripherals and PlayStation VR2, jumped up 60% to $698 million in Q3. While still a small slice at 7% of sales, that’s a sizeable bump I’d wager was caused directly by Portal.
When taking the full Q3 report into consideration, it shows PlayStation’s position as one of strength on the sales side, partially due to the yen, and an ongoing struggle for profit growth amidst ballooning development and hardware costs. Yes, there’s general inflation and interest rate impact. It’s also the case that rapid-paced triple-A game development and maintaining hardware pricing as a console ages is not sustainable.
The good news is that software demand and player engagement look healthy. It’s just harder to translate these things into higher margins, especially since attracting players to something like PlayStation Plus requires spending money on partnerships or launching first-party games simultaneously into the service, which Sony is not currently doing. At least management is expanding to platforms beyond console, thus spreading risk and boosting audience reach.
Before closing the books on another quarter, I’ll now looking ahead to the finale of Sony’s fiscal year ending March 2024 and beyond.
In a classic flip flop, after revising annual PlayStation revenue guidance up by 5% last quarter, it now backed that off and reduced it by that same amount. This still translates to an increase of 14% up to $29 billion, which would certainly be a record high and lead the industry. I believe this will happen.
Even with the double-digit decline for operating profit this quarter, management reiterated the annual profit guidance of $1.89 billion or up 7%. In order to get there, management said they are reviewing measures to improve profit. One of those could very well be more layoffs. This time, I’m skeptical and I don’t think it’s going to meet this target.
The holiday period was going to be a huge indicator all along for PlayStation 5 unit figures. Now that it missed, management revised annual guidance down from what I called an unrealistic goal of 25 million to now 21 million. This would still be a million above the PlayStation 4’s best year, and I don’t buy it. It’s at 16.4 million so far, leaving 4.6 million to ship between January and March to get there.
Back when Sony was signalling higher, my forecast was also higher. Now I’m at 19.5 million to 20 million, tops, if it can even replicate its predecessor’s success. the only way to get there is if Sony announces aggressive discounting as soon as possible, which again puts a strain on margins.
Finally, executives acknowledged that this will likely be the best year of PlayStation 5 sales, and it’s all downhill from here!
I know what you’re saying: What? Already?! Well, PlayStation 4 peaked in its fourth fiscal year, and PlayStation 5 will be entering its fifth financial year starting this April.
Software is where uncertainty continues, notably for internal studios. There’s no doubt Marvel’s Spider-Man 2 accomplished an incredible feat. That’s the outlier. Plus, the likes of Marvel’s Wolverine, a Ghost of Tsushima sequel and anything from Naughty Dog are at least a year away, if not multiple years.
While The Last of Us Part II Remastered launched on PC and Helldivers 2 is off to a fantastic start, partly because of Steam, Sony didn’t capitalize on the Palworld craze and has a sparse console calendar incoming. I do expect a live service title or two by March 2025, like Concord and Fairgame$, alongside select PC launches to hold software sales over until seeing heavy hitters again.
Development and marketing are as expensive as ever, and projects require increasingly longer timelines to complete. A steady cadence of blockbuster releases is tough if near impossible. That’s a huge part of why we see the current dynamics underlying Sony’s gaming business, and the team will have to navigate these treacherous waters.
As always, I very much appreciate you stopping by for my ongoing earnings coverage. Check in on social media for more and visit soon for future articles. Be well!
Note: Comparisons are year-over-year unless otherwise noted. Exchange rate is based on reported average conversion: US $1 to ¥143.1
Sources: Company Investor Relations Websites, Sony Interactive Entertainment.
Next up for this quarters’ recap series, as you clearly know from bookmarking my earnings calendar, is Nintendo. The gaming company that continues to delight audiences and defy expectations.
The Japanese console manufacturer and mega publisher reported figures for the nine months ending December 2023, the third quarter of its fiscal year ending March 2024. Which means I have plenty to break down including quarterly, nine month and trailing annual numbers. A little bit of everything!
Nintendo’s quarterly financial results were down slightly in Q3, however its 9-month figure remains trending upwards during this likely final full year of the Switch’s life cycle.
Super Mario Bros. Wonder was the big winner of the quarter, moving nearly 12 million units as the fastest-selling Super Mario title in series history. Over the April to December span, The Super Mario Bros. Movie and The Legend of Zelda: Tears of the Kingdom were doing heavy lifting along with additional content for its suite of legacy titles like Mario Kart 8 Deluxe and Splatoon 3.
Nintendo shipped upwards of 6.9 million Switch units during the December quarter, and without official discounting at market. While down a bit since last year, that’s a healthy result for a console that saw its first holiday season back in 2017. This pushed lifetime shipments to nearly 140 million, steadily approaching the realm of all time behemoths like Nintendo DS and PlayStation 2.
“When we look at the sales situation so far this fiscal year against this backdrop, we believe that hardware sales have held stable since the first half and that the holiday season results were steady,” Nintendo President Shuntaro Furukawa said in a Q&A.
“We want to maintain momentum in the business through a good balance of both first-time buyers and demand for multiple units. During the holiday season, we noted a particular rise in first-time buyers of our hardware, and we see this as a positive sign for the Nintendo Switch business going forward.”
All of this led management to raise full year guidance yet again, similar to last quarter, for a number of things: sales, profit, hardware and software, in addition to a dividend hike that will return more profits to shareholders. I’ll cover these in more detail in a later section.
Now to the question on everyone’s mind: Where’s that Switch Pro? (Oh no, not again.)
Really, check below as I’ll fully cover the company’s report then drop a set of predictions, including my latest forecast on when the Switch’s successor will be out. Let’s jump into it!
