Disappointing decline in video game profits – 2023

Decline in video game profits After accustomed to the corona pandemic and the significant increase in profits associated with the ban, major video game companies saw sales decline in the second quarter, led by (Microsoft), (Sony) and (Nintendo).

video game profits

Relaxing pandemic restrictions have led people to prefer outdoor activities to home entertainment options such as video games. And this is not the only reason. The persistent shortage of semiconductors only exacerbates the situation. video game profits

Disappointing drop in ratio

According to market research firm NPD, Americans spent $ 12.4 billion on games in the second quarter, pushing consumer spending on games down at an annual rate of 13%. video game profits

(PlayStation) also recorded a 15% reduction in player-based play time. This is below the company’s expectations.

Hiroki Totoki, Sony’s chief financial officer, said the reason for the decline was that the closure was lifted as soon as it occurred. On one phone call, he said: “Growth in the gaming market has slowed recently as users have more opportunities to leave home, as Covid-19 infections have declined in key markets.”

In addition, sales of game consoles in the fiscal year ended June decreased by 2% year-on-year, and operating income decreased by nearly 37%. This reduced our full-year profit forecast by 16%.

Activision Blizzard, which was acquired by Microsoft, reported a 70% decrease in net income and a 29% decrease in revenue, which was not good for its competitors. video game profits

Ubisoft, the creator of the Assassin’s Creed series, saw a 10% reduction in online bookings.

Michael Butcher, Managing Director of Wedbush Securities, describes the situation as follows: In other words, companies can’t match the big numbers released in 2021. ” video game profits

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Console production issues

Profit declined from April to July due to Nintendo’s inability to respond and increased demand for video players.

The company’s switch console sales for the quarter were 3.43 million units, down 23% year-on-year. Software sales were down 8.6% to 41.4 million units.

The company blamed the global shortage of semiconductors for its poor performance. This hinders the work in manufacturing your own console (Nintendo Switch).

This is a slight increase from sales over the same period last year, but less than expected. video game profits

Sony believes it was due to the closure of its manufacturing center in Shanghai. I would like to cancel the closing procedure i

The company also wants a holiday season with regular sales growth and hopes to reach its goal of shipping 18 million units (Playstation5) by the end of 2022.

Butcher, on the other hand, said: “Slow hardware adoption is one of the biggest factors. New hardware buyers tend to buy a lot of software, but (PlayStation) and (Switch) sales are limited. Was. “

Working from home also delays the release of new games, limiting the range of games people want to buy. For example, Microsoft has postponed the release of the long-awaited epic science fiction movie Starfield until early 2023.

Expectations of further sales decline

The continued rise in all prices from gas and groceries could lead to sector stagnation.

According to Ampere Analysis, the global gaming and services market is projected to shrink to $ 188 billion in 2022, an equivalent of a 1.2% annual decline. This will be the first annual decline in more than 10 years.

Pierce Harding Rolls, Ampere’s Research Director, said: Despite limited availability, demand for high-end consoles in particular is stagnant.”