Commissar SFLUFAN Posted February 19 Share Posted February 19 These article appeared within the last couple of days: Game over? Industry suffers slowdown after decades-long winning streak (Financial Times) Quote The $200bn video games industry is reckoning with its biggest slowdown in 30 years, as the huge growth driven by smartphone gaming and the latest generation of consoles reaches its limits. Hardware sales are slowing, with Sony cutting its forecast for PlayStation 5 sales this week. Consumer spending on mobile gaming declined last year, down 2 per cent to $107.3bn according to Data.ai, which forecasts low single-digit growth in 2024. The sense of crisis across the games sector is in sharp contrast to growth achieved during the Covid-19 pandemic, which allowed many locked-down consumers to spend their excess time and money on games. That peak marked the culmination of a winning streak for the digital entertainment business that began with the original PlayStation in the mid-1990s and was accelerated further by Apple’s iPhone. Many in the gaming industry expected it to bounce back quickly after 2022’s post-pandemic decline, but last year did not deliver the growth they hoped for. The latest quarterly numbers from some of the biggest publishers, including Electronic Arts and Take Two, has underwhelmed investors. Meanwhile, games developers have been forced to cut thousands more jobs this year after already slashing as many as 10,000 in 2023. “There’s a lot of commercial anxiety: about growth, about profitability, about keeping budgets in check and about making an impact in the market when there are so many established products,” said Piers Harding-Rolls, games research director at Ampere Analysis, a market researcher. “We are in a much slower growth era.” Quote After the PlayStation 5 surpassed 50mn units in December, Hiroki Totoki, Sony’s group president and interim head of its gaming unit, said this week that it was “entering the latter half of the console cycle . . . so we anticipate a gradual decline in unit sales from next fiscal year onwards”. Heavy discounting of the PS5 in 2023 has already contributed to what Totoki called a “significant” drop in Sony’s gaming operating profits. He warned that Sony does “not plan to release any new major existing franchise titles” in the fiscal year starting in April, depriving it of any boost from bankable, big-budget games such as Spider-Man or God of War. Quote Cutting prices is a double-edged sword. The huge popularity of free-to-play online games such as Fortnite and Roblox consumes hours of playtime that had previously been spent on $70 titles. The strong network effects of multiplayer games, such as Call of Duty, also make it harder for new entrants to succeed. “Thousands of titles are hitting every month and the success rate is very low,” he said. “You’re faced with significant challenges in trying to break new product into the market.” The rising costs of developing blockbuster games has also raised the stakes. “When you’re talking about a budget that’s $100mn plus, even for a big company, if you miss with two or three of those then commercially you’re on the ropes,” Harding-Rolls said. Sony plunged $10 billion after its PS5 sales cut. But a bigger issue is its near decade low games margin WWW.CNBC.COM Around $10 billion of value was wiped off Sony's stock this week after it cut its sales forecast for its flagship PlayStation 5 console for the fiscal year. Quote Around $10 billion of value was wiped off Sony’s stock last week, after the Japanese tech giant cut its sales forecast for its flagship PlayStation 5 console for the fiscal year. Analysts, who already thought Sony’s PS5 target was too lofty, told CNBC a bigger issue for the company are its declining margins in its key gaming business. Sony this week announced it now expects to sell 21 million units of the PS5 in the fiscal year ending in March, compared with a previous forecast of 25 million units. The company’s shares fell after the announcement, with around $10 billion of value wiped off the stock since the forecast cut, according to a CNBC calculation using FactSet data. But analysts were watching another key metric — the operating margin in the gaming business — which came in just under 6% for the December quarter, according to a CNBC calculation. By contrast, Sony’s operating margin was more than 9% in the December quarter of 2022. “The shipment forecast cut for PS5 ... is not what is disappointing ... What is disappointing is the low level” of operating margin, Atul Goyal, equity analyst at Jefferies, said in a note to clients on Wednesday. Quote He added that prior to the January-to-March quarter of 2022, margins at the gaming unit were around 12% to 13% in the previous four years. The latest quarter’s single-digit margin for Sony is present “despite various tailwinds that should have driven up the margins towards 20%,” Goyal said, adding that the situation is “extremely disappointing.” Quote “Their rev (revenue) on digital sales, add-on-content, digital-downloads are at all time highs… And yet their margins are at decade-lows. This is just not acceptable,” Goyal said in an email to CNBC. Goyal qualified