Game Company Q3 Earnings Roundup

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The third quarter of this year, ended September 30th, was a good one for many game companies, but there were mixed results for some. We’ll be updating this with more earnings information as it’s released.

Electronic Arts
Electronic Arts reported earnings for the quarter ended September 30, with net non-GAAP revenue of $1.22 billion and income of $232 million. GAAP revenue was $990 million, with income of $3 million. The non-GAAP revenue was up from $1.04 billion for the same quarter last year, with income up from $105 million last year. The change in GAAP numbers was dramatic, with net revenue up from $695 million last year and net income up from a $273 million dollar loss last year.

“By emphasizing player engagement and our digital live services, we’ve grown revenue, expanded gross margins and delivered EPS well above prior year and our guidance,” said Chief Financial Officer Blake Jorgensen. “We are raising our annual non-GAAP net revenue guidance by $75 million to$4.175 billion and annual non-GAAP diluted EPS by $0.20 to $2.05.” The company also noted it is the #1 publisher on PS4 and Xbox One in the Western world, and that players of EA games on consoles and PCs logged 1.9 billion hours of play in the quarter.

EA’s performance continues to impress investors, as the share price continues to climb. The race with Activision to be the top game publisher in North America is getting very close indeed, and the quarter coming up will determine if EA is able to take back the lead it held years ago.

Sony
Sony overall had a difficult quarter, recording revenue of $17.445 billion and a loss of $1.247 billion, both of which are greater than the same quarter last year. The loss was primarily due to the Mobile & Communications business, which lost $1.615 million; most of Sony’s other divisions made money, with the Game division revenues up by more than 80 percent.

Sony sold 3.3 more million PS4 consoles during the second fiscal quarter, bringing its worldwide total to over 13 million units. Meanwhile, the portable division suffered, with the PS Vita, PSP and PS TV selling a combined total of only 700,000 units – a 100,000 unit decrease from the previous quarter.

While the PlayStation 4 continues to thrive, the company’s recent 2.00 firmware update has been met with criticism, particularly with its change to the system’s stand-by service. In addition, one of the company’s bigger releases, DriveClub, continues to have problems on the online front, with the PlayStation Plus version delayed indefinitely. At least PlayStation Plus is thriving, with the service now counting 7.9 million subscribers.

TakeTwo
Take-Two Interactive had a terrible quarter compared to the same quarter last year, when the company launched Grand Theft Auto V. The publisher saw non-GAAP revenue of $135.4 million, down almost 90 percent from the previous year’s quarter with $1.27 billion. The non-GAAP revenue difference was much less, with $126.3 million in revenue this year compared to $148.8 million in the same quarter last year. The company lost $48.5 million under GAAP, and $30.815 million under non-GAAP measures. Still, TakeTwo professed to be happy with its results.

“Our second quarter results exceeded expectations, driven by strong catalog sales and continued growth in digitally-delivered revenue from recurrent consumer spending,” Take-Two chairman and CEO Strauss Zelnick said. “With the successful launches of NBA 2K15, Borderlands: The Pre-Sequel, Sid Meier’s Civilization: Beyond Earth and WWE 2K15, our third quarter and holiday season is off to a great start, and there is tremendous anticipation for our upcoming releases, including Grand Theft Auto V for PlayStation 4, Xbox One and PC, as well as Evolve – the only title in history to win Game of Show honors at both E3 and Gamescom in the same year.”

The company has been faring better since launching an Evolve open alpha on Xbox One, and is considerably bumping up the hype behind Grand Theft Auto V‘s next-gen release, complete with the promise to transfer over previous assets from the Xbox 360 and PlayStation 3 versions of the game to the newer ones. Grand Theft Auto V is set to launch November 18th for Xbox One and PlayStation 4, and early next year for PC.

Ubisoft
Ubisoft reported $156.5 million revenue for the second quarter of the fiscal year, down 43 percent from the previous year’s $275.5 million for the same quarter. This still beat Ubisoft’s guidance, and Ubisoft boasted that the combined last two quarters (the first half of Ubisoft’s fiscal year) was up more than 65 percent over the previous year, to $611.2 million, with income of $30.31 million.

