GCD2: Games Chart Discussion

[Digfox]

An interesting article here on GameIndustry.biz following the recent slump in share prices for the 4 largest western publishers:

Fortnite alone can't explain tumbling game stocks - The industry's biggest firms have lost around 13% of their value in the past week, and many are down a third in recent months

One of the worst Decembers on record was followed by one of the best Januaries, so nobody really has a clue what to expect from February, but if you're an investor whose fortunes are tied up in stocks related to the games industry, the good news is that you've seen a lot of consistency. The bad news is that the consistent direction of travel has been downwards; just about every major games-related stock has spent the last four months in steady decline.

The current climate around game stocks is unusual, though. Investors are on edge and trigger-happy. Shares in all four companies have plummeted between 13% and 14% in the wake of their reports. Activision Blizzard, which won't report its results until next week, dropped 10% as well.

EA and the yet-to-report Activision Blizzard are in very different positions. I'd be tempted to say that the runaway success of RDR2 likely had more impact on the weaker-than-expected sales of Battlefield V than Fortnite did, but there's no question that EA is struggling to compete effectively with many of its core releases.

[Neon Ignition]

I'm mildly sceptical about EA looking to RDR2 for BF5's struggles, I think it's just that they've skewered that franchise and anything DICE touch good and proper over the last few years.


I Given January rose, I wonder how much impact the Jan-Mar release schedule had as well? It's properly packed out whereas the Oct-Dec are largely ruddy boring with the same old franchises trussed up and doled out time and again, I just wonder if there's an element of some holding off for more interesting fare post-Xmas this year.

[Digfox]

EA have blamed BFV lower than expected sale in part on single player and lack of BR at launch.

Personally I think there are many reasons for BFV's sales, namely; the terrible PR launch, turning political on its customers (even if they are right politics don't mix), series fatigue, fall out from Battlefront 2 lootboxes, bad PR from lootbox regulation/gambling rules, the alternative Sci-fi reality of WW2 being against what the fans want and crucial declining quality from the series. And of course lots of competition including Fortnite. But it's easier for EA to blame competition or not being on-trend than on their own shortcomings.

[Neon Ignition]

https://www.eurogamer.net/articles/2019-02-18-far-cry-new-dawn-physical-sales-just-quarter-of-far-cry-primal

UK charts and it suggests a mixed picture. Presumably Far Cry: New Dawn underperformed despite taking number one, it's hard to imagine digital sales accounted so such a high required number during such a busy week for new arrivals.

Crackdown 3 was a very difficult one to gauge. At face value it tanked hard but the heavy focus on digital and Game Pass figures would make this difficult to see as reflective of how the game did. Likewise though, it's hard to picture it a hit.

https://www.google.com/amp/s/www.mcvuk.com/.amp/business/far-cry-new-dawn-debuts-at-no-1-but-metro-exodus-steals-the-spotlight

However, accounting for digital sales isn't an easy get out for these games because the star this week was Metro: Exodus that managed to open larger than any previous Metro title release.

[Digfox]

Eek.

Jason Schreier on Twitter: Given GOG's troubles and the poor sales of Gwent/Thronebreaker, I have to wonder if CD Projekt Red is feeling pressured to get out Cyberpunk as quickly as possible, no matter how much crunch it takes.

Facing Financial Pressures, GOG Quietly Lays Off At Least A Dozen Staff (Kotaku)

Amid a month full of mass layoffs across the video game industry, the digital store GOG quietly let go of what it says was a dozen staff last week. GOG, which is owned by The Witcher 3 publisher CD Projekt, did not say why the layoffs happened, but one laid-off staffer tells Kotaku that the store has been in financial trouble.

In an official statement to Kotaku this afternoon, a representative for GOG confirmed the layoffs but did not offer much more clarification. “Letting people go is never easy,” they said. “We have been rearranging certain teams since October 2018, effecting in closing around a dozen of positions last week. At the same time, since the process started we have welcomed nearly twice as many new team members, and currently hold 20 open positions.”

One person who was laid off from GOG last week offered a different perspective, saying that laid-off staff were told that this was a move made by a company in dire straits. That person estimated that the layoffs had hit 10% of GOG’s staff.

“We were told it’s a financial decision,” that person told me in an online message. “GOG’s revenue couldn’t keep up with growth, the fact that we’re dangerously close to being in the red has come up in the past few months, and the market’s move towards higher [developer] revenue shares has, or will, affect the bottom line as well. I mean, it’s just an odd situation, like things got really desperate really fast. I know that February was a really bad month, but January on the other hand was excellent. We were in the middle of a general restructuring, moving some teams around, not unprecedented. But layoffs that big have never happened before.”