I’ll now dig into the above slides and below charts, which cover all of the numbers Nintendo released during its third quarter 2024 announcement.
Overall, the firm generated $4.18 billion in profit during the three months ending December 2023. That equates to a 6% decline. Operating profit dipped 3% to $1.29 billion.
Across the latest three quarters, net sales grew 8% to $9.74 billion while operating profit rose an impressive 13% to $3.24 billion.
These can be attributed to the yen’s continued weakness overseas, a higher proportion of Switch OLED model shipments compared to the broader family of devices plus add-on content for its more evergreen titles. Not to mention having one of 2023’s biggest movies based on a world-renowned brand, I might add.
Expanding to latest annualized figure, which ends up being the 2023 calendar year number, revenue moved up 7% to $12.53 billion. That’s the best calendar year revenue number for Nintendo since 2008! Operating income bumped up even more, settling at $4.09 billion or an increase of 10%.
These growth numbers are all fantastic for a company that will likely move into its next generation of consoles within the next six to twelve months, and highlights the smart move by executives to diversify into different areas like digital support, intellectual property (IP) adaptation, online services and post-launch content drops.
Moving onto product categories, Nintendo’s hardware and software each contributed exactly 50% during the third quarter. This split last year was 51% and 49%, in favor of hardware. Across the 9-month period, the software slice was larger at 55% of the total. At the same time last year, it was 54%. Not too much movement in either direction over the last couple years.
With respect to regional splits, the latest nine months continued a slight shift away from Japan and towards The United States and its neighbors. The Americas made up 44% of sales, up from 43%. Europe remained flat around 25%, while Japan declined from 24% to 21%.
The digital portion of Nintendo’s sales during Q1 to Q3 moved up a couple percentage points to 48%, fitting the industry trend towards downloads as opposed to retail buying. Digital came in around a quarter of the company’s revenue stream, growing 12% in the last nine months to $2.42 billion.
Here’s where Nintendo stacks up against the industry’s biggest players. First, yen weakness does have a positive impact on revenue in local currency for companies that mainly operate globally, like a Nintendo or Sony. However when converting from yen to U.S. dollar, it doesn’t appear as attractive because of the low rate. Sony, which reports gain next week, had PlayStation at $28 billion annually while Tencent stacked up to $26 billion. Microsoft’s integration of Activision Blizzard brought it to $18.13 billion this quarter, while Nintendo comes in under $13 billion. However, Nintendo’s operating margins are best in industry, even while developing a new hardware.
Focusing strictly on Switch hardware shipments, these totaled 6.9 million during October to December. Compare that to 8.23 million the prior year.
Which is excellent for a console that’s saturated its market as much as Switch has. For context, I estimated that Microsoft shipped 4 million max Xbox Series X|S this holiday. Sony moved 7.1 million PlayStation 5’s in the quarter ending December 2023.
That brought hardware units to 13.74 million during the first nine months of this fiscal year, down 8% from 14.91 million. Management noted this was mostly in-line with expectations for the time frame.
As has been the case for a couple years, the predominant model during this period was the Switch OLED. That version shipped 8.17 million between April and December, up 6% from 7.69 million. Next up was the base model at 3.4 million, down 25% from the prior year’s 5.22 million. Rounding out the list was Lite, which grew 9% year-on-year from 2 million to 2.18 million.
So, this all brings Switch lifetime sales to 139.36 million. Is there a legit chance it clears the Nintendo DS at 154.02 million to become the company’s best-selling device ever? The answer is: absolutely.
Switch is under 15 million away from Nintendo DS. If the company’s target holds this fiscal year, it would need 13 million more during the financial period beginning in April. I am betting that, by the end of March 2025, not only will Switch be Nintendo’s best-selling ever, it will surpass PlayStation 2 at 155 million to secure the top spot on the all-time top seller list. Even if Super Switch exists!
Back to the latest announcement, Nintendo did share some insight into hardware sell-through to consumers. Namely that it’s been steady for the console’s age, and that the OLED version saw increased demand, echoing the growth seen in shipments. And it wasn’t just first timers, there were plenty of people who double dipped or grabbed replacements, according to prepared remarks.
Now swapping over to Nintendo’s other bread-and-butter which is software sales, this is where the team has shined the entire back half of this generation with both new games and existing support.
For the holiday quarter, software unit shipments for Switch totaled 66.87 million. That’s down only 14%. Expanding to the April to December period, unit sales for software dipped 5% to 163.95 million. Considering the saturation and how many titles it’s already moved, that year-to-date figure showed great resilience.
The proportion of first party titles, those published by Nintendo, rose from 79% to 83% in the nine months ending December. That’s more than four out of every five games purchased in this period, namely due to flagship Zelda and Mario launches plus a mainline Pikmin.
How’s about yet another lifetime milestone for the Switch’s historic run? Just this quarter, lifetime unit sales on the platform surpassed 1.2 billion. The strength of its portfolio is unrivaled even compared to prior Nintendo generations, plus there’s the legacy library via Switch Online, broad attraction of franchises like Animal Crossing and third party offerings like Fortnite.
Speaking of big sellers, Switch now has 24 “million-seller” titles which shipped a million units or more in the latest nine months alone. Within that, 17 were first party and 7 were external publishers. Compare this to last year’s 27 overall, and it’s another example of the platform’s appeal.
The elephant in the room was Super Mario Bros. Wonder, not just shipping 11.96 million but also selling-through 10.7 million of those to consumers. For comparison to recent franchise titles in their respective first quarters: Super Mario Odyssey had 9.07 million in 2017, New Super Mario Bros. U Deluxe reached 2.5 million in 2019 and 2021’s Super Mario 3D World + Bower’s Fury saw 5.59 million. Keep in mind the lower install bases at this times, of course.