Ubisoft specifically pointed to its continued success of new IP Watch Dogs, which has now shipped over 9 million units. Additionally, the publisher cited a “firm back catalog” that generated $142.3 million, thanks to games like Assassin’s Creed Black Flag, South Park: The Stick of Truth, Far Cry 3 and Rayman Legends. It’s also important to note that Ubisoft’s digital segment revenues increased 90.4% to $168.6 million (27.8 percent of total sales) – this was driven by digital distribution, DLC and in-game items and mobile titles.

Ubisoft CEO Yves Guillemot remarked, “Our performance in the first half of the fiscal year has strengthened our confidence that we will reach our annual targets. It demonstrates that our strategy of creating strong brands and investing in digital is paying off. This strategy is underpinned by a creative force of an unrivalled scale as well as constantly enhanced execution. It has positioned us at the forefront of the new console cycle and will be a determining factor in creating value for our shareholders in the short, medium and long term. We also are standing by our target for 2015-16.”

The publisher is counting on a big third quarter, driven by titles like Assassin’s Creed Unity, Assassin’s Creed Rogue, Far Cry 4, Just Dance 2015 and The Crew. Ubisoft’s guidance calls for Q3 sales around $913.5 million (which would be up by 40 percent over last year) and the company expects its non-IFRS operating income to amount to at least $250 million for full-year 2015-16.

Inside [a]: It’s All Mobile With Robert Brill And Brian Foster

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Robert Brill and Brian Foster are a dynamic duo. Robert is the Executive Director of ION and Programmatic Media and Brian is the Talent Group Director of ION at Ayzenberg. Together they have unleashed influencer campaigns under ION that have generated a huge amount of hype. Most recently, they commandeered an influencer campaign that was 100 percent mobile.

When it comes to talking about mobile campaigns, Robert is over it. “It’s all mobile,” he says. ‘When we talk about mobile, we are talking about where digital consumption is going.” Influencers, are, of course, a very key part of that.

So how do you know which influencers to choose What’s most important Here are their insights:

What do you look for in an ideal influencer?

Brian Foster, Talent Group Director, ION

Robert Brill, Executive Director of ION

Brian Foster: I look more for production quality. That’s always the first thing that we see: if they’re uploading quality content that looks good and is visually appealing as well as having a voice that projects well or sounds good. Most of the stuff is based on commentary– it’s like voice editorial– so we want to make sure that they’re speaking clearly, that they’re brand friendly, and that they’re not hateful in any way. We look for ones that like to talk about the things they love and are speaking in a genuine voice. An honest opinion is always great to have also, as long as they’re not skewing so far negative or so far positive that it seems disingenuous. We always want to see content that looks good as well as hear content that the brand would appreciate as well as their [the influencer’s] viewers.

That said, is content more important than the audience itself?

Robert Brill: Influencers are media channels. They are publishers. They have an audience and they create content just like websites do and mobile applications do. Influencer channels are new ways for people to discover content. They are content creators. So, just like with any media campaign where a brand integrates into the larger context of the channel, we are looking for alignment between the brand and the channel.

“Having the right volume of audience is always important, but it’s not the end-all be-all when it comes to the decision that gets made when we choose an influencer.”

There’s a very highly customized element to the way we map out these campaigns. So one is defining the right alignment between the brand and the influencer. Having the right volume of audience is always important, but it’s not the end-all be-all when it comes to the decision that gets made when we choose an influencer.

Do you have any tips for brands on improving how they approach influencer marketing?

Brian: I think the main thing to note is that influencers on YouTube have created their own voice and their own personality since probably 2005-2006. Some of these guys were working before YouTube. They’ve been creating content in their own style for a long time. Coming in and treating influencers as though they are actors or talent that are going to work in a commercial that you’re shooting is not the way to go. The way to go is to find, I call it a 50/50 balance of creative. It’s about finding that match between what you want to say as a brand and the right influencer that can speak to that brand genuinely and not change exactly what they are saying and finding a nice fit.

“Coming in and treating influencers as though they are actors or talent that are going to work in a commercial that you’re shooting is not the way to go.”

