TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Nintendo's Switch struggles to keep up with Sony's older PS4
Change Size
The five-year-old PlayStation 4 is delivering more energy — and profit growth — for Sony Corp.’s business, when compared with Nintendo Co.’s much-newer Switch. (Shutterstock/Peter Kotoff)
T
he five-year-old PlayStation 4 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 jumped the most in a year on Wednesday, while Nintendo fell.
Game machines tend to follow a predictable cycle of accelerating growth, price cuts and retirement. But Sony is breaking that pattern with a strong collection of gaming titles for the holiday shopping season, including homegrown hit Spider-man, that’s 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 is down. On Wednesday, 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.”
Read also: A decade late without key features, Nintendo is finally online
Sony’s December 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 yen ($2.1 billion) for the September quarter, topping analysts’ average estimate for 205 billion yen. More than a third of that came from the PlayStation division, where profit climbed 65 percent from a year earlier to 91 billion yen. Total revenue was 2.2 trillion yen.
For the full fiscal year, the Tokyo-based company boosted its operating profit forecast to 870 billion yen from the prior forecast for 670 billion yen. While the PlayStation division is doing well, it’s also worth noting that the music business accounted for about half of that increase, thanks to the $2.3 billion acquisition of EMI Music Publishing this year. The deal added a catalog of 2.1 million songs from Beyonce, Carole King and other artists. Sony’s outlook for total sales rose slightly, to 8.7 trillion yen.
Nintendo’s quarterly operating profit of 31 billion yen and revenue of 221 billion yen both missed market projections. That’s raising concern over whether Nintendo can reach its Switch sales target. The Kyoto-based company maintained its full-year forecasts.
“It was a quiet quarter without many big releases from Nintendo,” said Hideki Yasuda, senior analyst at Ace Research Institute. “Reaching their Switch target really depends on the holiday quarter, especially the new Super Smash Bros. game.”
The battle between Sony and Nintendo is also a test for the new chief executives of the companies, both of whom took over only months ago. Sony’s Kenichiro Yoshida, the former chief financial officer who was promoted to CEO in April, set a low bar that initially spooked investors. Nintendo’s Shuntaro Furukawa represented more of a generational shift when he took became president in April, vowing to “develop the company to its fullest.”
“It’s very important to continue putting out new software,” Furukawa told reporters at a post-earnings news conference on Tuesday.
