Tag Archives: Nintendo Switch

Drop the Mike, Ashley!

Welcome to the issues on a man that I do not know. This is not the most straight-forward of starts, yet the man who has been valued more than once and that verdict is several thousand stacks of £1,000,000. The man who owns Newcastle United, which means he gets the swanky seat in the stadium. Now, we can understand that this man founded Sports Direct. When you get enthusiastic about sports, you can bet that it will be part of your life. There is no denying it and as it became a good success, I would state ‘good for him’. Yet, the focus on him started in an entirely different way. It started with him getting in on the videogame action by getting a near 26% stake in the franchise ‘Game‘. That brand did not go well here in Australia, yet I always found it to be a decent store and the people working there knew their games and consoles. I have seen them in the UK as well and a similar feeling remained on that experience. Here it did not go well as they were up against EB Games (who grew aggressively at that time) and JB Hifi that was an established chain of quality stores, so they had a murder competition, they did not make it (for the most). Yet all this is now in play when I read “Mike Ashley swoops on video games retailer after profit warning forced by shortage of Nintendo Switch consoles“, this is a weird issue. We get ‘profit warning‘ in regards to a situation of shortage. Basically the story becomes, we are short on revenue/profit because we can’t get any more consoles, they are sold out, and everyone wants one! Which at present is pretty much the truth of the desire of people and their need for the Nintendo Switch, it is actually THAT amazing.

The result was “Game shares rose by more than 15% to 28p on the news, and later traded at 26.5p (up 9.3%), giving it a market value of £47m“, apart from the 28p not sounding like that impressive, it is the end result of +9.3% that is staggering. You see, I have issues with the entire part where ‘profit warnings‘ are labelled in the way they were. You see, the entire mess (as reported) gives no clue on the actual situation (well, the one as I personally see it), I do not care how people quantify one way or the other; it is the addressing of profit warnings.

I offer in evidence the following pieces

Part 1, Sony (at http://www.playstationlifestyle.net/2017/01/03/uk-2016-sales-chart-2016-game-sales-down-13-infinite-warfare-the-2-best-selling-game-of-the-year/) gives us ‘UK Sales Chart: 2016 Game Sales Down 13%, Infinite Warfare the #2 Best-Selling Game of the Year‘. In this we see: “The major titles of 2016 also disappointed when compared to 2015’s, with Call of Duty: Infinite Warfare (the second biggest title of 2016) lagging 31.5% behind Call of Duty: Black Ops 3. In other comparisons, Watch Dogs 2 fell just short of the 500,000 copies Assassin’s Creed Syndicate sold in 2015, Steep performed worse than Rainbow Six Siege, Gears of War 4 couldn’t reach the heights of Halo 5, and Final Fantasy XV was outsold by Just Cause 3.” For those who do not talk games, let me boil it down to the first item is that overall less games were bought. In my personal view, the overall quality of games was not great. Even as Watchdogs 2 was a good step up from the previous game, yet many gamers felt too burned by the first game. I believe that the second game was good, it has online and offline options and people were not forced to go online here. Regarding the other title, I am not a fan of Call of Duty, I know many are. the fact that a game like that became ‘the’ game is not entirely on the fact on how good their Infinite Warfare was, it is more that the other games were way below the line. The fact that the last four larger releases this year alone could be bought for 50% down, including the special editions with figurines is also a changing trend. People are less willing to just shell out the cash for games, reviews are more competitive and even though there are really good reviewers, there are a lot more really bad reviewers and they tend to get plenty of exposure. Yet in the end, the games were for a larger extent not up to snuff. The reviewers ‘deserve’ extra attention as some are more and more about the larger players, whilst some of the true gems have been largely ignored by plenty of people. Nioh is perhaps one of the most visible ones. Like Infinite warfare it is a specific game. I actually like this game, but I loathe the challenge it contains at times (they are really hard games). Some saw that is was some Dark Souls games and plenty of people ran for the hills as this is a game for actual gamers, not for wannabe’s. In my view there are several similarities, yet the only thing that the game Nioh truly has in common with Dark Souls III was its graphical excellence.

So here we see two elements that would push any revenue down.