Elsewhere, new launch in Super Mario RPG Remake shipped 3.14 million since hitting market in November, another benefactor of the Switch effect. July’s Pikmin 4 also hit the 3 million milestone, moving up 720K units to 3.33 million.
After an incredible run since May, The Legend of Zelda: Tears of the Kingdom reached the 20 million milestone this quarter, settling at 20.28 million. While it’s slowed in recent months, it’s still a ridiculous feat to hit this sort of threshold in less than a year.
One one that seems to never slow down is Mario Kart 8 Deluxe, which zoomed past the frankly absurd 60 million milestone this quarter. After somehow shipping 3.57 million in the holiday quarter, it’s held pace at 60.58 million. That’s well above the second place on the platform in Animal Crossing: New Horizons at 44.79 million. I don’t know how Nintendo can top this latest Mario Kart entry, and I don’t envy the designers that have to make its follow-up.
The last statistic revolved around engagement, as Nintendo announced a record 122 million Annual Playing Users as of December, up from 114 million last year. While this isn’t as indicative of active players as something like monthly or daily active users, it does show that buyers at least login to their devices over the years. Separately, Nintendo didn’t share any updates on Switch Online subscribers, last reported at 38 million in September 2023.
Between a nice holiday quarter, the financial growth in the first nine months of fiscal 2024, the fastest-selling Super Mario ever, major milestones for its biggest franchises, diversifying into film and other media plus revitalizing classics to close the cycle, Nintendo’s latest run continued in this earnings report as Switch approaches its seventh birthday next month.
To say it’s exceeded all expectations, and continues to prove analysts wrong, is an understatement.
Before closing out, let’s look at that updated guidance and make a few predictions. Management revised a number of forecasts upward, including financial targets and unit sales expectations.
The firm now expects 3% more net sales and 2% better operating profit during the fiscal year ending March 2024. That translates to roughly $11.4 billion and $3.56 billion, respectively. This indicates Nintendo expects both of these to grow in the single digits, and I expect them to be achieved. If not exceeded by a decent margin.
On hardware, according to Furukawa commenting after the company’s announcement, the Switch will remain its “main business” through the end of March and into the new fiscal year. In fact, he called out internet rumors and asked people to “exercise good judgment” when hearing them.
Fitting with this sentiment, the company raised Switch unit guidance by 500K to 15.5 million. That implies the January to March quarter to have only 1.76 million shipped in order to reach this goal. Personally, I’ve been predicting the 16 million to 16.5 million range for this year. I see no reason to change that now, and I’m even leaning towards the upper end of this range.
The real question on everyone’s mind is the Super Switch! Mainly when, and how much. Executives are playing coy for now, as expected.
“We are unable to make any comments beyond saying that our company is constantly conducting research and development on new hardware and software,” Furukawa said.
There were some small hints in his latest Q&A series posted today. Furukawa pointed out the hybrid model is the “optimal way” to deliver Nintendo’s unique experiences. That all but confirms the successor will have both handheld and console functionality, consistent with recent speculation that’s pointed to a larger screen in portable mode.
I’ve written before that my forecast puts Super Switch in the fourth quarter this calendar year. I’ll also stick to this, expecting an initial announcement after Nintendo’s current financial year ends, so as to not jeopardize hitting that hardware target. This puts a reveal in April or May, then more details and presentations leading into launch around October.
Management also bumped up its software expectations by 3% for the full year, now guiding that Switch will have 190 million units shipped in that period alone. This feels on the money, with slight upside to beat it.
The current slate features one brand new title Prince Peach: Showtime!, a more niche title launching in March that I think will do alright yet not gangbusters. There’s also the remake of Mario vs Donkey Kong out next week. Between these and continued interest in Super Mario Bros. Wonder among others, I’m not worried about Nintendo reaching its more optimistic guidance.
Beyond that, it’s anyone’s guess because Nintendo hasn’t shared much for its offerings beyond a pair of revitalized old games in Luigi’s Mansion 2 HD, on the calendar for Summer 2024, and the pending Paper Mario: The Thousand-Year Door remake sometime this year. Metroid Prime 4 remains a mystery, the only title in its financial report listed as to be announced.
One title that probably won’t hit Switch anytime soon is Palworld, what with The Pokémon Company’s investigation into 2024’s biggest sales surprise so far for potential IP breach and asset usage. While I’m not sure that a legal battle will ensue, I’m sure it will remain on other platforms for the foreseeable future.
That does it for my latest earnings recap. I’ll be back soon with more coverage of the season and other topics as 2024 keeps it moving. Be well, all!
Note: Comparisons are year-over-year unless otherwise noted. Exchange rate is based on reported average conversion: US $1 to ¥143.22.
Sources: Company Investor Relations Websites, Video Games Chronicle.
As you well know because you’ve seen my handy earnings calendar for this season, Microsoft reported its 2024 second quarter results earlier this week.
Only executives and literally everyone, including when I wrote about this very topic last quarter and predicted the revenue amount, expected the software tech conglomerate to post record gaming sales almost entirely becasue Activision Blizzard numbers are now included since closing the deal in mid-October 2023.
That’s precisely what happened.
Still, as I’ll illustrate shortly, I’d argue massive growth isn’t the whole story. I’m more interested in isolating Xbox’s organic performance, comparing post-acquisition to the sum of both entities before it happened and trying to determine how annual numbers will shake out. In addition, I’ll review the acquisition’s notable hit to profitability for the time being due to its cost and integration.
Essentially: headlines, even mine, never tell the whole story!