If the brand wants them to say something but the influencer doesn’t want to say that specific thing, let’s find the right thing to say, but still say the same thing.

Robert: Influencer marketing gets funded in many situations by the media group. The media group is… well, they’re control freaks. They need things to be done at a specific time, targeted to as specific a group as possible, say the right things… and everything will be hunky-dory. Then you have PR and publicity people who let creators do what they want to do and you’ll write their story and you’ll have freedom and don’t really have control over what you say, but they’re just hoping that you talk about the brand in an organic way. This is the coming together of those two disciplines.

As Brian said, these are people who are their own format. You don’t want to be too direct in what you want to accomplish, but you don’t want to tell the influencer exactly how to accomplish that. At that point, you’re overbearing. And when you become overbearing, they will out you, like what just happened with Shadows of Mordor. You have a bit of control, but you don’t have the same control as paid media.

 

Call Of Duty Pairs With Instagram

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Instagram has been picking up quite a bit of business lately with video ads, as such companies as The Walt Disney Co., the CW, Banana Republic and Lancome have presented their fair share of ads. However, Activision is taking a more aggressive approach with the site, introducing a series of videos that tie in with its forthcoming game release, Call of Duty: Advanced Warfare.

Through a campaign called “Power Unlocked,” enables fans to connect to the game for whatever platform they have it on. From there, they can earn points on their account through engagement events, including social sharing, which they can then trade back for extra multiplayer features, as well as new in-game weaponry and equipment. In addition, back stories on in-game characters can also be unlocked.

So how does Instagram tie in Through Mission Zero. With this, players interact within their social feed through a reality-based gaming experience that ties in with Advanced Warfare‘s themes. This allows them to spread the word much easier across social media, while Activision receives bigger and better hype for a game that’s sure to reach an enormous audience, providing it even more word of mouth.

Players who want to learn more about Power Unlocked can do so now, as the feature is live on the Advanced Warfare website. As part of the video promotion for the game, the publisher also released a nice live-action trailer directed by Peter Berg, taking place in entirely first-person as the player, alongside a soldier played by actor Taylor Kitsch, take on a variety of bad guys. The trailer is below.

 

Social Marketing Trends To Watch In 2015

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With the year almost up, brands are already settling in to their campaigns for the remainder of the year. But where should they go heading into 2015 Clickz published a report explaining the top five social marketing trends to watch for, and how they can be used to their credit in the next coming year.

The first trend discusses the movement of a mobile-first world, with more people spending time on their mobile devices in the United States. The report showed an increase of devices with a 4.7 inch or larger screen, rising from four percent in the previous year to a third of the market this year. NPD Group reports that these devices now hold a place in one-quarter of all general phone sales.

Millennials use these devices quite often, according to Facebook, as overall daily active users have grown eight percent for this year. That’s small potatoes compared to mobile daily active users, who grew 15 percent and mobile-only daily active users by 34 percent.

With that, Clickz recommends switching from mobile-aware to mobile-first when it comes to outreach.

Next up, the increase of the pay-to-play market has picked up, as six percent of adults’ digital media time is spent on Facebook, while 10 percent of U.S. digital ad spending is also assigned to the site. Facebook continues to hold a strong social factor, including with games and other applications.

As a suggestion, Clickz recommends investing in smart social advertising, as well as working more on audience segmentation and targeting better advertising for the social front in general.

Leading into the third tip, social content takes a heavy focus. With that, it’s recommended that companies continue to build content, but don’t be careless about it. The report states that “social audiences themselves can be a truly inspired source of content that is authentic and highly sharable, when commissioned, moderated and presented in a creative way.”

The fourth step explains that, while YouTube is still a viable source for it, it’s no longer the only game in town when it comes to video. Short form video across Twitter’s Vine channel has picked up in traffic, as have GIF’s on Tumblr. Facebook also stated it had big viewing numbers, though they can’t be taken too heavily into account due to the use of auto-play.

The report suggests looking for more creative ways to utilize video to produce content, including short-form Vine videos. It doesn’t necessarily have to be about straightforward commercials anymore. One example of this is the FIAT 500 Endless Fun GIF ad, which can be watched below.

