What You Missed This Week in Video Games

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

CIRCANA MARCH: Circana analyst Mat Piscatella (SONY), Xbox Series (MSFT) and Switch (NTDOY) spending each declined a minimum of 30% year-on-year. Hardware spending finished the first quarter down 24% versus the first quarter of 2023.

On the software side, Capcom’s (CCOEY) “Dragon’s Dogma II” debuted as the best-selling premium game of March and the 3rd best-selling game of 2024 YTD, Piscatella noted. With just one month in market, “Dragon’s Dogma II” has already surpassed the life-to-date tracked dollar sales of “Dragon’s Dogma” and “Dragon’s Dogma: Dark Arisen” combined. Sony’s “Helldivers II” remains the best-selling premium game of 2024 year-to-date after placing 2nd in March. “Helldivers II” currently ranks 7th in lifetime US dollar sales for Sony published titles after just two months in market. Square Enix’s (SQNXF) “Final Fantasy VII: Rebirth” remained the 4th best-selling game of 2024 year-to-date, despite falling 5 spots in the monthly rankings to 7th in March after placing 2nd in February. Other top sellers for the month were Sony’s “MLB The Show 24,” Activision’s “Call of Duty: Modern Warfare III,” Sony’s “Rise of the Ronin,” Nintendo’s “Princess Peach: Showtime!,” Sega’s (SGAMY) “Unicorn Overlord,” and Take-Two’s (TTWO) “WWE 2K24.”

NINTENDO RESULTS: On Tuesday, Nintendo reported fiscal year 2023 revenue of Y.167T, up from Y1.6T last year, and operating profit of Y528.9B, up from Y504.4B last year. The Japanese gaming giant noted it sold 15.7M Switch units in 2023, down 12.6% year-over-year.

“Looking at the Nintendo Switch business for the full fiscal year, good sales were posted for The Legend of Zelda: Tears of the Kingdom, which sold 20.61 million units, for Super Mario Bros. Wonder, which sold 13.44 million units and for Pikmin 4, which sold 3.48 million units,” Nintendo said. “In addition, the April 2023 release of The Super Mario Bros. Movie positively impacted sales of Mario related titles, such as Mario Kart 8 Deluxe which recorded sales of 8.18 million units. As a result of these factors, the total number of million-seller titles during the period was 31, including titles from other software publishers. Hardware sales for this period totaled 15.70 million units, and software sales totaled 199.67 million units. While this represents a decrease from the previous fiscal year, sales are steady for a platform in its eighth year after launch.”

Meanwhile, Nintendo president Shuntaro Furukawa said in a post on X, formerly Twitter, that the company intends to make an announcement about the successor to the Nintendo Switch “within this fiscal year. “It will have been over nine years since we announced the existence of Nintendo Switch back in March 2015,” Furukawa added. “We will be holding a Nintendo Direct this June regarding the Nintendo Switch software lineup for the latter half of 2024, but please be aware that there will be no mention of the Nintendo Switch successor during that presentation.”

MICROSOFT STUDIO CLOSURES: Microsoft is shutting down several game studios, including “Redfall” developer Arkane Austin, “Hi-Fi Rush” developer Tango Gameworks, Alpha Dog Games, and Roundhouse Games, The Verge’s Ash Parrish reported, citing an email sent to staff from head of Xbox Game Studios Matt Booty. In the email, Booty cited “reprioritization of titles and resources” as the main reason for the shutdowns, Parrish added. Some staff at the affected studios will be relocated while other studios will completely shut down.The Fly notes that all of these studios were under the Bethesda banner when Microsoft acquired Bethesda in 2021.

“These changes are not a reflection of the creativity and skill of the talented individuals at these teams or the risks they took to try new things,” Booty said. “I acknowledge that these changes are also disruptive to the various support teams across ZeniMax and Bethesda that bring our games to market. We are making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games.”

In response to the news, Circana analyst Mat Piscataella noted that growth of spending in video game subscription services, such as Microsoft’s Xbox Game Pass, had stalled in June 2023 and remains stalled. March 2024 non-mobile video game subscription spending was only up 1% vs the April 2023 figures Piscatella reported last year, the analyst said.

OTHER STORIES TO WATCH:

• Take-Two (TTWO) will close game studios Roll7 and Intercept, Bloomberg reports (read more)
• Xbox game “Sea of Thieves” is having a “great start” on PlayStation 5 in the U.S., says Circana (read more)
• Roth MKM cut its price target on Electronic Arts (EA) to $135 from $140 (read more)
• Ubisoft (UBSFY) has been upgraded to Buy from Hold at Stifel, which sees increasing visibility around the game maker’s fiscal 2025 pipeline (read more)
• Tencent (TCEHY) increased its stake in “Alan Wake” maker Remedy Entertainment to 14.8%, VGC reports (read more)