There’s also a divide happening right now with Microsoft. Just as the company closed above $3 trillion in market value for the first time, it announced big layoffs in its gaming division. Around 1,900 people across Xbox, Activision Blizzard and Bethesda, or 8% of the gaming workforce, were let go. I know there’s various factors behind this, including macro ones like inflation and interest rates. Plus, stock market valuations are determined by a collective set of investors rather than a company’s management.
Still, the optics and timing are tricky. The fact that job loss after the deal due to redundant roles and function overlap was inevitable doesn’t make it any less painful for the people involved. Especially as the broader company reaches record valuations and reports gaudy numbers.
Moving into those numbers, Xbox revenue totaled over $7 billion in the quarter ending December 2023. That’s up 49%. Within that, Activision Blizzard was responsible for contributing $2 billion. This makes Gaming the third biggest contributor to all of Microsoft’s sales at 11% of the total compared to 9% last year, right now behind only Server and Office.
It’s pretty clear what’s underlying this: Buying a massive third party publisher and integrating it within content and services figures. Even so, there was some organic Xbox growth in Q2. Under 6% to be semi-exact. I was also impressed that hardware was able to deliver solid performance during the holiday season, even if boosted by discounting.
“With our acquisition, we’ve added hundreds of millions of gamers to our ecosystem, as we execute on our ambition to reach more gamers on more platforms,” said Chief Executive Officer (CEO) Satya Nadella. “Great content is key to our growth, and across our portfolio, I’ve never been more excited about our lineup of upcoming games.”
Pretty standard corporate speak from Nadella, and I’d argue Xbox’s line-up this entire generation has been anything but exciting. In fact, management quotes around gaming on the earnings call were generally tame. The team did offer select insights that I’ll cover later, namely on cloud streaming and engagement across platforms including mobile, the latter of which hit record highs after the integration of Activision Blizzard players.
Read on to learn what the numbers truly look like, some estimates from me around a combined historical comparison, my guesses for hardware unit sales and then predictions going forward into 2024.
First thing to note when checking the above slides is Xbox, Bethesda and now Activision Blizzard are all accounted for within Microsoft’s broader More Personal Computing (MPC) segment.
Quarterly gaming revenue rose 49% in the three months ending December, up to an all-time high of $7.11 billion. This was exactly within the firm’s guidance.
What drove it? Well I’ll break that into two categories: Activision Blizzard and pre-acquisition Xbox. Here is where we talk the deal’s impact, which actually cost upwards of $75 billion based on the latest filing. During the second quarter, it contributed $2.1 billion to gaming division sales.
Essentially, Activision Blizzard was responsible for 30% of Microsoft’s second quarter gaming business at the top-line. Still, as I’ll get to in a second, its inclusion put major downward pressure on profit.
Separating that out, the $5 billion “organic” Xbox sales implied a growth rate of 5.7%. Much less than the headline suggests, right. Still, it’s certainly noteworthy for the important holiday time frame, notably while facing what executives called a “tough console market.”
Moving to the latest year, which happens to cover the 2023 calendar months, gaming revenue expanded 17% to rise above $18 billion for the first time ever. This particular figure, mapped out over time in one of the below charts, will only grow over time as more quarters take the acquisition into account.
I’ve also provided a new chart measuring Estimated Combined Gaming Revenue that, full disclosure, pulls in a few different assumptions to form a rough estimate of how annual figures compare when adding in Activision Blizzard’s historical revenue. I’ve summed up the two pre-deal entities going back for a few fiscal years then subtracted $2 billion per year in assumed overlapped sales.
What results is where I think Microsoft gaming sales could be when a year of Activision is considered: almost $22 billion, up a bit from the $21.6 billion a year back. That’s an upward trajectory of 1% as opposed to the 17% I just referenced. Good, yet nowhere near as wild as the headlines indicate.
While Microsoft is the first of the bigger gaming companies to report, I like to gather up a comparison to peers and update throughout the season in my articles. Sony’s latest annual PlayStations sales tracked towards a whopping $28 billion, with notable impact from the yen’s depreciation. Tencent was around $26 billion. This is where the current combined Xbox and Activision Blizzard slots, at $18.13 billion. Nintendo’s latest hit $13 billion. My usual caveat is that Nintendo is operating at higher profitability than at least PlayStation, and likely Xbox as well.
Speaking of profit, Microsoft gave us a bit more than usual this quarter! Partially because it had to illustrate the impact from Activision Blizzard, but I’ll take it. For the MPC group, operating profit jumped up 29% to $4.29 billion. Half of the “gross margin dollars” profit metric, a figure that moved up 34% in Q2, was contributed by Activision Blizzard as it helped up operating expenses at a higher rate of 38%. Focusing strictly on Activision Blizzard, its net impact was $437 million in operating income because of those higher costs. There’s also some accounting nitty gritty that I won’t include, for the sake of brevity.
What does this all mean? Well, record sales were mostly due to Activision Blizzard no longer being a 3rd party partner and becoming first party, however there was single-digit organic Xbox growth during the holiday season. Profit for the segment that includes gaming will take a short-term profit hit while integrating costs and following through with the deal’s financial accounting.
Here’s a quick dive into the two Xbox sub-areas, called Xbox Content & Services (i.e. software and subscriptions) and Xbox Hardware.
For October to December, the vastly larger Content & Services jumped up nearly 70% when measured by revenue. The first figure was above guidance, while the second technically under-performed at least based on what I calculated because Microsoft rarely, if ever, issues formal hardware forecasts.
The reason I say “nearly 70%” is because how Microsoft reported its numbers actually indicates that Content & Services moved up 68% to $5.69 billion, another best ever number, rather than the 61% in its announcement. From what other analysts and I can tell, Microsoft seems to have excluded Activision Blizzard’s eSports sales, for whatever reason.
