Games Industry Finance Cheat Sheet, Winter 2024 edition: Video Games Industry Memo, 22/02/2024
Xbox bigger than Windows, Sony missing the target & Nintendo in Wonder
We help you blag your way through the final financials from 2023
Epic Games unveils further details of its mobile game store
Inkulinati leads a week of genuinely intriguing indie releases
Blimey, last week was an exciting one at VGIM towers. I can’t actually tell you why just yet - I’m such a tease, I know - but everything really is coming up Milhouse at the moment.
Anyway, allow me to take a quick break from goading you all with secret things to tell you some public news about the schedule for the London Developer Conference which takes place on Thursday 11th April.
We’ve started announcing our first speakers over on the event’s social media channels. I’ll also have a condensed update of everyone who is currently on the slate in next week’s VGIM because I am nice like that.
If you’d like to beat the rush and make sure you get your place at the event in April, you can nab your ticket here.
Or if you’d like to sponsor the conference, email David Lilley, organiser of events and Friend of VGIM, at david.lilley@roucan.co.uk to discuss available opportunities.
Right, shall we VGIM?
The big read - Games Industry Finance Cheat Sheet, Winter 2024 edition
The Games Industry Finance Cheat Sheet is back!
Following the popularity of the first edition in November last year, I’m using this week’s VGIM to march you through recently released financial results by the biggest games companies in digestible, informative fashion.
As with the first cheat sheet, there are a few points of order:
All the results reported in this piece cover the final three months of 2023. However, businesses cut their financial years differently which means that they often denote the quarter differently (e.g. a business using a financial year based on the annual calendar will call it Q4, whereas it’s Q3 for a business with an April to April financial year) - so watch out for that.
I report all financial figures in the cheat sheet in US dollars, with local currencies included in brackets afterwards where necessary. If any exchange rates end up being slightly out, blame my local Bureau de Change/Google for leading me astray.
And as for lingo you may need to know, Bookings are an important way to measure the sales of digital consumables that a player may not use straight away (e.g. virtual currencies or items that can be held onto in a player account beyond the quarter). This makes them an important metric for any games companies with hefty live service offers.
And with that done, it’s time to get down to (video games) business.
Microsoft: Windows Xbox’ed into a corner
In a blow to fans of operating systems, Xbox is now officially bigger than Windows according to Microsoft’s second quarter results for FY 2024.
Xbox content and services revenue leapt by 61% following the completion of Microsoft’s acquisition of Activision Blizzard in October 2023, leading to games generating $7.1bn for the business in the last quarter.
This means that games is now the third biggest part of the company’s $3tn business, edging its operating system segment into fourth place. However, the games part of the company did generate an operating loss of $440m as a result of the costs relating to the acquisition - a factor behind the company’s recent belt tightening which saw 1900 people lose their jobs across the business.
Summary: Update the “why games are a big deal” slide in your powerpoint deck with “Xbox is bigger than Windows”.
Sony: I got 25 million problems, and PS5 sales are one
What does ambition cost you? In the case of Sony and its PlayStation business, the answer is apparently $10bn.
Yes, the company saw a serious chunk of change wiped off its stock price after it admitted that it is on course to miss its target of selling 25 million devices this financial year - clocking in at a mere 21 million devices instead.
Expecting to miss its optimistic sales forecast wasn’t the only blow to the PlayStation business this quarter. While its overall revenue was up 16% year on year and reached $9.31bn (1.39 trillion yen) for the quarter, the operating profit within Sony’s games business fell by 26%.
And with the company suggesting publicly that it is entering the “latter stage” of the PS5’s life cycle, Sony is looking like another victim of the games industry’s overly optimistic post-pandemic thinking.
Summary: Over promise and under deliver = no fun for anyone.
Nintendo: A Super Mario Bros Wonder-ful time
Nintendo has continued its impressive recent financial performance even as it prepares to say goodbye to its beloved Switch.