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M-Commerce Grows 141%

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MarketLive recently released its Performance Index for the third quarter of this year, and had a message loud and clear for a certain audience: “Merchants must immediately face — and address — the enormous implications and inescapable demands of multi-device shopping and mainstream mobile commerce.”

Smartphone traffic with e-Commerce sites have managed to grow more than 62 percent, with revenue reported well over 141 percent, according to Marketing Land. In comparison, tablets fell behind, with only a modest growth of 20 percent, although that still counts as growth overall.

On the PC front, there was a sign that it “continued to decline,” with a reported 57 percent of traffic to e-Commerce sites, but only responsible for 76 percent of revenues. Smartphones only drove 28 percent of traffic and 11 percent of revenue, while tablets had 15 percent of traffic and 13 percent of revenue.

MarketLive was quick to note the overall two percent decline from conversions in the previous year, with a larger count of shopping cart and checkout abandonment overall, by about 3 and 7 percent, respectively.

The chart below shows overall performance highlights, indicating the exact percentages of these numbers, as well as the overall increase in traffic and revenue. It also detailed engagement, with just over a four-minute time on site overall, and 24 percent home page bounce rate.

This chart also shows the change in revenue for companies, and brick and mortar-based shops lead the charge with 23.7 percent, with apparel following in second place with 10.9 percent. Meanwhile, both beauty and brand have shown a decrease between 5.3 and 8.9 percent.

As far as organic search traffic is concerned, it showed an increase of 31 percent of visits overall, with 26 percent of conversions, while paid-search was slightly less with 18 percent of traffic and 22 percent of revenues in the aggregate, according to the numbers.

It’ll be interesting to see how these numbers hold up over the holiday season, especially with companies looking to get on board with the usual rush of Black Friday sales.

 

Brands Matter In The Moment

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There’s an interesting technique out there that many companies don’t consider, probably due to the risk involved or failing to capture that “moment” in which they can purely connect with audiences. But that’s the thing – something going for that “moment” is the best way to capture it, such as watching the Super Bowl live or taking part in some other big event.

Think With Google, Rethinking Real Time: How Brands Can Really Matter In the Moment, explains the steps involved in terms of capturing that feeling when companies and their respected audiences can truly connect together.

One example the article brings up is the World Cup Finals, with Google Search traffic from smartphones tripling over the four year span between the 2010 and 2014 tournaments, going from 18 percent to 70 percent of total volume.

In addition to watching the event, using second screen features also provides a way to look items up, as well as watching the best parts of the event on YouTube and purchasing related items, like seeing a dress from the Academy Awards and looking for something similar.

Nielsen research indicates that 84 percent of smartphone and tablet owners utilize their devices as second screens when watching said experiences, per a report from the Digital Consumer.

Other examples of companies interacting with their audience through this process includes Nike’s Phenomenal Shot, a series of 3D ads featuring sponsored athletes doing their celebratory poses, allowing users to interact with them to define their moment. EA Sports’ Madden NFL 15 also comes to mind, introducing a Giferator tool that enables them to create customized taunts with their favorite teams and players, sending a not-so-subtle message to their competition that they’re ready to play. The video below provides an idea of how this works.

 

Marriott Inks Branded Content Deals With More Digital, Traditional Talent

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by Sahil Patel

A month ago, Marriott International launched a branded content studio, essentially announcing that it planned to be the Red Bull of the hospitality industry. The goal of the studio is to create original content for multiple platforms, in partnership with leading producers and creators both from traditional and digital media.

Read more…

 

This article was originally posted on VideoInk and is reposted on [a]listdaily via a partnership with the news publication, which is the online video industry’s go-to source for breaking news, features, and industry analysis. Follow VideoInk on Twitter @VideoInkNews, or subscribe via thevideoink.com for the latest news and stories, delivered right to your inbox.