Part 2, Pushsquare. At http://www.pushsquare.com/news/2017/01/ps4_physical_game_sales_increase_as_uk_industry_suffers_blow, we see more confirmation: “Overall sales down 13.4 per cent“, the mere subtitle and the direct impact that matters, less sales overall, this is not entirely correct, but I will get to that in a moment. The next quote is, as I personally see it wrong, but still essential. With “Bethesda’s Dishonored 2, for example, couldn’t come close to matching the success of Fallout 4, while Square Enix’s Final Fantasy XV somehow failed to outsell Just Cause 3.” My issue is that no matter how you slice it, Dishonored 2 is a little bit of a niche game, more intent for those who love stealth gaming (me being one), it is graphically superb, the game is a little steampunk in a very good way, but for the most, it is highly original and exquisite in quality. It is not fair to compare it to a game that has millions of followers and has been revered since its original release (Xbox 360, PlayStation 3 and PC) on 11/11/11, the date that some will carry with them for all time. An established success that was bought on the console be new players as well as nearly everyone who had the previous version. The game is good for months of gameplay, so a game that sells itself due to 5 years of raving reports. The second is equally unfair. I myself was never a FF fan, but I have always admired the originality and scope of the stories and the near perfection each game brought. Even I am surprised that Just Cause 3 outsold it, perhaps merely because of the over the top explosions and things you can do with the game? I cannot tell what the exact reason is, yet the second part implies that the gamers are diversifying in different directions, changing the gaming requirement. It is almost like there is a new generation taking over the baton of gaming and it has different tastes.

Yet he best is left for last, in part 3 we see Retail Week

The mention (at https://www.retail-week.com/sectors/entertainment/game-issues-profit-warning-as-uk-sales-falter/7022184.article), where we see “The specialist retailer, which posted a slump in its interim profits in March, said anticipated supply in the UK of the latest Nintendo console had failed to meet expectations, negatively impacting overall sales“, is a first issue. In this the mention ‘anticipated supply‘ beckons the question, so did you order enough or not? As the experts, you should have seen the impact it would make. The E3 and other events clearly showed that Nintendo was blowing both others out of the water. In addition we see “alongside ongoing poor sales of Xbox and PlayStation devices“, now we can argue about Xbox for several reasons, so let’s take this out of the equation, the PlayStation part gives the issue. Overall sales of the PS4 and PS4pro are still up by a decent amount, so it now becomes a shifting focus, but I will get to that soon.

For now I will end with the quote “The group continues to actively implement its UK action plan, encompassing improved supplier arrangements, enhancements to the customer experience, further operational progress including cost reduction programmes and disciplined cash management“, yet will not address it yet. Let’s take a look at three more elements.

The first is from the Business Insider which gives us “Sony sold 10 million PlayStation 4 consoles between early May 2016 and December 6, 2016. That puts sales in the neighbourhood of over 1 million sold every month, which keeps it locked in as the fastest-selling PlayStation console of all-time

The second is again from PlayStation Lifestyle with “Taking a deeper look at software last year in the UK, Games Industry points out that nearly 80% of all boxed games sold last year were either on PS4 or Xbox One (up from 66% in 2015)

The last is G24/7 where we see (at https://www.vg247.com/2016/11/14/ps4-console-sales-have-tripled-in-the-uk-following-the-launch-of-the-ps4-pro/) “Sony’s PS4 Pro launched at the end of last week and has had quite the impact on PS4 console sales. According to MCVUK, PS4 sales for the week ending Saturday, November 12, were up 204%. 65% of the total PS4 sales last week were for the PS4 Pro, while the final sales figure for all PS4 consoles was 44% higher than those for the Xbox One.

Now we put the whole together!

We know that sales were massive end of year 2016, especially with a new console and Christmas coming up, all that makes sense. We can also clearly see that overall, the consoles represent the bulk of all game sales. This partially makes sense because that is what we see as flagships in pretty much any gaming store, PC owners have a lot more options to buy in other places and at times a lot cheaper and there is Steam to consider, so that part remains an unknown and as such a much lesser impact to these stores (apart from the selling of steam credit). The fact that the PS4 is surpassing the previous consoles, is debatable (PS2 sold over three times the amount in its life time), yet the overall market trend is that games should be on par and were up by a fair bit last year. So when we go back to the initial start with “Video game retailers have been particularly badly affected by the broader shift away from the high street in recent years, with developers moving to increase their own profit margins selling games as direct downloads“, which we get from the Financial Times (at https://www.ft.com/content/172c3ba1-e880-35e8-9273-957e325cd7f4?mhq5j=e3).

