A gamer is a player Sony’s Playstation His house has 5 consoles AFP via Seoul.
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The second quarter saw sales decline for video game giants despite initial headwinds. Covid Pandemics have ended.
In the three months ended June, Microsoft, Sony Nintendo Any company posted disappointing results in its respective gaming business.
The This These figures point to a larger contraction in consumer spending on gaming. Americans According to market research by NPD, 12.4 billion dollars was spent by video game companies in the second quarter. This is a decrease of 13% year-on-year.
Several factors include the lifting of pandemic restrictions and people choosing outdoor entertainment to replace home entertainment.
Ongoing The shortage of semiconductor equipment also contributes to this problem.
“The overall game market growth has slowed recently as the opportunities for users to get out of the market have increased [the] home as Covid-19 infections have declined in key markets,” Sony’s Hiroki Totoki said at the company’s earnings conference last month.
Sony It reported that its gaming unit saw a 2% drop in sales year-over-year. June Operating profit fell by almost 37% in the quarter. The company also gave a bleak outlook and cut its full-year earnings forecasts by 16%.
The why? People spend less time playing video games and more time outside.
Total play time among PlayStation players fell by 15%, which is much lower than originally forecast by the company.
But with consumer spending changing after the lockdown and inflation soaring, the industry is taking a hit.
At Microsoft, total gaming revenue fell 7% year-over-year. Sales of the company’s Xbox consoles fell 11%, while revenue from gaming content and services declined 6%.
The declines were “caused by lower engagement hours and monetization of third-party and first-party content,” said Amy Hood, chief financial officer at Microsoft, during the company’s earnings call last week.
Activision Blizzard, the controversial game publisher being acquired by Microsoft, reported a 70% drop in net profit and a 29% drop in revenue.
The Call of Duty creator blames the slump on weak sales of the latest title in the popular shooter franchise.
Ubisoft, the company behind Assassin’s Creed, recorded a 10% drop in net bookings.
Michael Pachter, director of Wedbush Securities, said the disappointing numbers were largely driven by comparisons with the “outrageous performance” a year ago. In other words, companies couldn’t match the huge numbers they posted in 2021.
“Everyone saw record numbers during shelter-in-place, with catalog sales of older titles leading the way,” Pachter told CNBC. “That made for an impossible comparison, and the year-over-year declines were well telegraphed and expected.”
Electronic Arts was one of the few companies to defy the contraction in gambling, with a 50% increase in profits and 14% revenue growth.
A major factor hindering performance in the gaming world is the ongoing battle for key console hardware.
Nintendo saw a 15% drop in sales in the April-June period. The company behind the Super Mario franchise blames its poor performance on the global semiconductor shortage, which has prevented it from producing and selling as many Switch consoles as it wanted.
Nintendo sold 3.43 million units of its Switch portable console in the quarter, down 23% year-over-year, while software sales fell 8.6% to 41.4 million units.
Sony sold 2.4 million PlayStation 5 consoles in the quarter, slightly more than the 2.3 million sold in the same period a year ago. The company hopes that a lifting of lockdown measures at its crucial production center in Shanghai and a sales campaign during the holiday season will help reach the goal of shipping 18 million PS5 units by 2022.
“The slow hardware rollout is one of the biggest contributors,” Pachter said. “New hardware buyers tend to buy a lot of software, and PlayStation and Switch sales are limited.”
The remote working trend has also caused delays for new game releases, limiting the pool of games people want to buy. For example, Microsoft has postponed the release of its highly anticipated sci-fi epic Starfield to early 2023, while Ubisoft has postponed the launch of a game based on the Avatar movie franchise.
Rising prices for everything from gas to groceries, and fears of an impending recession could put the sector further into trouble.
The global games and services market is expected to shrink 1.2% year-over-year to $188 billion by 2022, the first annual decline in more than a decade, according to data from Ampere Analysis.
“The tight cost of living puts additional pressure on household budgets,” Piers Harding-Rolls, research director at Ampere, told CNBC.
“The impact will likely be felt on high-ticket items, including console hardware, although limited availability and pent-up demand, especially for the more expensive consoles, means the impact will be minimal at this point.
Harding-Rolls added, “There may also be some added pressure on high in-game spend as gamers adjust their discretionary spending.”
Some companies are betting that a push toward subscription products will help counteract the effect of declining game sales.
According to Microsoft, growth in the company’s Xbox Game Pass membership plan helped cushion the blow from weaker demand for consoles and games. While Microsoft did not provide an updated subscriber number for the service, it totaled more than 25 million subscribers in January.
Sony recently revamped its PS Plus subscription service and hopes this move will help counteract the recent decline in gaming activity. PS Plus subscribers totaled 47.3 million, according to Sony’s quarterly report, a slight decrease from the previous quarter.
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