Game Industry Snapshot Reveals Strengths, Weaknesses

This is that magical time that occurs every three months, when publicly traded companies disclose their revenue and earnings. So far there have been winners and losers among the companies reporting, as everyone gets ready for the launch of new console hardware in a few weeks. The last three months of the year will no doubt be good for the traditional game publishers, as the holidays always are.

No one’s quite sure what to expect next year, though, once the excitement over new consoles begins to fade. Will console gaming experience a large, sustainable boom that rivals the last generation, or will the continued growth of mobile and online gaming (and rivals on the horizon) sap the strength of this resurgence. No one knows the answer at this point, but we can look at this financial snapshot to see how some of the major players stand. Most are poised to do well in the months ahead, with one glaring exception.

Electronic Arts reported a strong second quarter that exceeded the company’s previous guidance, and anticipates a solid performance during the holidays. Still, the company continues to lose money on a GAAP basis, though the loss is narrowing from last year’s (a loss of $273 million last quarter versus a loss of $381 in the same quarter last year). When the company uses their non-GAAP accounting, though, the picture flips to a profitable one, showing a profit of $105 million. Digital revenues grew from $324 million in last year’s Q2 to $450 million this year on a GAAP basis, driven by strong performances by The Simpsons: Tapped Out, Plants Vs. Zombies 2, Real Racing 3 and FIFA. “EA’s strong second quarter was driven by great title launches, continued digital growth, and financial discipline,” said CEO Andrew Wilson. “While we have made good progress in the first half of the year, we remain focused on executing our FY14 plan and delivering a full slate of amazing games and services to players on current and next-generation consoles, mobile, and PC.”

TakeTwo recorded a record Q2 with $1.27 billion in revenue (on a non-GAAP basis), of course, led by the record-setting strength of Grand Theft Auto V. TakeTwo’s GAAP performance was actually only $148.8 million, down 45 percent from last year, because under GAAP rules the company couldn’t record the sales of GTA V in the quarter since the multiplayer component didn’t launch until one day after the quarter ended. We’ll take the non-GAAP results as more reflective of the company’s reality, though, as they bask in the glow from selling 29 million units of GTA V in just a couple of weeks. The company expects revenues for the full year of $2.2 billion to $2.3 billion on a non-GAAP basis. Other titles like BioShock Infinite and Borderlands 2 have also been outperforming expectations.

Microsoft posted record results for the overall company with $18.35 billion in sales for the quarter, even as Xbox 360 sales slid 29 percent from last year’s quarter. The company did see first-party game sales and Xbox Live transactions go up, with a 17 percent rise for the overall division (with a 25 percent rise just for Xbox Live transactions). In a post-release conference call, Microsoft’s executive VP and CFO Amy Hood has faith in next month’s big hardware release, saying, “We expect the launch of Xbox One to be the biggest in Xbox history.”

Sony’s game revenues rose slightly compared to last year, mostly due to the change in value of the yen versus other currencies. Although revenues rose to $1.58 billion for the game division, Sony posted a loss of $8 million (compare to a gain last year of nearly $24 million). “The decrease in sales on a constant currency basis was primarily due to a decrease in unit sales of PlayStation 2, PlayStation 3 and PSP hardware, partially offset by increased PS3 software unit sales compared to the same quarter of the previous fiscal year,” Sony said in its report. Projections for the rest of the year remain unchanged for the games division, but Sony revised its projections for the overall company to reflect lower profits than previously expected for the entire year.

Nintendo provided the big disappointment among hardware makers, as we reported here. The company’s sales were below what analysts expected, driven by weak hardware sales. Analysts had expected the company to show a profit for the quarter, but Nintendo turned in a loss. The price cut on the Wii U, while it boosted sales, also made it more difficult for the company to show a profit. Sales were very slow for the Wii U, and even the 3DS hardware (with a strong software lineup) sold less than expected.

Analyst Michael Pachter pointed out that the Wii U’s hardware and software sales so far (the first six months of Nintendo’s fiscal year) have actually been lower than the Wii hardware and software in the same time period, despite the fact that the Wii is seven years old (and now production is ceasing in Japan and Europe). Here’s the grim fact about the Wii U: lifetime sales of the console have been 3.91 million units so far, and this fiscal year (the last six months) we have only seen 460,000 Wii U units sell worldwide.

Yet Nintendo has not changed its guidance for the full year, which ends on March 30, 2014, projecting the company will sell a total of 9 million Wii U’s in this fiscal year. To meet that goal, somehow Nintendo will have to sell 8.54 million Wii U units between now and March 30th. With Donkey Kong Country: Tropical Freeze moving into next year, and other hot Wii U titles like Mario Kart 8 and Super Smash Bros. not given a specific launch date in 2014, that seems unachievable – perhaps “hallucinatory†would be a more accurate term. This holiday season will be an important one for Nintendo, and if the results aren’t exceptionally good the company will need to make some serious decisions about its strategy for 2014 and beyond.

Meanwhile, blithely unconcerned by all of the hullabaloo over new consoles, mobile and online games continue to grow. The holidays mostly don’t affect digitally distributed titles that much, although we do see record new device activations on Christmas Day and a flood of downloads immediately thereafter. Still, it’s unlikely that mobile or online games will be affected much no matter how well new consoles perform.

Twitter Infuses Stream With Photos

Twitter’s new makeover will certainly make a big difference in how brands and users utilize the service, but there’s nothing too revolutionary about it. Why It looks like a Facebook news feed.

This is a radical new Twitter. Images are getting prime real estate as we scroll through our Twitterfeeds, interrupting what would normally be a stream of text and hyperlinked content.

Brands who have not made use of Vine yet, establishing a presence in the hordes of micro-video, may want to. With the new “rich tweet” feel, Vine videos are automatically displayed in users’ streams. Marketers can push out the display ads typically reserved for Facebook content as well.

This is what it looks like on mobile:

“These rich tweets can bring your followers closer to what’s happening and make them feel like they are right there with you,” said Twitter’s vice president of product, Michael Sippey.

The redesign has already proved to be problematic for pioneer brands who ran into some trouble with sizing issues. Badly cropped images have appeared from the likes of Sprint and Dell Security. To rectify this, Twitter will have to move to educate brands on how best to utilize the stream, just like Facebook has actively done.


Twitter is banking on their new redesign making their ads a more desirable product. It is noteworthy that unlike Facebook, advertisers are only charged when users engage with a promoted tweet. The question now is: will users still engage with Twitter now that it has lost its text-only appeal? Time will tell.

Source: AdAge {link no longer active}

‘X-Men’ Takes Us Back To The Future

The X-Men comic has its fair share of crazy time traveling elements and that’s now bleeding into the movie universe as well. For X-Men, Days of Future Past, characters from the original X-Men film trilogy team up with their younger selves from X-Men: First Class to change both the past and the future.


PS Vita Getting More Unique Titles

While this season is the first for the PS4, it doesn’t mean there aren’t still efforts on the PS Vita. Check out these trailers for Proteus and Tearaway, which promise to be unique experiences on the PS Vita.

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