Microsoft and Sony released earnings last week that suggest there’s undeniable softness in the sector—at least in the short term—after a pandemic-driven boom over the prior two years. The results mirror recent reports finding a slowdown in video game spending and engagement in the first half of 2022, potentially putting the industry on track for a rare year of contraction. https://dailytechfeed.com
The recent semi-swoon has Wall Street ever-so-slightly on edge about the industry’s immediate prospects—even if it remains bullish on the long-term outlook.
Xbox parent company Microsoft said Wednesday that its gaming-related revenue declined 7% year-over-year in the most recent quarter, or 5% in constant currency, as hardware sales slowed and gamers spent less time online. By comparison, Microsoft’s gaming revenue rose 6% year-over-year in the prior quarter, or 8% in constant currency.
The results were even more grim Friday evening for PlayStation parent Sony, with the Japanese giant reporting a 12% year-over-year quarterly drop in game and network service revenue and a 31% fall in the unit’s operating income. Sony CFO Hiroki Totoki said that players spent 15% less time on PlayStation products in the quarter compared to the previous year—“a much lower engagement level than we anticipated in our previous forecast.”