This leads to my estimate of $16.5 billion for Content & Services over the last 12 month. That itself is above the $15.56 billion for all of Xbox in 2022 Q2. Separately, Hardware generated $3.27 billion in the latest annual period, slightly below the last couple years.
When hearing this numbers and looking at these charts, I’ve assumed all Activision Blizzard revenue is caught in the Content & Services pipeline because it doesn’t have anything to do with console manufacturing.
Underlying the best-ever figures for the software side was another all-time high, this time for engagement. Nadella noted that, now that Activision Blizzard players are included, Microsoft’s gaming division boasts 200 million Monthly Active Users (MAUs) on mobile devices. Prior to this, Xbox’s figure overall was 120 million. Activision had 92 million in September, while Blizzard was 26 million and King totaled 238 million.
Nadella also alluded to a double-digit jump in cloud gaming hours streamed, moving up 44% in the quarter. We don’t have specifics on the actual number of hours played by its active users, only the growth rate. Plus, unfortunately, there’s still no word on Xbox Game Pass subscribers. The last update was 25 million a couple years back, and I estimated recently that it’s likely approaching 30 million though has not eclipsed it. I hope Microsoft offers a new figure this year. Yet I’m not holding my breath.
Xbox’s Hardware segment had a solid holiday, even if the result ended up below my expectations.
Console dollar sales moved up 3% in Q2, to above $1.4 billion. This was spurred on by holiday discounting for the Xbox Series X|S family, and the appeal of something like Bethesda’s Starfield. In terms of number of consoles shipped to market, I believe it slightly increased although those units sold at a lower average selling price.
“In our consumer business, the PC and advertising markets were generally in line with our expectations,” said Chief Financial Officer (CFO) Amy Hood. “PC market volumes continued to stabilize at pre-pandemic levels. The gaming console market was a bit smaller.”
It’s a curious statement. Just because it was challenging doesn’t mean it wasn’t good. Any growth right now for Xbox console revenue, even in the lower single digits, is a positive sign. Echoing my past sentiment, and it’s something gamers need to get accustomed to, is that Xbox’s strategy has officially shifted away from consoles and towards offering services on various devices.
During the last year, Hardware reached $3.27 billion. That’s down 9% from the same time in 2022, though above pre-pandemic figures. Again, this tracks with the general theme.
Since Microsoft doesn’t provide global unit sales like peers do, I have no choice but to guesstimate where they stand. For the holiday quarter alone, I backed into 3.5 million to 4 million shipments for Xbox Series X|S. This would be in-line with last year, albeit below the roughly 4.5 to 5 million that its Xbox One predecessor was doing during its prime.
I put Xbox Series X|S lifetime at 25.5 million or so prior to this latest three month report. Which was below the 26 million of Xbox One. Adding on my estimated holiday shipments for the family, I believe Xbox Series X|S stands currently at 29 million to 29.5 million units lifetime since November 2020. Thus, it remains tracking below Xbox One by upwards of a couple million.
For comparison, Sony’s PlayStation 5 was the best-selling console in key regions during 2023, including the United States as I covered recently. The console reached 50 million units sold to consumers in December 2023, and the shipment figure will be even higher when Sony reports in a couple weeks.
Overall at Microsoft during Q2, revenue jumped 18% to $62 billion. Operating profit rose 33% to $27 billion. Microsoft Cloud grew 24% to 33.7 billion. Executives provided some color around how the Activision Blizzard deal affected the full firm’s financials.
“At a company level, Activision Blizzard contributed approximately 4 points to revenue growth, was a 2 point drag on adjusted operating income growth, and a negative 5 cent impact to earnings per share. This impact includes $1.1 billion from purchase accounting adjustments, integration, and transaction-related costs such as severance-related charges related to last week’s announcement.”
That’s referencing last week’s Xbox group layoff announcement, which came after a year of more than ten thousand people losing their jobs at the broader company.
To wrap up the latest quarter, it’s important to look behind the absurd 49% growth and big figures due to integrating Activision Blizzard. There has to be consideration for what numbers look like when combining the two historically, plus the notable downside profit effect for the time being. Not to mention the painful layoffs that happened mostly because of the deal taking place.
In terms of dynamics and future of the Xbox division, these don’t necessarily change with the latest new acquisition. The numbers are bigger, and the portfolio certainly has more brands especially on the mobile side with the unsung King division, while various challenges remain especially on the hardware front plus with industry-wide service stagnation and general costs rising.
I’m also lamenting the lack of details into Activision Blizzard’s underlying financials. We’ll never see them ever again. Pour one out, fellow business nerds and data transparency advocates.
Here I’ll take the chance to look ahead to the third quarter, and make some predictions on the immediate future of Xbox.
Management expects Xbox division sales growth “in the low 40s,” so between 40% and 44%. Out of that, management signaled 45 points would be due to Activision Blizzard. Yes, this means that Microsoft is saying its non-Activision Blizzard Xbox sales will likely decline in this current quarter.
Assuming say 42% growth, that puts Xbox sales at $5.12 billion in the three months ending March 2024. Which, you guessed it, would be a Q3 record. I believe this will be met, though on the lower end.
For Xbox Content & Services, Hood said to anticipate growth “in the low to mid-50s” i.e. around 50% to 57%. Most, if not all of that, will be Activision Blizzard causing a net impact of 50 points or 50%.
Let’s say it gets to 54%, that would elevate Content & Services to $4.77 billion in Q3. Again, I expect that to be achieved, and I think there’s a good chance it hits the upper end.