that the current margin for Sony’s gaming business is “almost near decade lows.” The analyst questioned how, with all of these higher-margin products, the gaming division’s operating margin has remained so depressed. The "operating margin problem" speaks directly to the need for development cost control which I have no idea how to achieve when a "graphical arms race" exists. As for Nintendo, this really isn't unexpected given the very credible reports of the Switch Sequel's release being postponed to early 2025: Nintendo shares fall nearly 6% after report that the Switch 2 will be delayed until 2025 WWW.CNBC.COM Nintendo shares fell nearly 6% after a report said the launch of the Switch 2, the next version of its flagship gaming console, would be delayed until 2025. Quote Shares of Nintendo fell on Monday after a report suggested the launch of the Switch 2, the next version of its flagship gaming console, would be delayed. Nintendo’s stock in Japan closed 5.84% lower. Bloomberg reported on Saturday that Nintendo had told game publishers that the Switch 2 would be delayed until the early months of 2025, citing people with knowledge of the matter. 1 Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 My kids have complete access to my Steam Library (including teenage boys of 14-16). They, and their friends, prefer to spend most of their time playing FTP games -- Roblox, Rocket League, etc. 1 Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 19 Share Posted February 19 Nintendo’s shares falling because of a Switch 2 delay is entirely their fault for trying to milk the Switch waaaaaay beyond when they should have released a successor. They got greedy and bet they could keep it going longer than then they should. 2020 gave them a false sense of where the market was going to be in 2 years. 1 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted February 19 Author Share Posted February 19 1 minute ago, Spawn_of_Apathy said: Nintendo’s shares falling because of a Switch 2 delay is entirely their fault for trying to milk the Switch waaaaaay beyond when they should have released a successor. They got greedy and bet they could keep it going longer than then they should. 2020 gave them a false sense of where the market was going to be in 2 years. That's correct, but their situation (primarily hardware-related) appears to be of a different cut that Sony's which is more centered around its declining operating margins rather than the expected miss on PS5 hardware sales. Quote Link to comment Share on other sites More sharing options...
ShreddieMercury Posted February 19 Share Posted February 19 But the games are better than ever! 1 Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 5 minutes ago, Spawn_of_Apathy said: Nintendo’s shares falling because of a Switch 2 delay is entirely their fault for trying to milk the Switch waaaaaay beyond when they should have released a successor. They got greedy and bet they could keep it going longer than then they should. 2020 gave them a false sense of where the market was going to be in 2 years. If they had reduced prices on their hardware, as we have historically seen in the console lifecycle -- then their sales would probably be much higher. The price for a Switch OLED is insane for how dated the tech is. 2 Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 19 Share Posted February 19 2 minutes ago, Commissar SFLUFAN said: That's correct, but their situation (primarily hardware-related) appears to be of a different cut that Sony's which is more centered around its declining operating margins rather than the expected miss on PS5 hardware sales. For Sony it probably isnt helped by how much more expensive AAA gaming has become, needing bigger and bigger teams just to make 1 game. Even Sony’s first party output has slowed dramatically. @AbsolutSurgen makes a good point about many gamers just spending time in F2P games. But I also wonder if Sony put too many SW eggs into the live service basket and now the bubble has kind of burst. Especially where nobody wants to see their big single player studios making love service games. Years of work just abandoned. Time that could have been spent on the next billion dollar franchise. Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 8 minutes ago, AbsolutSurgen said: If they had reduced prices on their hardware, as we have historically seen in the console lifecycle -- then their sales would probably be much higher. The price for a Switch OLED is insane for how dated the tech is. Probably would have been a bit higher, but maybe not so much that it would make sense. Certainly not when compared to the impact of the Switch Lite as a low entry model. Look at their game prices and their meager discounts. No one is saying they’re fools for charging what they do. