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: Last week, Circana analyst Mat Piscatella (ATVI) “Diablo IV” was the best-selling game of June, instantly becoming the #3 best-selling game of 2023 year-to-date. Four other new releases appeared among the top 20 best-sellers, including Square Enix’s (SQNXF)” “Final Fantasy XVI” in second place, Capcom’s (CCOEY) “Street Fighter 6” in third place, and EA’s (EA) “F1 23” in the fifteenth spot. Other top sellers for the month of June were Nintendo’s (NTDOY) “The Legend of Zelda: Tears of the Kingdom,” Warner Bros. Discovery’s (WBD) “Hogwarts Legacy,” Activision’s “Call of Duty: Modern Warfare 2,” EA’s “Star Wars Jedi: Survivor,” and Sony’s “MLB The Show 23.”

NINTENDO RESULTS: Last Thursday, Nintendo reported sharp year-over-year increases in first quarter revenue, operating profit, and profit per share, with the company noted that sales from its dedicated video game platform business increased 44.6% year-over-year. Additionally, mobile and IP sales rose 190.1% in Q1, bolstered by an increase in come from royalties and income from visual content related to “The Super Mario Bros. Movie.” On the hardware side, the company reported 3.91M hardware units sold int he quarter, up 13.9% year-over-year, noting that sales of “The Legend of Zelda: Tears of the Kingdom” has already sold 18.51M units since its May 12 release.

Looking ahead, Nintendo reaffirmed its revenue and operating profit guidance for fiscal 2024, saying, “There are no changes to the original financial forecast for this period that was published on May 9, 2023. For hardware, by continuing to convey the appeal of Nintendo Switch, we try not only to put one system in every home, but several in every home, or even one for every person. Another objective is to continually release new offerings so more consumers keep playing Nintendo Switch even longer and we can maximize hardware sales. For software, we released ‘Pikmin 4’ in July, which will be followed by the release of ‘Super Mario Bros. Wonder’ in October and ‘Super Mario RPG’ in November. In addition, add-on content for ‘Pokemon Scarlet’ and ‘Pokemon Violet’ in the form of ‘The Hidden Treasure of Area Zero’ is on the way. The first wave of this add-on content, ‘The Teal Mask,’ is planned to be released in the fall of 2023, and the second part, ‘The Indigo Disk,’ is planned for release in the winter of 2023. Other software publishers also plan to release a wide variety of titles, and we will work to invigorate the platform by supplementing existing titles with a continuous stream of new titles and add-on content.”

EA RESULTS: Additionally, Electronic Arts reported better-than-expected Q1 earnings last week, though net bookings for the quarter came in just below Wall Street estimates. Live services and other net bookings for Q1 was $1.177B, up 4% year-over-year and represented 75% of total net bookings. “EA delivered a record Q1, driven by strong momentum in EA SPORTS global football and ‘Star Wars Jedi: Survivor,'” the company said. “Our exceptional teams are creating innovative entertainment experiences across our multi-year pipeline, starting with the highly anticipated, culture defining titles ‘Madden NFL 24’ and ‘EA SPORTS FC 24.’ We had a strong start to the fiscal year, with net bookings growth of 21% year over year, highlighted by new releases, continued live services growth, healthy engagement, and new player acquisition.” Looking ahead, EA provided conservative net bookings guidance for Q2 and 2024.

OTHER STORIES TO WATCH:

• Activision said that “Call of Duty: Modern Warfare III” is coming November 10 (read more)
• Take-Two’s (TTWO) Rockstar Games announced that 2010 title “Red Dead Redemption” will be coming to Nintendo Switch and PlayStation 4 on August 17 (read more)
• Square Enix president Takashi Kiryu said during a post-earnings call that “Final Fantasy 16” sales did not meet the company’s high expectations (read more)
• Roblox (RBLX) CEO David Baszucki said that the Roblox Beta on Meta Quest (META) has “well over” 1M downloads (read more)
• Super League Gaming (SLGG) has joined the Roblox Partner Program (read more)