Finally, management actually provided Hardware guidance! Well, somewhat. They think it will decline. That will certainly be the case if the other numbers hold. As in, console sales could be down by as much as 30%. Based on how they presented numbers this time, I’m guessing around a 5% to 10% decline for console in Q2 which would equate to around $450 million to $480 million.
The early year release slate for Xbox is a tad light, so I’m thinking evergreen titles and the Call of Duty effect being first party will drive the business to hitting these forecasts. In terms of new games, Sega’s Like a Dragon: Infinite Wealthhit a million units yesterday. Warner Bros’ Suicide Squad Kill the Justice League formally launches today, and I’m skeptical on its commercial upside, just like I am for Ubisoft’s Skull & Bones this month. There’s titles like Tekken 8 from Bandai Namco, which I’m quite upbeat on, and Capcom’s Dragon’s Dogma 2 in March that should attract a cult following.
Will these be the biggest software contributors of the quarter? Nope. It’s Palworld, the surprise console exclusive that’s garnering a lot of attention from consumers and pundits alike. It’s much more than the “Pokémon with Guns” moniker, and has been a near unprecedented sales success. So far, Pocket Pair’s latest reached more than 19 million players, 7 million of those on Xbox alone. It’s the largest third party launch in Game Pass history, beating out 2022’s High on Life, and instantly shot to the top of the service’s most-played chart. I’m on record saying it will end the year as one of the platform’s biggest titles. Frankly, it’s absurd and I love it.
That ends the first massive recap of the latest season. Follow me on social for coverage in between articles, and check back soon for more here at the site. Be well!
Note: Comparisons are year-over-year unless otherwise noted.
Sources: Circana, Company Investor Relations Websites, Pocket Pair, Sega.
I want to acknowledge my anticipation while also tempering excitement, mainly due to the difficult situation for people working across all industries right now where many people are finding themselves out of work.
It’s been an especially tough time within gaming, media and technology, the exact sectors I cover here at the site. I’m again sending my best to everyone impacted by layoffs and I hope you’ll bounce back soon. Don’t give up on your dream just because of a company’s decision!
That said, we’re here to cover companies and the dates on which they report their latest results. I’ve gathered up my usual quarterly list, now including well over a hundred companies. I do my best to track down individual dates however, as you’ll see, not everything is available at the time of publishing so I’ll give a range based on historical timing.
Note that the dates themselves are added according to each company’s announcement in their local time zone. Say a Japanese company announces results on a Wednesday, it might still be Tuesday in your location.
I recommend saving as a bookmark, copying the image and visiting the link below to track everything during a busy time for tracking trends and performance. Plus, read on for three companies worth watching over the coming weeks. Thanks for stopping by!
It made the list last quarter, and it’s here this time around because when Microsoft reports its third quarter fiscal 2023 results later today, it will be the first operating period where numbers will account for Activision Blizzard. After laying off tens of thousands last year and starting 2024 with almost 2K jobs lost in the Xbox department, Microsoft has also hit a $3 trillion market capitalization and expects massive double-digit growth for gaming due to the integration. There’s a clear dichotomy between its job situation and ongoing hardware issues, losing in key markets to competitors, compared to expected revenue growth and consumer sentiment on its future slate of titles. I believe its results will fall within forecasts, and that gap between labor and performance will continue, albeit without visibility into profit dynamics or Activision Blizzard’s underlying financials, which is a pity.
Warner Bros. Discovery, Inc. (WBD): Mid February
It was a banner year for Warner Bros’ gaming division, now boasting four billion dollar franchises including Harry Potter, on the strength of last year’s best-selling Hogwarts Legacy, and Mortal Kombat in addition to Game of Thrones and the DC universe. I’m expecting a potential record result when it reports fiscal year 2023 results in mid February, as its gaming success will supplement its various media and content businesses. I also remain incredibly curious about how Suicide Squad Kill the Justice League will start on the commercial side and if we’ll hear anything from executives after a gloomy marketing period and a shaky early access start this week.
Embracer Group (EMBRAC B): Thursday, February 15th
One of the biggest and most disappointing stories in the games industry has been Embracer Group’s over-expansion and restructuring, now resulting in job loss for thousands of employees. The Swedish firm, which reports third quarter 2023 results soon, has shuttered games and laid off people as recently as yesterday with news of a killed Deus Ex project and layoffs at Eidos Montreal. CEO Lars and the executive team is in the midst of a restructuring program that began when it lost a deal where Saudi Arabia’s Savvy Games was going to invest $2 billion, resulting in massive debt and a bloated list of operating groups. I expect we might hear about a divestiture or intellectual property sale around the time of its earnings report, and almost certainly more closures and cancellations unfortunately.
That’s right, it’s the final U.S. sales recap of 2023. A bit late, but here we are!
Earlier this month, Circana announced its December and full-year 2023 report on domestic games industry consumer spending. Both respective time frames showed slight growth, thus ending a shaky 12 months on a positive note.
Within the December holiday month, total sales rose a healthy 4% to $7.9 billion. Which means that overall, U.S. consumers spent more than $57 billion across gaming last year, an increase of 1% compared to 2022.
Two segments in Content and Accessories each moved up in the single digits during the year while Hardware output remained virtually flat.
On the premium software side, while Call of Duty: Modern Warfare 3 did secure the top spot in December, it couldn’t quite sell enough to outpace what ended 2023 as the year’s top seller: Hogwarts Legacy.
This win for Warner Bros marks the first time since Rock Band in 2008 that a game not in Activision Blizzard’s Call of Duty shooter franchise or made by Grand Theft Auto developer Rockstar Games led the yearly list. An exceptional, and mostly unexpected until right up until the final month, result.