In this there is debate, yet he part no one touches on is how the expectations were set, what they were weighed on and on the given image that sales were down, which had been an upcoming known for close to 2 quarters of a year. The part that the Financial Times gives us is that direct downloads are playing more of a role nowadays. It actually impacts the industry in 2 ways. Apart from buying directly, the additional issue is that consoles have a premium service; most gamers take that because of online gaming and the fact that both systems offer at least 2 free games a month. Microsoft was initially really bad with that (lousy games or games everyone had), they are still not great, yet this month it includes Lego pirates of the Caribbean, which is actually a nice and decent game (and not a large download in console terms). Sony beats Microsoft here hands down with titles like Until Dawn and Life is Strange. In all this both offer decent free games, with a bonus for Sony people as their account will also enable them to get free games for their Vita handheld, all that for around £50 per year, the premium service sells itself to both consoles without any difficulty. All elements that shows the impact of a bad year of games, not consoles, the overall quality of games gives rise to people deciding to just download an average game instead. The interesting part that even as Ubisoft lagged in a few ways, the one game what was awesome in many ways, ‘For Honor’ actually did not do that well, which is a mixed signal that multiplayer games are wanted, yet without a strong one player side, it tends to not make the cut in a top 10, which would be unfairly devastating on the makers I think. All elements that the analysts in this case should have known and realised and as such, when we see ‘would not meet expectations‘, my question becomes: “the expectations of whom and on what foundations?” Now we get to the part I skipped.

With “The group continues to actively implement its UK action plan, encompassing improved supplier arrangements, enhancements to the customer experience, further operational progress including cost reduction programmes and disciplined cash management” I wonder what we are being served.

  • Did they call short because they did not keep an eye on running costs, what arrangements would be needed with suppliers? Were they not up to scrap?
  • Even more customer experience? Were the current settings and anticipations of the competitor not up to scrap?
  • Disciplined cash management? Is cash not managed correctly?

The feedback we got from Game, directly below the image of a sort of smiley ‘Game CEO Martyn Gibbs on the merits of in-store gaming arenas‘ is one that leaves us with the thoughts that Game is going down because they are not on the ball of the game, and the game is passing them by? So in all this Mike Ashley merely flying in to pick up a bargain? In this he better realise fast that Game has an issue and more than one potential issue in play, he also needs to realise that the Games market is a shifty one and in the years before the publishers see clear to push a bigger load to online sales in the next 5 years (depending on where you live), we better consider that top games is a market in motion and it is likely to see a shift that Microsoft and Adobe made some time ago on PC’s, it is not a change that gamers are currently happy with, but it is one that the next generations of consoles will likely face, the game shop is seen as the middle man and they are trying to cut it out to maximise it for their own need to please whatever stakeholders they report on. It is early days now, but in 5 years it won’t be.

In the aftermath we actually need to look where I normally do not go. It is the Telegraph, in this case the business section, where (at http://www.telegraph.co.uk/business/2017/06/30/game-warns-profits-will-substantially-expectations/) we see the generic parts like “following its third profit warning“, we know that Christmas was weak (to some extent), yet in equality when you consider the previous information, the issue is not entirely just ‘weak Christmas‘, it is merely a much stronger competition to some extent and the fact that the cost of living in metropolitan UK seems to be ignored by analysts and those who speculate on how it would (read: should) be. The issue that is stronger is “The shares nosedived to just 21p on the back of the profit warning, valuing the business at £35.6m only two years after it was floated at 200p a share by US hedge fund Elliott Advisors” as well as “Elliott cashed in £101m at the time of Game’s stock market listing by selling a stake and made a further £59m by dumping a further 10pc of its stake just three months afterwards, despite agreeing to a lock-up period of six months” which now also implies that Game got played and not in such a nice way. Yet the bulk of all the sources do not give any clarity of the part that Elliott Advisors was playing, even the Financial Times steered clear of that part. In this, I am now also questioning the setting as given to Game and its senior management. Even as CNBC is giving the notion that Paul Singer, CEO of Elliott Management is just the best invention since Frozen Yoghurt (if we are to believe places like Forbes, CNBC and the Wall Street Journal), I wonder what price we can see the UK pay for getting played to the extent it is getting by the US Hedge market, in that regard should we allow for any US company coming in under false pretences and flood the market so that they can drain the profit quickly and walk away? It seems to me that they tried that in the Netherlands with Akzo Nobel, which had the great benefit of Elliott Management failing (for now), but it shows the extent that as a shareholder Elliott Management will go to get their profit, it seems to me that Game was not nearly as lucky and the fact that the different levels of publications left that side seemingly in the dark corners of ‘them not printing that part‘ is also upsetting (to me even more upsetting is the part that the Telegraph actually did get that info out). The fact that Game has been seemingly under exploitative attack does not diminish the issues as given by some of the publishers by the quotes, Game got caught out, which under the current size and the possible level of possible losses is a dangerous place to be in.

