What You Missed This Week in Video Games

Articles From: The Fly
Website: The Fly

December game spending rose 2% y/y, says NPD

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: 

This week’s major release is Nintendo’s (NTDOY) “Fire Emblem Engage,” which launches January 20 exclusively for the Switch. Also out this week is the Xbox (MSFT) and PlayStation (SONY) port of Capcom’s (CCOEY) “Monster Hunter Rise.” The action-RPG, which first released on Switch in 2021 and PC in 2022, launches January 20 for PS4, PS5, Xbox One, and Xbox Series X/S and will be available day one on Xbox Game Pass.

NPD: 

NPD analyst Mat Piscatella said that U.S. consumer spending on video game content, hardware and accessories totaled $7.6B in December 2022, an increase of 2% when compared to a year ago. Hardware spending grew 16%, offsetting declines in both content and accessories. 2022 spending totaled $56.6B, 5% below 2021 levels despite growth in hardware and subscription content spend. Factors impacting 2022 spending included continued supply constraints of console hardware, a relatively light slate of new premium releases, and macroeconomic conditions.

On the software side, Piscatella said said that the top video game seller in the U.S. in December in dollar sales was Activision Blizzard’s (ATVI) “Call of Duty: Modern Warfare 2.” Coming in second and third, respectively, were Nintendo’s “Pokemon Scarlet/Violet” and Sony’s “God of War Ragnarok,” and rounding out the top five were EA’s (EA) “Madden NFL 23” and “FIFA 23.” Other games in the top 20 for the month include Sega’s (SGAMY) “Sonic Frontiers,” Bandai Namco’s (NCBDY) “Elden Ring,” Square Enix’s (SQNXF) “Crisis Core: Final Fantasy VII Reunion,” Take-Two’s (TTWO) “NBA 2K23,” Ubisoft’s (UBSFY) “Just Dance 2023 Edition,” and Microsoft’s “Minecraft.”

UBISOFT SLASHES GUIDANCE: 

Last week, Ubisoft announced that it was slashing its 2023-2024 operating income guidance to (EUR500M), down sharply from its prior guidance of EUR400M, and lowered its Q3 net bookings guidance as well. The company said it is facing major challenges as the industry continues to shift towards mega-brands and long-lasting titles than can reach players across the globe, across platforms and business models. “Our strategy over the past 4 years has been about building long-lasting live games and adapting our strongest franchises, mainly Assassin’s Creed, Far Cry, Tom Clancy’s Ghost Recon, Tom Clancy’s Rainbow Six and Tom Clancy’s The Division, to these converging trends to make them truly global brands,” the company said. “However, the games from this investment phase have yet to be released, while our recent launches have not performed as well as expected. Compounding this effect, in the context of worsening macroeconomic conditions, the trends over the Holiday season, in particular the last weeks of December and beginning of January, have been markedly and surprisingly slower than expected.” The company also noted that it is once again delaying the release of “Assassin’s Creed” spinoff “Skull & Bones.”

The French game publisher added that the currently challenging environment and disappointing sales results has triggered a full review of its revenue prospects leading to increased cautiousness over the coming years. Considering this, combined with the significant additional investments that resulted from lockdown and new working patterns that have had a profound impact on productions across the industry over the past 3 years, Ubisoft is announcing a set of measures dedicated to strengthening its long-term growth and value-creation prospects: Ensure all energy is focused on building its brands and live services into some of the most powerful within the industry. As a consequence, the company has decided to cancel three unannounced projects, on top of the four already announced in July 2022. The company also intends to depreciate around EUR500M of capitalized R&D, concerning upcoming premium and Free-to-Play games and the newly cancelled titles. This notably reflects the increased cautiousness related to the current challenging videogame market and macroeconomic environment as well as the necessary increased focus on fewer titles. As part of the company’s increased strategic focus, Ubisoft seeks to adapt its organization to a more challenging market, with an expected net reduction of non-variable costs base of more than EUR200M over the next 2 years. This will be achieved through targeted restructuring, divesting some non-core assets and usual natural attrition, the company said.

MICROSOFT/ACTIVISION: 

Last week, Bloomberg reported that Alphabet’s (GOOGL) Google and Nvidia (NVDA) have voiced concerns to the FTC about Microsoft’s proposed takeover of Activision Blizzard. The companies have jointed Sony in expressing trepidation about the deal, which the FTC sued to block last month, according to the report. The commission has contended that the transaction would harm competition in the video game sector and has scheduled an in-house trial for August, the report says, noting that either company could be called to testify in said trial.

Meanwhile, Reuters reported this week that Microsoft will likely to receive an EU antitrust warning about its $69B bid for Activision Blizzard that could pose another challenge to completing the deal. The European Commission is readying a charge sheet known as a statement of objections setting out its concerns about the deal which will be sent to Microsoft in the coming weeks.

  • Xbox will host a Developer Direct event on January 25 to showcase upcoming first-party titles such as “Redfall” and “Forza Motorsport” [more]
  • Amazon Game Studios (AMZN) lost another key executive amid cutbacks, Bloomberg reports [more]
  • Saudi Arabia’s Public Investment Fund increased its Nintendo stake to 6.07%, Bloomberg says [more]

Originally Posted January 17, 2023 – What You Missed This Week in Video Games

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