[Neon Ignition]

If CD Projeckt is able to they'd do well to get Cyberpunk out this year or early next year, that way they can pull a Rockstar and once the game makes it's initial wave of sales catch a second wave with a spruced up next gen version that gets people to double dip

[Cassius_Smoke]

You can sense that Cyberpunk is going to be a cross generation game. I don't know why. Maybe it's because it looks like its too big a developed game to land on a console at the end of its life.

[Digfox]

Schreier's tweet certainly was an eye opener in 2 senses in that firstly I hadn't considered CD Projekt to be under any form of financial pressure. That said they are clearly a huge number of employees.

Also secondly GOG feels like it's part of the PC landscape, so hopefully the 'lack of growth' they mention isn't unsustainable. But scary language when they talk about coming close to being in the red. It feels like that moment in Margin Call.

[Neon Ignition]

The joys of competing storefronts popping up, if they're struggling now then it's hard to imagine it'll survive as competition heats up. CD Project will also have the output issue to contend with. Witcher 3 may have sold 15m+ units by now but it came out four years ago, every year they fail to release a major title is another year that games profits have to be used to keep the lights on and diminish it's positive benefits for the company. If Cyberpunk launches early next year those Witcher 3 sales will have had to sustain them for half a decade, not a great position to be in if your next game under performs. I know they've done DLC and Gwent but if Cyberpunk is a major hit they'd probably be wise to invest in either speeding up their development times or being able to put more games out.

[Deuteros]

Well, GOG.com announced its 'Fair Price Package' program will be coming to an end on the 31st of March (link). This program was the solution they came up with when regional pricing 'had' to be implemented, thus allowing for bigger publishers and newer games to be distributed on their platform.

I sincerely hope this helps their financial situation, they're the only distribution platform of digital PC games I support with my custom.

[Digfox]

Is Red Dead Redemption Online tanking Take-Two's share price? | Opinion [gi.biz]

By any reasonable standards, Red Dead Redemption 2 is a runaway success. 23 million copies of the game have been shipped to retailers, as of Take Two's earnings call at the start of February, making it into one of the best-selling games of the generation after only a few months.

Nevertheless, shares in Take Two have declined by 30% since the game launched at the end of October; part of an overall malaise in video game shares, certainly, but all the more remarkable since the successful launch of RDR2 and its subsequent sales performance barely even moved the needle.

There's very little to suggest that RDR Online has sparked interest among players in the way that GTA Online did

*****

Although I wonder if this quote from someone at ResetEra offers a far more plausible explanation:

I work in the investment industry and I can tell you why the share price isn't doing well.

1) Take Twos release schedule isn't known and so its impossible to forward forecast revenue.

2) The bonus structure at Rockstar is bias towards the Houser Brothers. Rockstar royalties from Take Two (i.e. bonuses) was $538m in 2018 with the majority going to the Houser Brothers. That compared to investor revenue for 2018 which was $400/$500m who take the equity risk. The Housers take more profit than the shareholders (who take the equity risk) which means the ROI (Return on Equity) is lower compared with other stocks in the same industry (Ubi/EA/Activision etc

[dataDave]

What do you do with 500m that you can't do with 100m, other than buy five of everything instead of just one?

[gunrock]

@Digifox: that's interesting because a publicly owned company has a fiduciary obligation to return equity to their shareholders, rather than cream it off for themselves.

[Digfox]

@Digifox: that's interesting because a publicly owned company has a fiduciary obligation to return equity to their shareholders, rather than cream it off for themselves.

I don't think the bonuses raising eyebrows amongst analysts and outsiders is new; https://www.bloomberg.com/news/artic...k-off-red-dead, and that made me realise there certainly are much more plausible reasons for T2's share price being where it is, rather than just the performance of RDR Online.

While analysts and industry insiders said it’s not unusual for game designers to share in the profits, the Housers’ take is extraordinary. By comparison, Michael Morhaime, the former president of Activision Blizzard Inc.’s Blizzard Entertainment division, earned $12.3 million last year, according to a public filing.

Wedbush Securities analyst Michael Pachter said he wondered why the Housers’ pay isn’t disclosed. Take-Two has a narrower profit margin than rivals Activision and Electronic Arts, partly due to the royalty structure, according to Bloomberg Intelligence analyst Matthew Kanterman. But since revenue has doubled and earnings before interest, taxes, depreciation and amortization have nearly quadrupled since 2012, Take-Two shareholders haven’t complained. The stock is up more than 10-fold since then.

[Neon Ignition]

https://blog.us.playstation.com/2019/03/25/playstation-vr-the-next-wave-of-games-coming-in-spring-and-summer-2019/

Sony has confirmed lifetime sales of PSVR have reached 4.2m units.

The lifetime timeline for PSVR sales is:

February 2017 - 954,000 units
December 2017 - 2m units
August 2018 - 3m units
March 2019 - 4.2 units