Games Industry Finance Cheat Sheet: Autumn 2024, 21/11/2024
Microsoft goes "ker-ching" as Activision fully folds into the business
Microsoft and Tencent on the up, Nintendo and Ubisoft having a wobble in latest industry financials
Sony in acquisition talks to buy From Software’s parent company
Microsoft Flight Simulator 2024 comes into land for this week’s releases
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Hello VGIM-ers,
I want to kick proceedings off with an enormous thank you to everyone who turned out for the VGIM first birthday drinks - sponsored by Big Games Machine - last week.
Dozens of readers came together to talk shop, share drinks and desperately try to clean the dark blue icing from the VGIM branded cupcakes off their teeth.
We even sang happy birthday. For a newsletter. Absurd.
Anyway, those drinks mark the final public VGIM event of 2024.
I am putting my head down to tie off my client work for the year, bosh out a chapter of Power Play and, god forbid, take a week off over Christmas.
But if you would like to work with me, there’s a few ways you can in the new year:
I have one final space to mentor a games business via the Barclays Eagle Labs programme. You can request time with me here.
VGIM sponsorships are flying off the shelves for 2025. If you’d like to get your brand in front of 3,500 superstars of the global games industry - including bigwigs, policy makers, journalists, business leaders and a couple of best-selling authors - you can book a campaign directly here (and get in before the rates go up in January) or email directly if you have a VGIM Insider 10% discount to cash in.
Finally, if you’re looking to work with a consultancy that understands how to increase your business’s influence within the games industry, then get in touch via the email linked at the top of this newsletter. Half-Space Consulting’s work is pretty darn good, according to the public testimony of our clients.
Anyway, enough of the flagrant sales pitch; it’s time for the newsletter.
The big read - Games Industry Finance Cheat Sheet: Autumn 2024
Thank all things holy that it is finally time for the latest Games Industry Finance Cheat sheet.
As well as being one of the most consistently popular pieces of VGIM output every quarter, it is also mercifully easy to put together at a time when my brain feels like it has glued itself to the inside of my head. Honesty is always the best policy, dear reader.
For those of you who haven’t read a cheat sheet before, the aim of it is dead simple.
I pick through the financial results for a number of big publicly traded video games companies, summarise the key findings and put them all in one place for you to easily flip through.
Before getting started with them, I’ll remind you of a couple of key pointers:
All figures are reported in US dollars for clarity’s sake. If a total is reported originally in another currency, I take a conversion rate on the day of writing (Tuesday 19th November in this case) and include the original total in brackets next to the number I produce.
I will also remind you that there are a couple of specific bits of context around what “net bookings” means for a software business and what “units shipped” actually means for a console company. Head back to an earlier cheat sheet for a quick refresher.
Let’s get into it then.
Microsoft: Call of Booty
Xbox content and services revenue grew by 61% year-on-year in Q1 of FY2025 as the full impact of Microsoft’s purchase of Activision Blizzard was felt on the business.
The company’s revenue in the hilariously named More Personal Computing division grew by 17% to $3.2bn in the quarter.
And while some of that performance was driven by growth in Microsoft’s Windows OEM and devices revenue (up 2%) and in its search and news advertising biz (up 18%), Activision’s acquisition clearly tipped the balance - adding 53 points of net impact all by itself.
This helped Microsoft to a strong quarter overall, with the company recording revenue of $65.6bn (16% up year-on-year) and an operating income of $30.6bn (up 14%).
And with Satya Nadella, the company’s CEO, pay increasingly tied to growth in the company’s games business, expect Microsoft to double down on bumping the Xbox brand up in the years to come.
Nintendo: Switching down
Nintendo has cut its operating forecast for the financial year ending March 2025 by 10% to $2.36bn (360 billion yen) as sales of its wildly popular Switch flatline.
Console sales for the first half of the financial year declined by 30.9% from 6.8m to 4.7m as a combination of a lack of major releases, market saturation and the looming arrival of a new device dragged the business down.
This has pushed the company’s sales and profitability down significantly, with net sales down by 34.3% to $3.41bn (523.2bn yen) and net profit down by 59.9% to $707.2m (108.6bn yen). As a result, the company is likely to limp through this financial year.