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted February 19 Author Share Posted February 19 8 minutes ago, Spawn_of_Apathy said: For Sony it probably isnt helped by how much more expensive AAA gaming has become, needing bigger and bigger teams just to make 1 game. Even Sony’s first party output has slowed dramatically. @AbsolutSurgen makes a good point about many gamers just spending time in F2P games. But I also wonder if Sony put too many SW eggs into the live service basket and now the bubble has kind of burst. Especially where nobody wants to see their big single player studios making love service games. Years of work just abandoned. Time that could have been spent on the next billion dollar franchise. Sony is in very much a "damned if you do, damned if you don't situation" in regard to a live-service games strategy. They probably (definitely?) missed the boat on in executing an effective live-service games strategy, but that strategy and its (theoretically) consistent revenue stream is/was necessary to offset the skyrocketing development costs of their single-player campaign-oriented, third-person, action/adventure titles that they've become renowned for. I really, really don't envy any anyone at Sony who has been tasked to untangle this developmental Gordian knot. 1 Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 7 minutes ago, Spawn_of_Apathy said: For Sony it probably isnt helped by how much more expensive AAA gaming has become, needing bigger and bigger teams just to make 1 game. Even Sony’s first party output has slowed dramatically. @AbsolutSurgen makes a good point about many gamers just spending time in F2P games. But I also wonder if Sony put too many SW eggs into the live service basket and now the bubble has kind of burst. Especially where nobody wants to see their big single player studios making love service games. Years of work just abandoned. Time that could have been spent on the next billion dollar franchise. All of the kids I know (mostly friends of my kids, or kids of friends) play lots of videogames. None of them play on consoles -- mostly PCs or tablets. 9 minutes ago, crispy4000 said: Probably would have been a bit higher, but maybe not so much that it would make sense. Certainly not when compared to the impact of the Switch Lite being a low entry model. Look at their game prices and their meager discounts. No one is saying they’re fools for charging what they do. If given the choice of a PS5 at C$540 or a Switch at C$450 -- the $100 walk is easy to make. C$450 is also hard to swallow as something you buy for younger kids -- particularly with the rise of things like Roblox. A lower price point on hardware brings people into the Nintendo ecosystem to spend the money on games. Everyone assumes that Switch 2 will be a huge success -- and I suspect it will be with core gamers. I don't know if Nintendo is still bringing in enough younger gamers to keep their traditional market. The rise of FTP gaming targeted at kids over the last 4-5 years has been astounding. Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 19 Share Posted February 19 Nintendo could always release their games on PC and allow modding. That would give them a boost in software sales. 2 Quote Link to comment Share on other sites More sharing options...
best3444 Posted February 19 Share Posted February 19 10 minutes ago, AbsolutSurgen said: All of the kids I know (mostly friends of my kids, or kids of friends) play lots of videogames. None of them play on consoles -- mostly PCs or tablets. If given the choice of a PS5 at C$540 or a Switch at C$450 -- the $100 walk is easy to make. C$450 is also hard to swallow as something you buy for younger kids -- particularly with the rise of things like Roblox. A lower price point on hardware brings people into the Nintendo ecosystem to spend the money on games. Everyone assumes that Switch 2 will be a huge success -- and I suspect it will be with core gamers. I don't know if Nintendo is still bringing in enough younger gamers to keep their traditional market. The rise of FTP gaming targeted at kids over the last 4-5 years has been astounding. Very interesting thoughts. Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 25 minutes ago, AbsolutSurgen said: If given the choice of a PS5 at C$540 or a Switch at C$450 -- the $100 walk is easy to make. C$450 is also hard to swallow as something you buy for younger kids -- particularly with the rise of things like Roblox. A lower price point on hardware brings people into the Nintendo ecosystem to spend the money on games. Not if the person is buying it for Nintendo exclusives, or prioritizes a child friendly ecosystem. The Switch doesn’t even have an internet browser. I don’t think Nintendo competes in a vacuum, but this is an area where an apples to apples comparison with more powerful consoles, largely marketed on M-rated games and released well after the Switch launched, just doesn’t work. And arguably, there’s never been more of a reason to own a Nintendo something with Sony and Microsoft’s attitudes towards exclusivity shifting. PC + Nintendo appears to be the most sound choice right now. Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 6 minutes ago, crispy4000 said: Not if the person is buying it for Nintendo exclusives, or prioritizes a child friendly ecosystem. The Switch doesn’t even have an internet browser. Nintendo exclusives are a big thing for adults with nostalgia. Kids are happy to play anything. Given the low price of tablets today, IMHO $550 is a hard pill to swallow when you can give your kid a tablet and have them download cheap apps. Or, sit them down in front of a computer and play Roblox for free. 6 minutes ago, crispy4000 said: I don’t think Nintendo competes in a vacuum, but this is an area where an apples to apples comparison with more powerful consoles largely marketed on M-rated games, released well after the Switch launched, just doesn’t work. Purchasing decisions are frequently made for the family by a HoH -- relative value is always looked at for everything. There are LOTS of choices for gaming available for kids that weren't as popular 5-10 years ago. There are lots of families with kids of various ages -- or parents that share the console with their kids. The Switch is immensely popular with a group of core-gaming adults. I just don't know if it is still bringing in many new kids. Hardware sales are down 43% from 2021. 1 Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 33 minutes ago, AbsolutSurgen said: Nintendo exclusives are a big thing for adults with nostalgia. Kids are happy to play anything. Given the low price of tablets today, IMHO $550 is a hard pill to swallow when you can give your kid a tablet and have them download cheap apps. Or, sit them down in front of a computer and play Roblox for free. This argument was used against Nintendo when the 3DS launched. The Switch decisively dispelled the idea that they would fade into irrelevancy with the rise of smart phones and tablets. If Switch costs were a hard pill to swallow, Nintendo wouldn’t be succeeding and thriving. 33 minutes ago, AbsolutSurgen said: Purchasing decisions are frequently made for the family by a HoH -- relative value is always looked at for everything. There are LOTS of choices for gaming available for kids that weren't as popular 5-10 years ago. There are lots of families with kids of various ages -- or parents that share the console with their kids. The Switch is immensely popular with a group of core-gaming adults. I just don't know if it is still bringing in many new kids. Hardware sales are down 43% from 2021. Sort of like asking why Disney is still relevant to kids today. Bringing new kids in is at the core of their buisness, and they make moves to ensure they’re part of the conversation and public consciousness. And any platform that sells as well as Switch is going to slow down eventually. How long has it been now? 1 Quote Link to comment Share on other sites More sharing options...
Keyser_Soze Posted February 19 Share Posted February 19 1 hour ago, AbsolutSurgen said: All of the kids I know (mostly friends of my kids, or kids of friends) play lots of videogames. None of them play on consoles -- mostly PCs or tablets. I was listening to the Nextlander podcast from a couple weeks ago and they were talking about (Vinny and Will Smith) how kids are mostly playing on PC as well and there are a lot of kids just asking for PCs. And that they are using Mouse and keyboard like god intended. 1 Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 4 minutes ago, crispy4000 said: This argument was used against Nintendo when the 3DS launched. They lowered the price on the 3DS by 33% less than 6 months after launch. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted February 19 Author Share Posted February 19 We simply won't know if the overall demographic environment for Nintendo's hardware has significantly changed until some time after the launch of the Switch Sequel. Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 10 minutes ago, AbsolutSurgen said: They lowered the price on the 3DS by 33% less than 6 months after launch. Yes, and with Switch they found a way they didn’t have to. It starts with a solid game people want at the launch. Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 19 Share Posted February 19 8 minutes ago, Keyser_Soze said: I was listening to the Nextlander podcast from a couple weeks ago and they were talking about (Vinny and Will Smith) how kids are mostly playing on PC as well and there are a lot of kids just asking for PCs. And that they are using Mouse and keyboard like god intended. I suspect alot of this has to do with influencers/streamers that prefer to play on PC, and games also on PC have a longer viewing life than console exclusives. 1 Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 7 minutes ago, Keyser_Soze said: I was listening to the Nextlander podcast from a couple weeks ago and they were talking about (Vinny and Will Smith) how kids are mostly playing on PC as well and there are a lot of kids just asking for PCs. And that they are using Mouse and keyboard like god intended. Good, typing skills are important! Imagine when that becomes a plus on a resume. Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 11 minutes ago, Keyser_Soze said: I was listening to the Nextlander podcast from a couple weeks ago and they were talking about (Vinny and Will Smith) how kids are mostly playing on PC as well and there are a lot of kids just asking for PCs. And that they are using Mouse and keyboard like god intended. My son even plays Rocket League with a mouse and keyboard -- its really bizarre. 1 Quote Link to comment Share on other sites More sharing options...