In all this, I am aware of things, but not as much as a person like Mike Ashley would be, so is this his triumph with Game, should we see this as a mere quick victory to see if he can get more out of this than Paul Singer’s place did, or is it an actual rescue and grow attempt? I am not implying one or the other, but as you see the presented evidence, there are a few issues with Game and I believe as such they were set up as the weak runt in the market, whether this will happen twice in a row is something I have no way of telling and I am not implying anything wrong, immoral or illegal. The entire mess is not completely shown by some players and that is what seems to be the actual issue. I remain in an attempt to be protective of the places that feed my need for gaming and there is a positive in having a diverse and competitive market. It guarantees to some degree I get the best games at the sharpest price, which is what every gamer wants, there is no exceptions to that rule.

 

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After the E3

I tend to not take Kotaku as a source (not for any negative reason), yet they have been hammering the nail on the head, even as they did not say it.  Their part ‘the losers’ starts with an image of the Xbox with the text ‘I witnessed the most powerful console ever‘, yes, hiding behind a technical detail whilst there is no proper space to store it is always a bad idea and I was happy to call the Microsoft presence literally a ‘waste of space‘ in my previous E3 article, so far I stand by it. Consider that the most powerful console has only 50% of storage space compared to a MacBook pro, which cannot do that level of gaming. Consider (taken Seagate 2.5″ drives as an example). The shift from 1TB to 2TB is $30, the shift from 2TB to 3TB is an additional $60. I do acknowledge that the 3TB drive is 8mm thicker, yet the dimensions of the 1TB and 2TB are identical, so twice the size for a mere $30 more, this is what makes the Xbox a joke. Sony might do the same, yet with Sony, you get the run on how to change it and there are good guides to show how to replace the hard drive. Plenty of gamers shelled out the additional $120 to get the space, with Microsoft it is not an option.

Now for the hardware, the Switch showed what fun was like and it has the games and more coming to keep us all happy. Both Sony and Microsoft failed us a little there. Now Sony was more about games, which is good and they just released the PS4pro, so this is not an issue, whilst the way they did it shows long term commitment, which is what gamers like. Now we see a changing market with any PS4 next to a Nintendo switch and it is a good day for gaming. Another visible event is that some of the better Xbox One exclusives are now making their way to Sony, so whilst the Sony exclusives grow, the Xbox exclusives list is starting to shrink. In addition, although not confirmed, the consoles Sony vs Microsoft was at 2:1 in 2015, some sources now give this a 6:1 setting. The PS4 has gone through the roof, with sales now surpassing 60 million consoles, meaning that they have surpassed the PS3 and could surpass the PS2 sales by 2018. I think it is a stretch, but part of me hopes so. Part of me can go towards Steve Ballmer with an ‘I told you so‘ state of mind. The weird think is that neither Mattrick nor Ballmer are stupid, they are decently intelligent and the conclusions I got to did not take a rocket scientist, which beckons who is drawing their marching orders and why are they on some track to force people to push data towards the Azure cloud? Why endanger your console market in this way?

By the way, pretty much NONE of the E3 attending press took a decent look at that, even the Guardian avoided the storage issue, which is a question for another day.

The only questionable part in it was the Bethesda Creation club. I think that it is not just about making money. The developer gets a share (as I understood it), so those with really good mods could stand to make $1-2 per quality mod. Now, I am not much of a mod fan, but there are a few really good ones and I would not begrudge the maker those $2 if need be. It would in addition up the ante for mod creators to become even better, which is not a bad thing. Finally, in some respects, a game like Fallout 3 (PC) went from awesome to beyond legendary, just because of some mods. Now, it might not be for all and that is fair enough, yet if your perception of a 90% game becomes a 98% game through the additional $2-$4 because of 1-2 mods, is that such a bad thing? It is up to the gamer to decide that, but I believe that there is some validity in the option. The validity is for them to come with it and for us to embrace those professional mods, or to ignore them. It should not impact the foundation (the original game) you bought.