But with Nintendo’s CEO confirming that the Switch 2 will be backwards compatible shortly after its latest results were announced, it is clear that the company is keen to calm the market horses by showing that it will - eventually - build on the legacy of its generationally successful Switch console.
Sony: PlayStation for the win
Sony’s operating profit grew by a whopping 73% year on year from $1.71bn (263bn yen) to $2.96bn (455.1bn yen) for Q2 FY 2024.
And while image sensors were the true hero of the quarter for the Japanese giant, the company’s games business was cited as a major reason for growth across the quarter.
Profit within the company’s game and network services segment increased nearly threefold to $898.5m (138.8bn yen) as pre-orders for the PS5 Pro, steadily growing sales of the mainline PS5 and burgeoning software sales amongst its increasing console install base fed into the wider business.
The question is how much longer it can maintain momentum. Despite the growth in profit, sales of the PS5 were down 22% year-on-year to 3.8m.
It keeps the console on course to hit its forecast of 18m units for the financial year but acts as a reminder that this generation of devices is steadily reaching its conclusion - gently ratcheting up pressure on Sony to begin to talk about what comes next for the company’s console business in the process.
Electronic Arts: Baller, Baller, Baller, Footy, Footy, Footy
EA beat its high end guidance of $1.25bn net bookings due to the strong performance of both its actual football and American football games (apologies to my readers in the US).
The company recorded $1.26bn net as Madden NFL 24 and both the online and mobile versions of its EA Sports FC franchise outperformed expectations.
In addition to the success of its established franchises, EA also revealed that its first annual College Football game attracted 5m players - putting another feather in its pigskin cap.
But while football dominated the agenda this quarter, its results also teased the significant popularity of Dragon Age: Veilguard prior to its launch in October - suggesting Bioware’s RPG could make a big positive impact on the company’s next set of quarterly results.
Ubisoft: An earning galaxy far, far away
Ubisoft has had a half year to forget, reporting a significant decline in revenue and bookings year-on-year as a grim 2024 catches up with it.
Revenue for H1 2024-2025 declined by 19.6% to $717.5m (€679.1m) with net bookings down by 21.9% to $678.6m (€642.3m) as major titles such as Star Wars: Outlaws underperformed financial expectations.
The company attempted to put a brave face on results by highlighting the ongoing strength of the company’s back catalog and “further progress on the cost reduction program” (i.e. laying people off) as reasons to be cheerful. Easy for them to say.
But with the company pulling the plug on the launch of Assassin’s Creed: Shadows this quarter - missing a golden chance to dominate the festive sales period in the process - Ubisoft’s position is unlikely to improve until at least the first quarter of the next calendar year.
Tencent: Back in the games
Tencent’s games division is back in the money, driving a 9% year-on-year growth in both domestic and overseas gaming revenue.
On the home front, domestic revenue hit $4.8bn (34.6bn RMB) as the launch of Dungeon & Fighter Mobile, increased earnings from Valorant and refreshes to games like Honor of Kings paid off.
And internationally, revenue increased to $1.9bn (13.9bn RMB) across the quarter due to the success of Supercell’s mobile games - including the recently released Brawl Stars - and due to punchy performance from PUBG Mobile.
This strong performance will keep company founder Pony Ma happy, especially after he criticised the company’s games business for not pulling its weight earlier this year.
It also suggests the company is well placed to deepen its interest in Ubisoft if the French publisher continues to have a mare in the rest of this financial year.
The best of the rest
Take-Two racked up $1.47bn of net bookings in the quarter, with Grand Theft Auto Online and Borderlands receiving the garlands. But as mobilegamer.biz reports, the more interesting fact is that mobile now accounts for over half of the company’s revenue: a quiet strategic shift that shows how the consumer games economy has shifted its balance over the past decade.
Bandai Namco had a barn burning first half of its financial year, with digital entertainment revenues up 31.1% to $1.48bn (228.5bn yen) over the reporting period after the successful launch of the Elden Ring DLC. If it keeps it up, it believes it can deliver record earnings of net sales of $7.46bn (1.15 trillion yen) over the financial year.
And Paradox Interactive CEO Frederik Wester continues to deliver upon his reputation as the most drily entertaining deliverer of financial results. His summary of the past quarter for the business - which saw revenue up by 2% and operating profit up 67% year-on-year - was to call it a “mostly uneventful and stable quarter without any major surprises.” Lovely stuff.