Latin America: The $4.5 Billion Game Market

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As the game industry heads swiftly to the $100 billion annual revenue mark, it’s important to keep informed on the rapid growth around the globe. Part of the explosive growth of the games business is due to the globalization of gaming, not just the widespread adoption of mobile devices. Twenty years ago if you had said China would be a multi-billion dollar game market, you’d have been laughed out of the room. Now, other regions once mostly ignored by the gaming industry are growing rapidly and becoming major opportunities. Latin America is a rapidly-growing example right next door.

SuperData has released a fascinating report on the state of the Latin American, focusing on digital games. Limiting the scope of the study to digital games is not the kind of limitation that it would be in the United States or Europe, since physical retail stores that sell games are few and far between in Latin America — and, indeed, most other regions of the world. A major factor in the growth of gaming worldwide is the growth of digital distribution of games on both PCs and mobile devices. Creating a retail infrastructure and then convincing customers to travel to stores to buy games in boxes just isn’t going to happen in significant numbers anywhere in the world that it hasn’t already happened. The future of gaming is digital, and Latin America shows that clearly.

The numbers that SuperData has compiled are impressive, showing the Latin American market growing from $3.6 billion in 2013 to an estimated $4.5 billion this year, forecasting $5.3 billion in 2015. You can see that console games represent only 6 percent of this total, and it’s not surprising given how expensive consoles are in most of Latin America, especially compared to the average incomes. Mobile accounts for 43 percent of the revenue, the largest share, while social games deliver 27 percent of the revenue and free-to-play MMO games are 17 percent.

Latin America accounts for 10 percent of the worldwide digital games market, and SuperData forecasts that will grow by 7 percent next year as the region experiences 16 percent market growth. Brazil accounts for more than a third of all the revenue in the region with 40 percent share, but the rapid growth in countries like Mexico, Argentina, and Chile are decreasing Brazil’s market share.

The average lifetime value of these players is nearly $88 for a single game, with a lifespan of 169 paying player days. The players spend close to $16 per month on a game, so if you can engage someone you’re going to make some good money.

It’s also very interesting, and instructive, to look at how customers in Latin America are paying for their digital games. Bank transfers are the method of choice for 24 percent with mobile payments close behind at 21 percent — mobile is projected to grow rapidly as a payment source. The implication of all this is that if you want to make good money on games in Latin America, you’d best work with someone familiar with payments in each country. Credit cards only account for 20 percent of the revenue, unlike the situation in North America where credit cards are the standard payment method.

Looking more closely at Brazil, SuperData found that social games and free-to-play MMOs are growing rapidly there, with social games growing 35 percent and MMOs growing by 20 percent by 2015. The muliplayer online battle arenas (MOBAs) like League of Legends and Dota 2 have more than doubled revenues in Brazil during the past year. While Latin America is not yet fielding world-class teams in MOBAs, the rapidly growing user base should help produce players with greater skills in the future.

Another solid indicator of the growth in Latin America is the rapid rise of the consumer game shows in the region. The Electronic Game Show (EGS) announced record-breaking attendance of 40,000 for its 13th edition, further establishing Mexico as a major video game market in Latin America. “With the 40,000 attendance mark being surpassed for the first time in EGS history, this is a clear sign of the momentum of the Mexican market,” said Alejandro Bertoldi, EGS Manager.

Companies that attended included: Microsoft, Sony, Electronic Arts, Ubisoft, Activision Blizzard, Disney, Warner Bros. and Bandai Namco. These companies exhibited at large booths and made major announcements during the weekend of Oct. 3-5 at Centro Banamex, one of the most renowned venues in Mexico City.

Similarly, the Brasil Game Show has grown from a few thousand people to well over 250,000 attendees this year. The enthusiasm for games in Brasil is huge, even though consoles are lagging behind in efforts to reach the country. Brasil’s import regulations make it difficult to put reasonable prices on game consoles.

In a report published in March this year, Bloomberg named Brazil as the most expensive country in the world to buy a PlayStation 4, its suggested retail price of 3999 Reals (R$) putting it ahead of second-place Argentina by more than $300, and ahead of third-place Sweden by more than $1000. To put that figure in its proper context, the Xbox One launched at a suggested retail price of R$2200, cheaper than Sony’s console by more than $700 at the current exchange rate. It should be noted that both consoles were available at the Brazil Game Show from the retailer Saraiva for substantially lower prices, but that yawning chasm remained: an Xbox One without Kinect was R$1599, a PlayStation 4 was R$2499.

