PlayStation and Switch sales suffer from industry consolidation movement

Two of the world’s biggest video game companies are feeling the pressure as the console wars heat up.

Shares of Sony and Nintendo, makers of the PlayStation and Switch, respectively, fell on Thursday (3) as the two Japanese giants cut their forecasts for console sales.

The slump comes as the two companies grapple with the current global chip shortage and just weeks after Xbox maker Microsoft announced plans to acquire Activision Blizzard in a highly successful deal worth nearly $100,000. 70 billion.

Sony last Wednesday lowered its forecast for the popular PlayStation 5, saying it expects to sell 11.5 million units in the fiscal year ending in March. This is down from the previously predicted 14.8 million units.

The company’s shipments and guidance cut were “disappointing,” said Kazunori Ito, director of Morningstar.

Meanwhile, Sony’s general gaming and network services unit also reported an 8% drop in sales in the quarter ended December, compared with the same period a year earlier.

The company’s shares fell 6% in Tokyo on Thursday, despite beating analysts’ overall forecasts.

The group’s wins were largely attributed to the film and television division, including “licensing proceeds from the comedy series Seinfeld and the success of the last film of the Spider man“Nomura analyst Yu Okazaki wrote in a note on Wednesday.

Nintendo also said it may continue to experience global supply chain issues this year. The Kyoto-based giant has once again lowered its sales forecast for the Switch, a big hit at the start of the pandemic.

It now expects to sell 23 million units by the end of the fiscal year, which ends in March, down from previous projections of 24 million and 25.5 million units in November and May. Nintendo’s shares closed down 2.8% on Thursday, ahead of the presentation.

But the company’s overall results were in line with expectations, according to Ito.

Switch console shipments “have not been as bad” as the market feared, he told CNN.

There were also some bright spots. Nintendo raised its software sales forecast by 10% through March to 220 million units.

That side of the business has proven to be “solid” and drives most of Nintendo’s earnings, even allowing it to slightly increase its overall financial forecast for the year, Ito noted.

console wars

Analysts have warned that the sale of Activision Blizzard to Microsoft could pose a serious threat to Sony, which has competed with Xbox for decades.

With Activision Blizzard, Microsoft would add popular series like “Call of Duty” and “World of Warcraft” to its library – as well as the nearly 400 million monthly active players that accompany them.

However, this week, Sony made its own news by announcing the acquisition of Bungie, a developer known for its creation of titles like “Halo” and “Destiny”.

The deal would help Sony bolster its intellectual property and make its “gaming business more competitive,” analysts at Nomura wrote in a note Tuesday.

In the meantime, Nintendo is expected to be more shielded from competition concerns related to Activision Blizzard because “people who want to play Nintendo games buy Nintendo hardware,” Ito added.

“So Nintendo can still differentiate its platform from others.”

Source: CNN Brasil

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