Nintendo Reports Q3 FY2023 Results, Switch 2 Sales Reach 17.37M Units
"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.NEW RELEASES:This week's most notable new release is Square Enix's"Dragon Quest VII Reimagined," a remake of 2000 role-playing game "Dragon Quest VII: Fragments of the Forgotten Past." The title releases for PC, Nintendo Switch, Switch 2, PlayStation 5, and Xbox Series X/Son February 5.NINTENDO RESULTS:Nintendo released results for the first nine months of the fiscal year, with the company reporting 9M earnings per share of Y308.23 on revenue of Y1.91T, compared to Y203.73 and Y956.2B, respectively, over the same period last year. The game maker said the Switch 2 console got off to a good start following its launch on June 5 and unit sales continued to grow through the holiday season."Looking at Nintendo Switch 2 software, Mario Kart World, which was released on the same day as the hardware launch, recorded sales of 14.03M units, including bundle sales," the company said. "Donkey Kong Bananza, released in July, sold 4.25M units, and Kirby Air Riders, released in November, sold 1.76M units. Pokemon Legends: Z-A - Nintendo Switch 2 Edition, released in October, also sold 3.89M units of the packaged version. Unit sales of the downloadable versions of this title and other Nintendo Switch 2 Edition titles are counted in the sales of Nintendo Switch software. Looking at Nintendo Switch software, Pokemon Legends: Z-A recorded sales of 8.41M units, including sales of the downloadable version of Pokemon Legends: Z-A - Nintendo Switch 2 Edition. Super Mario Galaxy 2, released in October, sold 2.42M units, and Super Mario Galaxy, also released in October, sold 2.28M units. Given that consumers can play both Nintendo Switch 2 exclusive software and Nintendo Switch software with Nintendo Switch 2, titles such as Mario Kart 8 Deluxe and Super Mario Party Jamboree, which were released for Nintendo Switch in previous fiscal years, have also shown stable sales. As a result, Nintendo Switch 2 hardware sales reached 17.37M units, and Nintendo Switch 2 software sales reached 37.93M units."Looking ahead, Nintendo reaffirmed its fiscal 2026 net sales guidance of Y2.25T and continues to see FY26 Switch 2 hardware sales view of 19M units. The company also reiterated its Switch 2 software sales gugidance of 48M units for FY26.CAPCOM RESULTS:Japanese game maker Capcomalso reported nine-month results last week, with the "Street Fighter" maker's 9M revenue rising 29.8% and operating profit rising 75.1% year-over-year. "In the Digital Contents business, the Company released Capcom Fighting Collection 2 for Nintendo Switch, PlayStation 4, Xbox One and PC and Onimusha 2 for PlayStation 4, Nintendo Switch, Xbox One and PC in May, revitalizing support from series fans," the company said. "Additionally, the Company also released Street Fighter 6 and Kunitsu-Gami: Path of the Goddess for the Nintendo Switch 2 in June. Regarding catalog titles, cumulative global sales of Street Fighter 6 surpassed 6 million units following its rollout to new hardware as well as ongoing efforts to bolster coordination between the Company's games and its esports activities in pursuit of wider brand recognition and an expanded user base. Moreover, user excitement rose for the Resident Evil series following the announcement that the latest title in series, Resident Evil Requiem, is scheduled for release in February 2026. This helped to drive sales growth for titles in the same series, led by Resident Evil 4 and Resident Evil Village. Additionally, sales of Devil May Cry 5 were strong due to carrying out pricing strategies coordinated with the television adaptation of the series and efforts to enhance brand value through building wider awareness of the Company's IPs. Furthermore, unit sales of Monster Hunter Rise and Monster Hunter Rise: Sunbreak continued to increase alongside cumulative unit sales of Monster Hunter Wilds, the latest title in the Monster Hunter series (released February 2025), which surpassed 11 million units. As a result, unit sales of catalog titles reached 33.39 million units, exceeding the 28.61 million units recorded in the same period of the previous fiscal year."GOOGLE AI ULTRA:Last week, Alphabet'sGoogle said that Google AI Ultra subscribers in the U.S. can now try out Project Genie, an experimental research prototype that lets users create and explore worlds. "In August, we previewed Genie 3, a general-purpose world model capable of generating diverse, interactive environments. Even in this early form, trusted testers were able to create an impressive range of fascinating worlds and experiences, and uncovered entirely new ways to use it. The next step is to broaden access through a dedicated, interactive prototype focused on immersive world creation. Starting today, we're rolling out access to Project Genie for Google AI Ultra subscribers in the U.S (18+). This experimental research prototype lets users create, explore and remix their own interactive worlds... Project Genie is a prototype web app powered by Genie 3, Nano Banana Pro and Gemini, which allows users to experiment with the immersive experiences of our world model firsthand," the company said.Following the announcement, multiple companies in the game development space, including Unity, Take-Two, AppLovin, and Roblox, saw share pressure. Commenting on the matter, Wells Fargo noted that Unity has a relationship with Google's DeepMind and better AI tools will lead to faster game development. Based on prior releases, it appears the Unity Engine was used as a training platform for the Genie model, the firm adds. With regard to Roblox and Take-Two, Wells continues to believe AI will lead to a higher velocity of game development, and sees it as a positive for the category.Meanwhile, William Blair reiterated a Buy rating on Unity, noting the drop in shares following the Project Genie blog post. Fears seem centered on the perceived competitive threat to Unity's Create business, which is currently being used by roughly 70% of all mobile games, the analyst tells investors in a research note. The firm believes the negative stock reaction is overdone, with fears overblown on something that is likely to further increase the reliance of Unity's platform for runtime operations over time.Freedom Capital also said the Unity selloff was overdone, while Evercore ISI said AppLovin's downward move was "incorrect directionally." Additionally, Jefferies analyst Brent Thill said the firm remains positive on Unity and AppLovin, saying a proliferation in AI content puts distribution at even more of a premium, requiring ads to stand out.MORE VIDEO GAME NEWS:Ubisoftunions have called for a "massive international strike,"Blizzard quality assurance workers havewith Microsoft, Microsoft reported a 9% decrease in total gaming revenue, a 5% dip in content and services revenue, and a 32% year-over-year drop in gaming hardware revenue
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TSMC Expands Manufacturing Footprint Amid Risks
- Japan Expansion Strategy: TSMC's plan to manufacture advanced chips in Japan aims to mitigate uncertainties from U.S. tariff policies and potential Chinese blockades, thereby enhancing supply chain resilience, with analysts noting this move will help protect the company from fluctuations in U.S. import tariffs.