A huge portion of the Content category is dictated by mobile where Monopoly Go became the big earner for both December and the year as a whole.
Elsewhere, Sony’s PlayStation 5 generated better supply throughout the year and saw consistent demand plus boasted a system-seller in Marvel’s Spider-Man 2, accelerating the family of consoles to best seller for December and 2023 when measured by both unit sales and dollar revenue.
“A 13% increase in spending on digital premium downloads on console platforms helped offset declines in physical software spending,” wrote Circana’s Mat Piscatella when talking about the year overall. “Growth in PlayStation 5 hardware dollar sales helped offset declines across both Xbox Series and Switch.”
No more time to waste. Read on for my full rundown, numbers and all, then a look ahead to 2024!
United States Games Industry Sales (November 26th to December 30th, 2023)
Across all of gaming during the holiday month, spending rose 4% to $7.91 billion. 2023 sales eclipsed $57.19 billion, up 1%. The largest contributor to growth was full game digital on consoles, highlighting the continued buyer shift towards downloads rather than retail purchases.
The biggest category of Content rose 3% in December to $5.73 billion, or 72% of the total which is slightly below the 73% a year ago. In aggregate across all of 2023, it moved up 1% to $47.97 billion. That’s an 84% contribution, same as 2022.
Mobile generated yet another month of gains, this time seeing spending increase 2.7% over the same time last year. All of the Top 10 earners experienced higher contributions than they did during November. December’s leading games were, in order of revenue, Monopoly Go, Royal Match, Roblox, Candy Crush Saga and Clash of Clans.
The report wasn’t specific about mobile’s contribution to the total 12 month period, however it did outline 2023’s Top 10 games by sales, which I’ve listed in full later in the article. Scopely’s Monopoly Go was the winner, followed by Candy Crush Saga and Roblox.
December’s premium software ranks showcased a number of familiar titles that launched in or before the month, with the only new game being Ubisoft’s Avatar: Frontiers of Pandora debuting in the 6th spot. Which I’d call quite a good start for the year’s last major AAA release.
As expected, Call of Duty: Modern Warfare 3 was the holiday month’s best seller. Next up was Super Mario Bros. Wonder moving up a few spots to 2nd, even without digital sales counted. It’s yet another fantastic showing for Nintendo, just ahead of Electronic Arts’ Madden NFL 24 rounding out the Top 3 as the football season entered its home stretch.
Expanding to 2023 as a whole, winner Hogwarts Legacy was the predominant sales story both domestically and around the globe. In addition to leading the annual U.S. chart, publisher Warner Bros claimed it was the world’s best-selling premium game. It generated well over a billion dollars in its first three months, moved 2 million copies globally in December alone and ending the year at 22 million. It’s now above 24 million.
Activision Blizzard claimed three titles in the Top 7, including two Call of Duty iterations in addition to Diablo IV. While technically a down year for the latest Call of Duty installment, this outcome shows the franchise is still among the top commercial successes, plus reveals that players didn’t need to move to the latest version in order to spend big money.
After Madden NFL 24 in third, Marvel’s Spider-Man 2 and The Legend of Zelda: Tears of the Kingdom, both platform exclusives, rounded out the year’s Top 5. Which makes sense for Insomniac Games’ Spider-Man sequel after its record-breaking start. This was especially impressive for Tears of the Kingdom since it’s based solely on retail. That’s right, it was among the year’s five best sellers considering only boxes sold in stores. When these days digital often accounts for half of a title’s units, if not more, this was a momentous feat for Nintendo.
Another fantastic trend was the commercial success of fighting games as both Mortal Kombat 1 from Warner Bros and Capcom’s Street Fighter 6 charted at #8 and #17 respectively. On the Xbox side, Bethesda’s Starfield, while being on Game Pass and seeing a somewhat soured sentiment since the September launch, landed just outside the Top 10 in 11th place.
In addition to the charts based on revenue, Circana shared the most played games of December by Monthly Active Users (MAUs) from each major platform. Fortnite, Call of Duty and, of course, Grand Theft Auto V led on PlayStation and Xbox while Lethal Company, The Finals and Counter-Strike Go 2 saw the biggest engagement on Steam. Huge movers into the Top 10 included PowerWash Simulator at #9 on PlayStation and Goat Simulator at #7 on Xbox. Apparently, lots of people like doing chores or acting a fool in their spare time!
Check below for December and 2023 best seller lists, including the annual Top 10 mobile earners.
Top-Selling Premium Games of December 2023, U.S. (Physical & Digital Dollar Sales):
Call of Duty: Modern Warfare 3
Super Mario Bros. Wonder*
Madden NFL 24
Hogwarts Legacy
Marvel’s Spider-Man 2
Avatar: Frontiers of Pandora
EA Sports FC 24
Mortal Kombat 1
NBA 2K24*
Mario Kart 8*
Super Mario RPG Remake*
Sonic Superstars
Minecraft
God of War Ragnarök
Star Wars Jedi Survivor
Elden Ring
The Legend of Zelda: Tears of the Kingdom*
Just Dance 2024 Edition
Assassin’s Creed Mirage
UFC 5
Top-Selling Premium Games of 2023, U.S. (Physical & Digital Dollar Sales):
Hogwarts Legacy
Call of Duty: Modern Warfare 3
Madden NFL 24
Marvel’s Spider-Man 2
The Legend of Zelda: Tears of the Kingdom*
Diablo IV
Call of Duty: Modern Warfare 2
Mortal Kombat 1
Star Wars Jedi Survivor
EA Sports FC 24
Starfield
Super Mario Bros. Wonder*
Resident Evil 4 Remake
MLB The Show 23^
Dead Island 2
Final Fantasy XVI
Street Fighter 6
Elden Ring
Mario Kart 8*
Minecraft
Top-Selling Mobile Games of 2023, U.S. (Revenue):
Monopoly Go
Candy Crush Saga
Roblox
Royal Match
Coin Master
Pokémon Go
Gardenscapes
Jackpot Party Casino Slots
Township
Evony
Swapping over to the Hardware category, this one gained 4% in December to almost $1.6 billion.