“[International] companies should be paying attention to this market. They should come here to research the market and try to understand the passion of the Brazilians. If they have their games in Portuguese, if they have their games at a good price, they will succeed here,” said Marcelo Tavares, head of the Brasil Game Show.

The Latin American game market is a great opportunity for companies that can find ways to bring games into the market. This is just one more piece of the global game industry puzzle that companies large and small are seeking to solve in order to get their share of that $100 billion. Whether it’s setting up offices in different countries, or finding partners who know the market, there’s clearly money to be made in Latin American games if you can find the right path.

Mobile Ad Money Shifting Next Year

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We’re seeing a dynamic shift of advertising spending, with more and more companies turning away from other formats and instead focusing more on mobile for better engagement with customers, according to eMarketer. However, when it comes to where all those dollars will be removed from to fund this mobile front, there are various places, per numbers reported in a July 2014 study by Advertiser Perceptions.

The main source, it seems, will come from print advertising, as 40 percent of advertising directors will take funds out of that to pick up its mobile ad spending over the next year. 34 percent of those polled intend to take funds out of its TV advertising, a smaller number than the 38 percent reporting that overall expansion of budgets would be the source.

Other sources for funds include digital display advertising (32 percent), search advertising (10 percent), digital video advertising (nine percent), owned social media (eight percent) and paid social media (also eight percent).

With the expansion set to continue over the next few years, it’s likely these trends will continue to rise. eMarketer reports that US advertisers will pick up its spending on mobile ads by 78 percent, with a total of nearly $19 billion. It’ll grow even further into the next year, with a 50 percent growth rate to $28.48 billion. But, again, that’s nothing compared to where spending will be by 2018, which is expected to rise 20 percent to reach a whopping $58.78 billion.

Advertiser Perceptions also reported that smartphones were better than tablets when it came to delivering ad results, including impressions and return on investment. In nearly every category, smartphones outperformed tablets on every level, including audience (smartphones’ 38 percent to tablets’ 13 percent), results (36 percent to 22 percent) and targeting (36 percent to 12 percent, nearly three times worth). Only in areas like engagement (27 percent to 36 percent), platform for advertising (tied at 25 percent apiece), brand safety (18 percent to 20 percent) and user experience (17 percent to 49 percent) did tablets fare better. The chart is below, and also highlights how some advertisers believe they are the same, particularly with audience.

 

Reddit Introduces Kickstarter-Style Crowdfunding

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With Kickstarter and Indiegogo still raking in the money from crowdfunded projects, it shouldn’t be a surprise that other crowd-funding sites would appear to get in on the action. However, in an unlikely move, Reddit has thrown its hat into the ring with the introduction of its new Redditmade service, according to Quibb.

With the service, users are able to sell whatever merchandise they see fit to the masses, using a storefront along the same lines as the Zazzle store. While it could be an effective tool for selling, some believe it could also be a place where less-than-favorable merchandise shows up.

Reddit explained in an announcement that it “is a new place to turn the best designs and products by the community into reality.”

“Redditmade gives you the flexibility to create almost anything you want, easily raise money, and support causes you care about. It’s also a great way for others to find awesome new products they’ll love and support other redditors while knowing their information and money will always be secure,” the announcement continues.

Some of the products are actually produced by Reddit itself, including a new Reddit Secret Santa Sticker Pack that’s available for purchase (part of a $50 million investment for professional designs). The general shop, though, is open game to sellers, offering everything from the “Ebola Soup” shirt seen above (which can also be “A Bowl of Soup” for those not favoring such a controversial issue) to a “You Broke Reddit” shirt, complete with the company’s mascot on the front.

However, the service has gotten off to a very slow start, as most of Redditmade’s products show no signs of backing, probably due to most of them having a mature theme. It’s hard to say if the service will be a payoff for Reddit, or something that will eventually fade away in favor of more community-based features for the site.

One thing’s for sure — the “Ebola Soup” shirt probably won’t catch on anytime soon.