‘Games sector is not recession-proof’ | The time

09 augustus 2022

18:28

Take-Two Interactive, the American publisher of the video game ‘Grand Theft Auto’, is the umpteenth company in the sector that comes out with disappointing prospects. The Belgian game sector puts the situation into perspective.

Take-Two Interactive

forecasts weak sales for this year. The industry has been hit by the lack of major new games, the lifting of the pandemic, problems with hardware component supply and the more expensive dollar.

The essence

  • Disappointing results or prospects are published in the global games sector. These are in stark contrast to the record results during the pandemic.
  • A shortage of components, the delay of new games and consumer wait and see are causing the delay.
  • A bright spot in the sector are promising trends such as streaming.
  • According to the sector organization, Belgian game makers are still growing.

For the full year, fiscal 2023, the gaming giant Take-Two expects sales of between 5.8 billion and 5.9 billion dollars. That’s less than analysts’ forecast of $6.32 billion. Earnings per share in 2023 will be between $4.60 and $4.85 compared to a forecast of $5.37.

We’re probably seeing a bit of a slacker situation in mobile.

Strauss Zelnick

CEO Take-Two Interactive

Take-Two’s estimates take into account Zynga’s contribution. The company recently acquired the mobile game maker for more than $11 billion in cash and stock. “We’re probably seeing a little slacker in mobile,” said Strauss Zelnick, Take-Two’s CEO. He immediately adds that Zynga is doing better than all its peers.

recession

“I don’t believe the entertainment industry is recession proof,” said Zelnick. According to him, the reduced spending and inflation do have an impact. In June, the US spent 11 percent less on video games. Sony, Microsoft, Electronic Arts and Nintendo indicated that things are not going well.

Take-Two’s biggest successes include games such as the basketball series ‘NBA 2K’ and ‘Grand Theft Auto V’, which have sold nearly 170 million copies. The next episode of ‘Grand Theft’ has been in development since 2014 and the Bloomberg news agency has learned that the next episode is at least two years away.

David Verbruggen, the general director of the Belgian Games sector organization, nuances the situation in the global sector. “In the end, the numbers are very good,” he says, but the comparison with the two previous record years is difficult. At the same time, analyst expectations were very high. Take-Two saw sales up 41 percent to $1 billion in its first quarter ended June 30. Impressive growth, but lower than the $1.1 billion that analysts had expected.

‘Elden Ring’

The pandemic has delayed the development of new games.

David Verbruggen

General Director Belgian Games

Bandai Namco, the publisher of the widely acclaimed fantasy game ‘Elden Ring’, also performed strongly. Gamers still have money left over for top games. ‘Due to the pandemic, the development of new games has been delayed’, Verbruggen notes. A new ‘God of War’ from Sony has been delayed until the end of this year.

The suppliers of the game sector are also feeling the slowdown. On Monday, chipmaker Nvidia warned of lower second-quarter revenue, citing weakness in the sector. Verbruggen notes that the trend towards streaming games could boost Nvidia’s business for data centers.

According to Verbruggen, the Belgian game developers sector is still in a growth phase with more and better games, and with partnerships with publishers. ‘We have a different momentum. I would be surprised if this small sector did not continue to grow here in the coming years.’

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