Circana’s report pointed out that PlayStation 5 and Xbox Series X|S generated revenue growth during the final month of 2023, while Nintendo Switch saw a double-digit percentage decline. That’s good news for Microsoft’s platform, even if it was spurred on by temporary price reductions. The last part there for Nintendo was mostly anticipated for the aging device, which is long past market saturation.
There’s no indication if the growth for either PlayStation or Xbox was in the double digits, however I’d imagine it was in the single digits since the report probably would have said so otherwise.
Topping the hardware list for December by units and dollars was, yet again, Sony’s PlayStation 5. I believe it won every month of 2023 except for May, when Nintendo Switch led on the heels of Tears of the Kingdom’s launch. In fact, Sony as a manufacturer generated a single month dollar sales all-time high in December, outpacing the prior record holder of December 2022.
Intriguingly, Nintendo Switch secured second place in December by units and revenue despite Xbox’s growth and the below comment from Circana.
“Xbox Series X|S set a new lifetime high in U.S. unit sales during the month of December,” Piscatella said on social media, documenting a new milestone for Microsoft’s latest console family. “The previous unit sales high for Xbox Series X|S was set in December 2021.”
After spending most of the year in the red, the Hardware segment’s solid holiday result moved it up to flat for the year at $6.59 billion in consumer buying.
PlayStation 5 topped the annual list by units and dollars. In fact, it was the only platform that gained ground when compared to 2022. Nintendo Switch was again the runner-up by both measures, as both Switch and Xbox Series X|S experienced declining annual sales.
Fitting with the general theme I’ve outlined in these write-ups before, 2023 was a banner year for PlayStation while Xbox maintained its inconsistency, although the latter did have certain bright spots in Starfield’s launch in September and holiday sales when discounted.
Accessories is up next, the final and fastest-growing of the three categories during both the holiday and 2023 overall.
During December, spending in this area rose 14% to $584 million. That’s a super healthy boost during the final month as people who purchases new generation consoles are now scooping up peripherals, including special editions and high-end controllers.
United States buyers purchased $2.64 billion accessories during the year, an increase of 4%. The report shouted out growth from game pads in particular.
Fitting that theme, Sony’s PlayStation 5 Dual Sense Edge was the top-earning accessory of 2023, after the premium pad won most months. Its continued momentum shows there’s ample demand for premium priced peripherals as the console cycle matures.
From a domestic spend perspective, 2023 was the definition of up and down, at least compared to the prior year. Exactly half of the twelve months showed spending growth, while all others saw lower sales than their 2022 counterparts. Only two months, May and September, produced double-digit gains.
There was a distinct lack of consistency, even with blockbuster launches and Sony’s concerted effort to produce more PlayStations. A return to hardware supply helped, as did mobile’s better contribution. Still, Nintendo Switch is long in the tooth, subscriptions are stagnant and the most recent Call of Duty installment under-performed.
“Subscription growth has flattened,” Piscatella wrote on Twitter. “And subscription services on console and PC platforms accounts for only 10% of total video game content spending in the U.S.”
In a broader historical sense, over a timeline including before COVID, it was still one of the best years of consumer spending in tracked history. Unfortunately, spending remains in stark comparison to the games industry labor market, which suffered a record number of layoffs globally in 2023 and is only accelerating early this year.
Speaking of 2024, it’s now time for my official predictions. I wrote a whole article with my expectations across the global industry, so here I’ll focus on solely what I expect from the domestic Circana reports before signing off.
In general for spending and where it’s going, I’m leaning towards keeping with my global prediction in that I expect the year to be close to flat with slight upside in the low single digits. That does include my assumption that Nintendo will in fact launch a Switch successor in the final calendar quarter.
Premium software is somewhat tricky considering the release slate is up in the air, especially for PlayStation and Nintendo. I think the rumored Call of Duty: Black Ops Gulf War will bring the franchise back to best seller status.
Beyond the sports games that will always appear, Star Wars Outlaws from Ubisoft will compete for a Top 5 spot if it’s out, as will a mainline Super Mario assuming it launches with Super Switch. Final Fantasy VI Rebirth has a good chance at Top 10 even on a single platform, and Tekken 8 will have a strong showing in the Top 15. I’m not expecting Marvel’s Wolverine to be out and don’t know what the heck to think about Suicide Squad Kill the Justice League, so I’ll say that one misses the Top 20. Just like Skull & Bones.
Hardware will be a juicy category. It’s almost a lock that Super Switch will be out in the back half. I’m on record saying I think adoption will start a tad slower than the original, then pick up over time. Considering Sony’s push to produce PlayStation 5 to make up for lost time during the pandemic, and its at least six to eight month head start, my bet is PlayStation 5 will take home hardware for 2023 with Nintendo as a close second, especially on units.
And, of course, I couldn’t leave without mentioning Palworld! I believe January’s big sales surprise, moving 8 million copies on Steam and topping the Xbox Game Pass list during its debut week, will be among 2024’s most-played titles. Especially if it leaves early access and launches on PlayStation.
That’s officially it for 2023. I highly recommend checking out Piscatella’s Twitter thread for the full Circana report, including individual platform charts and more engagement stats.
Be well, and see you soon for more this year!
Note: Comparisons are year-over-year unless otherwise noted.