Shulou(Shulou.com)11/24 Report--

Sina Technology News Beijing time on August 15 morning news, it is reported that in recent months, as players gradually return to the real world after the epidemic, while the rising cost of living forces them to cut expenses, game company sales and player participation are in a sharp decline.

Game console makers, video game publishers and related chip companies all reported a decline in demand in the most recent quarter. It also raises questions about whether games are really one of the forms of entertainment that are least vulnerable to the recession.

During the COVID-19 epidemic, isolation and blockade boosted consumer demand for virtual entertainment, the gaming industry made huge profits, and there were a series of mergers and acquisitions in the industry.

Game console makers Sony and Microsoft were the first to see a downturn in the game market, with sales falling in both companies' game businesses. Sony also reported last month that player participation in the PS was down 15 per cent from a year earlier. On Monday, graphics giant Nvidia reported a drop in revenue in the second quarter due to weakness in the gaming business. In the second quarter, revenue from Nvidia's gaming business fell 44% from a month earlier and 33% from a year earlier to $2.04 billion.

Strauss Zelnick, chief executive of game developer Take-Two Interactive, told investors this week that he did not think "the entertainment industry can avoid recession, or even resist it". On Monday, the company released its second-quarter results and full-year earnings outlook, which fell short of analysts' expectations and sent its share price down 5%. "if you are feeling inflationary pressure, especially on non-discretionary spending such as fuel and food, you can imagine that if you are still playing games, you will choose to spend less," Zelnik said. "

Another game developer Activision Blizzard's adjusted revenue fell 15% in the second quarter from a year earlier, mainly due to weak demand in the game console and PC market, as well as a poor response from the latest generation of flagship game call of Duty. Currently, Microsoft is buying Activision Blizzard for $69 billion. Meanwhile, EA, the developer of the FIFA and Sims series, last week gave a revenue outlook that fell short of analysts' expectations.

With the relaxation of the control of the epidemic, the game craze triggered by the epidemic is fading. At the same time, the global economy is also facing a difficult situation. Consumers around the world are cutting back on discretionary spending in the face of rising inflation.

The market that seems to be most affected is mobile games. Earlier this year, Take-Two bought Zynga for $13 billion. Last year, EA bought 3D mobile gaming company Glu for $2 billion.

However, EA said mobile orders fell 2.5% in the second quarter from the previous quarter, and existing games, excluding the mobile game version FIFA, performed poorly. Andrew Wilson, chief executive of EA, told analysts that the industry was facing an "open question": "what kind of user spending will we see during this period in a world where we can participate deeply without spending money?"

Shares of game production platform Robles fell 12% last Wednesday. The company had previously reported a 4 per cent drop in net orders and a slowdown in the growth of daily active users. Rob Roth is the platform behind Jailbreak and MeepCity. The company's market capitalization has shrunk by more than 50 per cent since the start of the year.

David Baszucki, chief executive of Robles, does not believe that the downturn in the gaming industry will have a serious impact on the company's performance. Robles is more like a "platform for future human experience" than gaming companies, he says. "We have experienced this cycle before, and we are relatively less affected by the cycle."

Game development platform Unity currently provides the engine behind more than 70% of the world's mobile games. The company cut its full-year outlook on Wednesday as revenue growth was weaker than previously expected, attributing the revision in part to "recent adverse macroeconomic factors".

New game releases are usually a catalyst for strong growth, but recent game releases have also been disrupted, especially as the epidemic has disrupted game reserves. EA's Battlefield 2042, launched in November last year, received poor reviews, while Take-Two delayed the release of one of the most important games. Activision Blizzard is also struggling, and the latest generation of the company's flagship game call of Duty has been lacklustre since its launch late last year.

"if you want the industry to accelerate growth, you need to launch attractive games," said Neil Campling, an analyst at Mirabaud Securities. He points out that users now have more diverse leisure options, so they have become more picky. "in fact, we are still waiting for the next blockbuster game that we have to play."

Patrick O'Luanaigh, chief executive of NDreams, the virtual reality publisher, agrees that there has been a "marked slowdown" in the release of gaming masterpieces. "the relatively small number of masterpieces has also frustrated some players."

Nonetheless, gaming executives remain optimistic about the medium-and long-term outlook. They say the number of gamers around the world is growing steadily.

EA's Wilson stressed that whether players choose free games or not, the company's development in mobile games "represents a new way to help us reach players that are not reachable by traditional business". He said that there are an estimated 3.5 billion players in the world.

Zelnik agrees. He pointed out that there is evidence that the next generation of gamers are "more engaged and play more". So I have to believe that interactive entertainment will continue to grow faster than other audio-visual entertainment businesses. "

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