Keyser_Soze Posted February 19 Share Posted February 19 2 minutes ago, crispy4000 said: Good, typing skills are important! Don't they teach that in school? BACK IN MY DAY, they did. And I also took it in College for easy credits. Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 4 minutes ago, crispy4000 said: Good, typing skills are important! Imagine when that becomes a plus on a resume. If typing only involved WASD+space they would be set. 1 Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 Just now, AbsolutSurgen said: If typing only involved WASD+space they would be set. How else you gonna shit talk without your parents hearing? Quote Link to comment Share on other sites More sharing options...
Keyser_Soze Posted February 19 Share Posted February 19 5 minutes ago, AbsolutSurgen said: My son even plays Rocket League with a mouse and keyboard -- its really bizarre. You should get him a trackball. 1 Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 Japan: Nintendo is the richest company with over $11 billion in cash MYNINTENDONEWS.COM Nintendo is currently the richest company in The Land of the Rising Sun with an exorbitant 1.7186 trillion yen which is around $11.44 billion. This new data is according to Toyo Keiza… Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted February 19 Author Share Posted February 19 8 minutes ago, crispy4000 said: Japan: Nintendo is the richest company with over $11 billion in cash MYNINTENDONEWS.COM Nintendo is currently the richest company in The Land of the Rising Sun with an exorbitant 1.7186 trillion yen which is around $11.44 billion. This new data is according to Toyo... I got a bit of a chuckle out of that metric because it's a rather meaningless one from an overall financial analysis standpoint (cash on hand minus debt) 2 Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 19 Share Posted February 19 41 minutes ago, Commissar SFLUFAN said: I got a bit of a chuckle out of that metric because it's a rather meaningless one from an overall financial analysis standpoint (cash on hand minus debt) One could argue that this much cash suggests poor cash management. 2 Quote Link to comment Share on other sites More sharing options...
skillzdadirecta Posted February 19 Share Posted February 19 3 hours ago, AbsolutSurgen said: My kids have complete access to my Steam Library (including teenage boys of 14-16). They, and their friends, prefer to spend most of their time playing FTP games -- Roblox, Rocket League, etc. Same with my nephew. I gave him one of my old Xboxes and I pay for a seperate Gamepass Ultimate sub for him and his cousins. All they play is Roblox and Fortnite with the occasional Ass. Creed thrown in. 1 1 Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 19 Share Posted February 19 1 hour ago, AbsolutSurgen said: My son even plays Rocket League with a mouse and keyboard -- its really bizarre. I am so controller trained that I struggled to play Lethal Company with M&K lol Quote Link to comment Share on other sites More sharing options...
crispy4000 Posted February 19 Share Posted February 19 1 hour ago, AbsolutSurgen said: One could argue that this much cash suggests poor cash management. It’s always been that way for Nintendo if I’m mistaken, going back to Yamauchi. They’d rather sit on cash to weather storms. Maybe because their business is not as diversified as their competitors. Quote Link to comment Share on other sites More sharing options...
Kal-El814 Posted February 19 Share Posted February 19 2 hours ago, crispy4000 said: Yes, and with Switch they found a way they didn’t have to. It starts with a solid game people want at the launch. The world wasn’t ready for Feel The Magic XY XX Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted February 19 Author Share Posted February 19 If this story is even remotely accurate, then it pretty much encapsulates everything that's broken in the gaming industry: Sega's new Crazy Taxi game "AAA" in scope WWW.EUROGAMER.NET The upcoming return of Crazy Taxi will be a "AAA" game, Sega has said. Sega first announced it was making a long-awaite… There is simply no universe in which Crazy Taxi should be budgeted as an "AAA" title. 1 2 Quote Link to comment Share on other sites More sharing options...
stepee Posted February 19 Share Posted February 19 It’s funny how all the talk here is about Nintendo when they are the ones doing fine, but just missed their target window (by not much) for their new highly anticipated product. 1 Quote Link to comment Share on other sites More sharing options...
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