In the end Nintendo did what it always does, it did something different, which is why I did not care about the WiiU and the failure I personally see it to be, from those ashes came the Switch and it rocks, going to the edge can get you big failures and massive hits, and the Switch could become their greatest hit yet, good for Nintendo! Yet, in fairness, there are media that really do not agree with me and that is fine. International Business Times was all but creating a shrine in the honour of the Xbox One X. The BBC is on my team when it comes to the Nintendo. They raised the issue that mattered for Nintendo; can the 100M units of Wii be equalled? I believe so! Now the Wii was backward compatible with the GameCube, which was my reason for getting it on day one, beyond that the Wii was a nice machine, yet it lacked a decent array of games. They let me down a little there. The Switch is already surpassing the game titles in the first year, compared to Wii 3 years, so they have that in the bag. Nintendo has in equal measure a few new IP options which can really make the Switch a phenomenal success. So from those points of view, the option of surpassing the 100M consoles seems like an easy mark. Even if the economy does not take a turn for the better, choosing between a Switch at $450 without 4K beats the Xbox One X at $500 with 4K gaming by close to 300%. So by the end of 2018 the console offset ‘Sony:Nintendo:Microsoft’ could end up being ‘13:9:2’. This would show Microsoft on how they truly bet on the wrong marketing horses. So I admit, it is a speculative prediction, yet the sales numbers are not that far off and my expected Nintendo growth is not unrealistic. Now, in the off season, the Switch is adding roughly a million users per month. I expect that the European summer, the upcoming games and upcoming festivity days could set it to a total of 10 million by the end of the year. If the economy kicks off a little stronger, it could go to 12 million, which means that in one year the Switch will equal the total Xbox One systems in the field. As more games come to switch, the added active users will fuel growth even stronger. Good games and word of mouth tends to do that, don’t take my word for it, and just look at the PS2 and PS4.

Yet, what more can we expect with the E3 behind us? Both the critics and people gave Super Mario Odyssey best of show, which fuels growth even more and it won by a substantial margin. Assassins Creed Origin did not win on any console or PC, they all had a different winner which was nice to see. Super Mario Odyssey also became best platformer, which is not really that big a surprise and again There was no win for Assassins Creed, which when we consider the stages of completion of the different games not too bad a negative. Again Nintendo got the best title for Strategy game. In this case ‘Mario + Rabbids Kingdom Battle‘, so as the laurels are handed to Nintendo in several ways. IGN wasn’t the only one with a voice, Gamesradar saw another part my way, they to just announced Ubisoft as the winner of 2017. It was a fair call and two brand new IP’s definitely boosts the score for Ubisoft. Gamesradar also shows one element the others did not, the lack of Indie developers. In regards to the PlayStation and the fact that this month Elite Dangerous will make it to PS4 is actually a big thing, it is one of the three top space games and now on PS4. The second is the remastered RPG original System Shock. Nightdrive Studios has enhanced a true original and so far has been able to capture the original suspense that System Shock brought us. The third one is unconfirmed from sources not that reliable, yet if true, Unknown Worlds with their open world RPG Subnautica will make waves. I reckon that the last two might bring additional hype to the Switch if they ever adapt those two for Switch. Games radar concurs; Nintendo is a winner, Xbox a loser. It is a harsh world for Microsoft and they might want to seriously consider in 2017 what their intent truly is, but as stated now the 4K and ‘strongest console ever‘ marketing gets them some media, yet in the end they poisoned their own customer base.

I think in the end it was a great E3, partially because Ubisoft and Nintendo amazed me with actual new stuff, which is what gets any gamer to the station ;-). I feel less negative about Bethesda than some of the ‘professional’ critics. Not sure why so negative as Bethesda delivered plenty, just some of their focus is VR, which might make them the legendary winner next year. In addition their new power puncher Prey was released a month before the E3, so there is that to consider. Finally there are more DLC’s coming for those games many love, so overall, we should not be too grumpy towards Bethesda.

So as the dust settles, we now get to wait another year for the next presentation of marketed hype by all the players. I for one will be very interested to see my own projection of Nintendo upcoming future. They have 5 optional new IP’s at their back and call and if they get 3 up and running, the run for Switch will grow more than even I predict which would be nice too. In the end, I am happy that the Nintendo message ‘it is about fun‘ that got through stronger than the need for 4K, which gives hope for gamers all over the world. For me personally, the moment it is a financial option, the Switch come in, perhaps a trade for my Xbox? I do hope that Nintendo will give us Pikmin, and Metroid Prime one and two, because those are the games I miss, and I will happily buy them again for the Switch, good gaming is just that, more good!

 

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