The company announced that it had generated $9.33bn (1.4 trillion yen) of revenue for the first three quarters of FY 2023, an increase of 7.7% year on year. The company’s operating profit for the period was also up by an impressive 13.1% to $3.1bn (414 billion yen).
While last year has proven to be a good one for Nintendo overall, strong sales of Super Mario Bros Wonder, which sold over 11m units after its launch in October, and better than expected performance of the company’s Switch Lite console over the festive period helped boost its prospects in the last quarter.
However, there has been a wobble in Nintendo’s share price this week as a result of strong rumours of a delay to the launch of its Switch successor to Q1 2025 - putting a small cloud on its currently golden financial sky.
Summary: Great games sell, more news as we get it.
Electronic Arts: FC keeps scoring
Electronic Arts continues to be pleased as punch about the performance of its rebranded football game EA Sports FC, after it recorded the franchise’s best ever net bookings results in the last quarter.
The company’s FIFA-less football game delivered a 7% net bookings boost over its predecessor’s performance this time last year despite a) the name change and b) the lack of dedicated World Cup content for this year’s version of the game.
As well as helping the series to new heights, FC’s performance also helped the wider company navigate a tough year for the industry effectively - increasing EA’s overall net bookings year on year for Q3 to $2.37bn (a 1% increase) and bumping live service bookings up to $1.71bn.
With the latter now making up 73% of the company’s overall business, EA will be hoping to generate even more loot from loot boxes (ducks for cover) in games such as FC in years to come.
Summary: Turns out that an organisation once compared to the Mafia isn’t a great brand partner.
Ubisoft: Nexus sales not VR-ery good
A positive quarter for Ubisoft was undermined by the disappointing performance of its VR game Assassin’s Creed: Nexus, according to CEO Yves Guillemot.
The company recorded net bookings of $675.9m (626m euros) in Q3 of its financial year, which was slightly ahead of guidance given to investors.
This was attributed to strong ongoing live service performance from Rainbow Six: Siege, as well as the launch of Assassin’s Creed: Mirage - which generated strong sales for both itself and a halo effect for the wider series.
However, Guillemot admitted to investors that the performance of Nexus, the series’ first major foray into virtual reality, underperformed on the sales front - leading to suggestions that Ubisoft will be limiting investment into spatial games in the years to come.
Summary: VR remains a miss for most.
Roblox: Build UGC platform…profit?
Roblox once again lost money in its most recent financial results, but the wider performance of the company suggests it’s on a pretty rapid upwards trajectory.
The company reported a net loss attributable to common stockholders of $323.7m for Q4 of its financial year. However, it also reported revenues of $749.9m and bookings of $1.13bn for the quarter - an increase of 30% and 25% respectively year on year.
And with player counts also up to 71.5m (a 22% year on year increase) and unique monthly payers up to 15.9m (a boost of 18% compared to last year), Roblox looks to be on the right trajectory to turn those losses around.
Summary: Maybe all those brands making Roblox experiences are onto something…
The best of the rest
Embracer Group has said that its restructuring is reaching its “final straight” after recording all time high sales for the third quarter of its financial year. The good news was undermined a little bit by comments about industry layoffs from Lars Wingefors that were so tone deaf it sounded like he was playing Purple Rain on a kazoo. But hey, let’s take the positives where we can shall we?
Devolver Digital has reported that it is on course to hit its forecast revenues of $90m for the financial year. However, the company also reported a reshuffle at the top of the business alongside its projection. So it may be worth keeping a pinch of salt to one side, just in case it’s needed.
Bandai Namco’s revenue was up by 3.9% to $5.1bn (772bn yen) but its profit fell by 28.5% to $560.9m (84.4bn yen). This led to the company announcing the cancellation of five in progress games to balance the books. But it softened the blow this week by announcing Elden Ring’s long sought after expansion is out in June this year - boosting its financial outlook and providing much needed excitement for hardcore video game sickos across the world.
The bluffer’s guide
Do say: The industry reset continues, with companies across the sector increasingly casting their minds towards the next generation of games devices and experiences.
