EA promises a “lighter release slate” in 2024
Plus: After the layoffs, what to make of Microsoft's gaming growth
Electronic Arts will release fewer games in 2024 than it did last year, with no new sequels to its big Battlefield or Sims series planned until April 1, 2025 or later, company leaders said yesterday during a call with investors.
“We do have a lighter release slate,” chief financial officer Stuart Canfield said about the 12-month period starting this April.
He noted EA would still release a “consistent” batch of sports games, implying the expected new 2024 editions of the annual Madden and EA Sports FC (formerly FIFA) franchises, plus the return of EA Sports College Football.
No word on the state of announced games like Skate. EA’s Black Panther and Iron Man games are much further away.
In 2023, EA’s release line-up was loaded, and included a January remake of Dead Space and April’s Star Wars Jedi: Survivor, which both reviewed very well.
Big game companies like EA are releasing fewer big games these days, so EA’s slowdown for 2024 tracks. Its most recent major Battlefield games came out in 2013, 2016, 2018 and 2021, but most had shaky launches that frustrated players and triggered litanies of apologies from the company. No new Battlefield until after 2024 is likely a good thing.
EA also simply doesn’t need to make as many news games, because it generates the vast majority of its money from all the transactions happening in already-released games. The company said that, for all of calendar year 2023, live services—people paying for Ultimate Team cards in EA Sports FC or new outfits in Apex Legends, etc—generated $1.7 billion in net bookings (read: transactions), accounting for 73% of the company’s business. What’s not captured there? People just buying a new game for $70. The purchase of brand-new games is a decreasingly important revenue generator for EA, and for other game companies that offer extensive post-release content, too.
Note: EA execs fielded an uncharacteristically creative set of questions from stock analysts during the earnings call:
Sports metaverse: Would EA like to unify its “siloed” hockey, football and soccer gaming fans into a shared sports “metaverse” where they can share highlights, do e-commerce and hang out? CEO Andrew Wilson, noting that half of EA’s 700-million-person community interacts with its sports games: “A super insightful question, nothing to announce today, but you should imagine that we see the very same thing.”
Gambling: At the end of a question about EA working more closely with sports leagues, and as those leagues become more tolerant of sports betting, “Is there a real money gaming opportunity?” The answer? Lots of talk from Wilson about working more closely with leagues, but he did not touch the betting part of it.
Switch 2: Could they talk about the opportunity for EA around a new Switch? Wilson: “I can absolutely not comment on anything that has not been announced or acknowledge it in any way.”
Item 2: Microsoft’s gaming business grows a lot (but also a little)
Less than a week after announcing the layoff of 1,900 workers from its gaming division, Microsoft confirmed yesterday that its gaming business is indeed still growing.
But there were hints in Microsoft’s latest quarterly financial numbers about what may have motivated the cuts which heavily targeted the newly acquired Activision Blizzard.
The company said its overall gaming revenues were $7.1 billion for the quarter and that its Xbox content and service revenue was up 61%—with 55 of that coming from the “net impact of the Activision acquisition.”
That’s big growth with Activision Blizzard factored in, but much smaller if you take them out.
A Microsoft gaming business that grows in the mid single digits without Activision Blizzard would make it one of the slower-growing parts of the company.
By contrast, Microsoft’s “intelligent cloud” business had a revenue increase of 22% last quarter. Office commercial products revenue was up 15%, and Windows and LinkedIn revenue were up 9%.
Something Phil Spencer told me in 2022 has been echoing in my mind lately. Members of his gaming team relied on him to ensure “that the business is being operated in a way that the company continues to support,” he told me. One way to read that: it matters little how well Microsoft is doing overall, the gaming team needs to do well—and I assume, by extension, might feel pressure when other divisions outperform it.
Last week, I shared with Game File readers some concerns by industry analysts that Activision Blizzard’s business was softening, perhaps due to relatively weak response to November's Call of Duty: Modern Warfare III.
