The five-year-old PlayStation 4 (PS4) is delivering more energy — and profit growth — for Sony Corp’s business when compared with Nintendo Co’s much newer Switch.
Quarterly figures from the two video-gaming rivals showed that Sony is benefiting from its best-ever console cycle, while Nintendo is struggling to expand sales of its play-at-home-or-on-the-go machine.
Sony boosted its operating profit forecast yet again, results on Tuesday showed, while Nintendo missed estimates and kept its outlook intact.
Sony shares yesterday surged the most in a year, while Nintendo’s tumbled.
Game machines tend to follow a predictable cycle of accelerating growth, price cuts and retirement.
However, Sony is breaking that pattern with a strong collection of gaming titles for the holiday shopping season, including homegrown hit Spider-Man, that is setting up the PlayStation 4 for its best year ever.
Without a fresh crop of new gaming titles and only one planned for the holidays, Nintendo kept its forecast for 20 million Switch shipments unchanged for the fiscal year.
“The PlayStation is doing great, Spider-Man sold like crazy in the second quarter,” said Kazunori Ito, an analyst at Morningstar Investment Services in Tokyo. “On the surface, it’s hard to say this was a good quarter for Nintendo.”
Investors have noticed: Sony shares had been up 15 percent this year prior to the results, while Nintendo’s are down.
Yesterday, after the earnings, Sony climbed as much as 7.1 percent — its biggest intraday jump in a year — while Nintendo fell as much as 4.7 percent.
Essentially, Sony is taking a page out of Nintendo’s playbook, churning out games made by its own studio; those first-party titles are also more profitable.
The PS4 exclusive God of War sold 3.1 million copies during its first three days in April, while last month’s Spider-Man topped that with a record 3.3 million copies over an equal period of time.
Nintendo is counting on a single title, the latest iteration of Super Smash Bros for Switch, to keep momentum going in the last three months of the year.
“Sony is using first-party titles very well — coupled with subscription services like PS Plus, that’s boosting sales of PS4s and extending its life cycle,” Ito said. “It will be painful for Nintendo without more first-party games.”
Sony’s fourth quarter also looks strong in third-party games, with analysts predicting record sales of Red Dead Redemption II after it became the best-reviewed game of the year, according to Metacritic.
Call of Duty: Black Ops set a new PlayStation record for first-day digital sales, and other big titles coming this quarter include Battlefield V, Fallout 76 and Just Cause 4.
Sony’s operating profit was ￥239 billion (US$2.1 billion) for the third quarter, topping analysts’ average estimate of ￥205 billion.
More than one-third of that came from the PlayStation division, where profit climbed 65 percent from a year earlier to ￥91 billion. Total revenue was ￥2.2 trillion.
For the full fiscal year, the company boosted its operating profit forecast to ￥870 billion from the prior forecast of ￥670 billion.
While the PlayStation division is doing well, it is also worth noting that the music business accounted for about half of that increase, thanks to the US$2.3 billion acquisition of EMI Music Publishing this year.
Sony’s outlook for total sales rose slightly, to ￥8.7 trillion.
Nintendo’s quarterly operating profit of ￥31 billion and revenue of ￥221 billion both missed market projections.
That is raising concern over whether Nintendo can reach its Switch sales target. The company maintained its full-year forecasts.
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