Don’t say: …so where can I get a dirt cheap PS5 then?
News in brief
Epic Mobile fight: Epic Games is preparing to launch its own mobile game store in the EU, with the company’s Swedish arm preparing for side-loading shenanigans later in the year. Expect it to ignite a major battle with Apple over its punitive policies towards alternative stores and possibly an unexpected political ruck in the UK when, as journalist James O’Malley pointed out, players in Brexit Britain don’t get access to Fortnite on their phones too.
Xbox portcast: Xbox’s kind of anticipated ‘future of the platform’ podcast saw the company announce that four of its exclusive games are heading to PS5 and Switch. Hi-Fi Rush, Sea of Thieves, Grounded and Pentiment (a video game whose target market is a) me and b) the historian Diarmaid MacCulloch) are hopping the Xbox fence, with Triple A flagships Starfield and Indiana Jones remaining exclusive…for now.
No luck of the Irish: Two thirds of employees at Activision Blizzard’s Cork office are being laid off, according to reports from the Irish Examiner. This follows weeks of rumours around the future of the Irish part of the business, which had allegedly been earmarked for complete closure as part of the fallout from the company’s acquisition by Microsoft.
We’re (Green Game) jammin’: A record 78 games are taking part in this year’s Green Game Jam, with the aim of inspiring a million players to take one positive climate related action in real life. The participation of mobile game mega hits like Honor of Kings, Subway Surfers and Runescape caught my eye, as did the lack of console and PC titles in the list of participants.
Buy games for charity please: GamesAid, the games industry charity that I help run in my spare time because my Protestant work ethic is matched only by my Catholic levels of guilt, is running a Steam Sale this weekend. Buy any one of 18 great games such as Farming Simulator 2022, Overboard!, or Totally Accurate Battle Simulator from today and watch a share of the profits flow to wonderful children’s charities in the UK.
On the move
Former interim Xsolla CEO Chris Hewish has become the company’s new Chief Strategy Officer…Global Game Jam’s Tim Cullings is stepping down from his role as the event’s Executive Director…Ash Ligouri has been appointed as TikTok Lead for We Are Reach…There are a couple of experienced Community Managers available in North America for those hunting talent: Christa Paolucci (who CM’d for Ooblets) is based in Portland in the US, with Cassie Makrides (of Reframe Games) in New Brunswick, Canada…
Jobs, jobs, jobs
Tencent is hiring an Associate Narrative Director - Lightspeed Games in London for an amount of money that in local terms made my eyeballs go AWOOGA…If you’re more of a conversational type, why not become Lead Dialogue Designer for Cloud Imperium Games instead…Boston Consulting Group is looking for a Senior Knowledge Analyst in its TMT division and will consider someone who knows their vid-ya games for a post…Epic Games is hunting for a Business Development Director to flog its Kids Web Services…Abertay University is on the search for a 3D Art Lecturer in sunny Dundee…And Roblox is hiring a Program Manager, Youth Engagement in San Mateo…
Events and conferences
Pocket Gamer Connects, San Francisco - 18th-19th March
Game Developers Conference, San Francisco - 18th - 22nd March
London Games Festival, London - 9th-25th April
London Developer Conference, London - 11th April
BAFTA Games Awards, London - 11th April
Games of the week
Inkulinati - 2D medieval inspired turn based battler achieves excellent balance of being fun and interesting.
Pacific Drive - First person supernatural ‘drive and survive’ game lands after months of hype.
Balatro - A deckbuilding roguelike based on Poker where you’re rewarded for playing illegal hands? Fine, I guess I’ll buy you all this week…
Before you go…
Angela Richardson MP, the Conservative Party’s elected representative for the Hollywood of Video Games (Guildford), was spotted chatting to games businesses on the hunt for new recruits at last Friday’s excellent local video games festival.
Was she there to take the temperature of a thriving creative industry? Or was she - as one wag suggested to me - looking for a new job ahead of her party’s almost certain wipeout in this year’s general election?
I’ll leave you to decide…