It’s hard to tell how Activision Blizzard did at the end of 2023, with its numbers now folded into Microsoft’s. We’ve got Microsoft saying that the revenue impact from Activision Blizzard, from the closing date of October 13 through December 31, was $2.1 billion. But we don’t have a comparison to Activision Blizzard’s previously preferred method of reporting quarterly net bookings, don’t have a monthly active user count, don’t have breakdowns comparing performance of Activision, Blizzard and King. All of that is gone with the end of Activision Blizzard reporting its own numbers.
What we do have is Microsoft showing in the fine print that adding Activision Blizzard significantly and disproportionately increased its expenses. The company said its “more personal computing” division had nearly $300 million in research and development costs (which includes the compensation paid to the people doing the work). Microsoft calculated that as a 4% increase and said it was up nine points because of adding Activision Blizzard. Same thing with the division’s sales and marketing expenses: up 10%, with nine of it from adding Activision Blizzard.
Overall, Microsoft made $21.6 billion in operating income for the final three months of 2023. It’s not hurting, and it clearly made enough to keep paying everyone who was laid off. But if it’s gaming division has to justify itself on its own—and if growth upon growth upon growth is the thing that matters, for better or worse—the hints are there for why, even after buying a highly profitable gaming giant, Microsoft’s execs decided to swing the axe.
Item 3: There are apparently never too many Resident Evil games
Capcom sold a million more copies of its Resident Evil 4 remake and about half a million more copies of Street Fighter 6 and Monster Hunter Rise: Sunbreak in the last three months of 2023, the company said today as it reported yet another quarter of growth.
The company’s big franchises just keep chugging along.
While Monster Hunter tends to report the most eye-popping numbers—Sunbreak, an expansion, has sold seven million copies in 18 months—Resident Evil games smother the company’s best-seller charts.
In those same final three months of 2023, Capcom’s Resident Evil 2 and Resident Evil 3 remakes, released in 2019 and 2020, each sold about 400,000 copies.
There was no specific quarterly number for 2021’s Resident Evil Village in the newest data, but the game has sold well over nine million copies, better than any other RE game mentioned in this item other than RE2 (which is at more than 13.5 million).
Time for a Code Veronica remake? Or are we getting RE5 again next?
Item 4: In brief…
😲 Tencent chief Pony Ma had a gloomy take on the tech giant’s gaming business, according to a Reuters report abou the company’s annual meeting in a stadium in Shenzhen, China on Monday: “We have found ourselves at a loss, as our competitors continue to produce new products, leaving us feeling having achieved nothing.” Tencent is one of the biggest gaming companies on the planet, owns Riot Games, and has a large stake in Epic.
🤔 Specs Ops: The Line, a 2012 video game acclaimed for its then-novel criticism of war, was removed from digital storefronts yesterday without warning by publisher 2K Games. A rep told Game File that “several partnership licenses related to the game are expiring.”
🎮 Imane “Pokimae” Anys, a streamer so closely identified with Twitch that she has been featured in promotional imagery for the Amazon-owned service’s app, is leaving the platform, she announced yesterday. No word about next steps.
👀 Destiny 2 game director Joe Blackburn, is leaving Bungie, as questions linger about the future of the live-service game and the Sony-owned studio’s approach, following layoffs last year. Blackburn said his work on the game’s long-awaited expansion, The Final Shape, wraps up next month.
🔥 Palworld isn’t just big on PC. Microsoft and Palworld studio Pocket Pair said today that the game has had more than the seven million players on Xbox (it’s available through Game Pass). The companies declared it: “the biggest 3rd party launch in Game Pass history.”
Microsoft said it is “providing support to enable dedicated servers, offering engineering resources to help with GPU and memory optimization.”
Item 5: Nope.
One of my kids is sick and he wants to play Lego Star Wars, so that’s all, folks.
PS: He just noticed the corner of a Palworld image on my screen and said “This looks like a Pokémon game.”
Seriously, it was just this..
https://substack.com/@thw0223/note/c-55551217?r=3tyi29&utm_medium=ios&utm_source=notes-share-action