The bluffer’s guide to the latest results
Do say: The video games market is in a better financial position than many would expect based on the public narrative, suggesting it is well placed to perform effectively in 2025.
Don’t say: …so everyone is getting their jobs back, right? Right!?!
News in brief
From Soldware?: Reuters reports that Sony is in talks to acquire Kadokawa, the entertainment conglomerate which owns Bloodborne and Elden Ring creator From Software. Could it lead to Sony securing exclusivity on console for the company’s range of ridiculously hard games? Possibly. And could it result in competition regulators around the world scrutinising the deal just in case it leads to anti-competitive behaviour in the soulslike video game market? No, of course it won’t. Stop being silly.
Roblox-ing content: Roblox has rolled out a fresh suite of parental controls to parents to give them much greater insight - and control - over the way their children access experiences on the platform. The announcement, which comes in the wake of a scathing report from short-selling firm Hindenburg accusing Roblox of being a “pedophile hellscape”, also restricts pre-teen accounts to content with a mild rating and bars them from viewing features like in-game white boards where teens keep drawing inappropriate pictures (which means, almost certainly, sets of cock and balls).
On the RITEC track: UNICEF and Lego have announced a new set of guidelines to help developers account for the wellbeing of children. The Responsible Innovation in Technology for Children (RITEC) Design Toolbox has been drawn up by boffins from industry and academia to advise companies on ways to support child wellbeing in games from the outset across eight different aspects of design -helping kids play nicely by doing things like fostering a safe and secure environment for them or by helping them develop their autonomy.
Play Ventures On: Play Ventures, the Singapore based fund, has rustled up $140m to support early stage games companies and consumer companies using games like techniques to drive their business forward. The market says the new fund is a sign of steadily returning confidence in the power of games as a creative medium and engine for innovation. VGIM says: Dear Play Ventures - can you lend us a tenner, please?
And the winner might be…: The nominees for this year’s Game Awards have been unveiled and they’ve caused a minor stir. Will Elden Ring: Shadow of the Erdtree win despite it technically being a slice of DLC rather than a full game? Will Final Fantasy VII: Rebirth grab the gong despite it being a very glorified remake? Or will it be given to Balatro, sparking a moral panic about how a game that LOOKS LIKE GAMBLING won a major video games industry gong? Tune in on Thursday 12th December to find out whether controversy wins out.
Moving on
PlayStation has shaken up its mobile team, with Olivier Courtemanche appointed as its Head of Mobile and Justin Kubiak emerging as Head of Mobile Business Development and Partnerships...Douglass C. Perry is NC America’s new Senior Director, Public Relations…Sebastian Froidefond has been hired as Ubisoft’s Chief People Officer…And Catherine Bygrave has popped up as a new Business Development Director at Sumo Digital…
Jobs ahoy
Roblox is hiring for a Senior Manager, Policy Communications, EMEA for anyone who fancies a challenge..Bad Robot Games is onboarding a Community and Content Creator in Santa Monica…Wasserman is recruiting a Senior Manager, Gaming and Esports…The most Irish sounding video games business in existence Black Shamrock is looking for a new Creative Director in Dublin…And YRS TRULY wants a new Campaign Manager (French or German speaking) to start asap…
Events and conferences
Slush, Helsinki - 20th-21st November
Africa Games Week, Cape Town - 2nd-5th December
BIG, Bilbao - 6th-7th December
The Game Awards, Los Angeles - 12th December
Pocket Gamer Connects, London - 20th-21st January
Games of the week
Microsoft Flight Simulator 2024 - Spend more hours in a plane than I have this year with the latest version of Microsoft’s ludicrously realistic flying game.
Stalker 2: Heart of Chernobyl - Get ready for a cheery festive period by playing this thoroughly depressing survival horror FPS with RPG elements.
Loco Motive - You mean there’s another charming point and click murder mystery game for us all to play? GO ON THEN.
Before you go…
Move over Legoland! It’s time for Minecraft to dominate the theme park world.
Yes, everyone’s other favourite block based game has inked a deal with theme park wizards Merlin Entertainment to bring Minecraft to life as a physical attraction in the US and UK in 2026 and 2027.
Guess you all better block out your calendar for a visit, eh?
*crickets chirp*