Wednesday , October 5 2022

Nintendo's Switch tries to keep up with the older Sony PS4


Five year old PlayStation 4 brings more power and profit growth for Sony Corp. compared to Nintendo Co.'s much more recent switch.

Quarterly numbers of both video game competitors have shown that Sony is using its best console cycle, while Nintendo is trying to prolong the sale of its play-at-home or on-the-go machines. Sony again backed the operating profit forecast, results showed last week while Nintendo missed forecasts and kept its outlook intact.

Game machines tend to follow a predictable cycle of accelerating growth, price cuts, and retirement. Sony, however, breaks this formula with a strong collection of holiday season titles, including the Spider-man home hit, which sets PlayStation 4 for the best year. Without a new collection of new game titles and only one planned for the holidays, Nintendo retained its forecast for 20 million Switch shipments unchanged for the fiscal year.

"The PlayStation is great, Spider Man sold as crazy in the second quarter, "said Kazunori Ito, an analyst at Morningstar Investment Services in Tokyo." It's hard to say on the surface that it's a good place for Nintendo. "

Investors have noticed that Sony's shares have reached up to 15% this year, while Nintendo is down.

Basically, Sony picks up a Nintendo Playbook page and selects games from its own studio. First page titles are also profitable. PS4 exclusive God War sold 3.1 million copies during the first three days in April, while last month Spider Man it ended with a record of 3.3 million copies for the same time. Nintendo relies on a single title, the last iteration Super Smash Bros. for the switch to keep the dynamics in the last three months of the year.

"Sony uses premium titles very well – combined with subscription services such as PS Plus, which increases PS4 sales and extends life," Ito said. "It will be painful for Nintendo without any further play."

Sony in December of the quarter also looks strong in a third-party game with analysts predicting record sales Red Dead Redemption II after being the best rated game of the year, according to Metacritic. Call of Duty: Black Ops set a new PlayStation record for first day digital sales, and other big titles that come in this quarter include Battlefield V, Fallout 76 and Just Cause 4.

Sony's operating profit for the quarter was 239 billion yen ($ 2.1 billion), an average analyst estimate of 205 billion yen. More than a third of them comes from the PlayStation division, where earnings rose 65% to 91 billion yen from the previous year. Total revenues amounted to 2.2 trillion yen.

For the full fiscal year, the Tokyo-based company increased the operating profit forecast to 870 billion yen from the previous forecast of 670 billion yen. While the PlayStation Division is doing well, it should also be noted that the music business has contributed to about half of this increase thanks to the acquisition of EMI Music Publishing this year. The deal added a catalog of 2.1 million songs from Beyoncé, Carole King and other artists. Sony's overall revenue rose slightly to 8.7 trillion yen.

Nintendo's quarterly operating profit of 31 billion yen and revenue of 221 billion yen both miss market forecasts. This raises concerns about whether Nintendo can achieve Switch's sales goal. The Kyoto company kept its year-round forecasts.

"It was a quiet neighborhood without many big releases from Nintendo," said Hideki Yasuda, senior analyst at Ace Research Institute. "Achieving the Switch goal really depends on the holiday area, especially new Super Smash Bros. game."

The battle between Sony and Nintendo is also a test for new executives of companies, both of whom took over months ago. Sony Kenichiro Yoshida, a former CFO who was promoted to CEO in April, lowered the color that initially haunted investors. Nintendo's Shuntaro Furukawa was a more generational shift when he became president in April and promised to "fully develop the company."

"It is very important to continue to introduce new software," Furukawa told reporters last week at a press conference. – Bloomberg

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