- U.S. Buildout Acceleration: While TSMC is ramping up its expansion in Arizona, analysts expect that less than 15% of its most advanced chip production will relocate to the U.S., contradicting the U.S. Commerce Secretary's goal of shifting 40% of Taiwan's supply chain to the U.S. by 2029, indicating limited U.S. market integration.
- Tariff Impact Analysis: Following TSMC's commitment to invest $165 billion in Arizona, President Trump reduced tariffs on Taiwanese imports from 32% to 15%, highlighting TSMC's significance in the global supply chain and its sensitivity to U.S. policy changes.
- Stock Price Dynamics: TSMC shares rose 1.40% to $335.36 during premarket trading on Friday, approaching its 52-week high of $351.33, reflecting positive market sentiment towards its expansion plans.
Super Bowl LX Ads Cost Up to $10 Million for 30 Seconds
- High Advertising Costs: Super Bowl LX commands a staggering $8 million to $10 million for a 30-second ad spot, enticing numerous companies to showcase their products and brands during the NFL championship on February 8, which is expected to attract over 100 million viewers.
- Movie Trailer Lineup: Comcast and Disney are set to feature multiple upcoming movie trailers during Super Bowl LX, including family-friendly films and less suitable options like 'Scream 7' and 'Disclosure Day', indicating a significant advertising investment from both companies.
- Disney's Advertising Strategy: Disney will unveil the trailer for its first Star Wars theatrical film since 2018, alongside ads for 'Hopper' and 'Toy Story 5', continuing its tradition of frequently showcasing movie trailers during the Super Bowl.
- Lionsgate's Comeback: Lionsgate will debut the trailer for the Michael Jackson biopic 'Michael', marking the company's first Super Bowl ad since 2016, demonstrating confidence in this highly anticipated music biopic.
Sony Reports Q3 Profit Beat Driven by Imaging Solutions
- Significant Profit Growth: Sony's Q3 operating profit reached ¥515 billion, a 22% year-over-year increase that surpassed market expectations of ¥460 billion, primarily driven by strong performance in the Imaging & Sensing Solutions segment, reflecting positive impacts from the recovery in the global smartphone market.
- Upgraded Full-Year Outlook: The company raised its full-year operating profit forecast by 8% to ¥1.54 trillion and revenue outlook by 3% to ¥12.3 trillion, indicating optimism about future performance, particularly in the Game & Network Services, Music, and I&SS sectors.
- Increased Stock Buyback: Sony has raised its stock buyback plan to ¥150 billion, aiming to enhance shareholder returns and boost market confidence, despite its shares declining nearly 3% in U.S. market trading.
- Mixed Segment Performance: While the Game & Network Services segment saw a 19% increase in operating profit to ¥141 billion, the Entertainment, Technology & Services unit experienced a significant profit decline, highlighting shifts in market demand and increasing competitive pressures.
Market Turmoil and Corporate Earnings Analysis
- Tech Sector Weakness: S&P futures tumbled due to weakness in Big Tech, with Bitcoin falling below $70,000 for the first time, indicating intensified sell-off in the crypto market that could undermine investor confidence and exacerbate market volatility.
- Job Market Instability: Challenger, Gray & Christmas reported that planned layoffs at American companies hit the highest January total since the global financial crisis, with hiring intentions at their lowest, reflecting the fragility of economic recovery and potential decline in consumer spending.
- Alphabet Price Target Hikes: Following a strong quarterly report, Wall Street analysts raised Alphabet's price targets, yet shares fell over 5% in early trading due to market rotation away from tech, highlighting concerns about future growth amidst competitive pressures.
- Boston Scientific Stock Plunge: Boston Scientific shares sank 17.5% on Wednesday, marking its largest single-day decline in 25 years after disappointing quarterly earnings, although Citi maintained a buy rating, indicating that increased competition could impact its market share.
Sony Reports Earnings, Stock Declines
- Revenue and Earnings Beat: Sony's consolidated sales rose 0.5% year-on-year to $24.11 billion, exceeding analyst expectations of $23.88 billion, demonstrating the company's resilience in a challenging market.
- Gaming Segment Decline: The Game & Network Services division generated revenue of 1.61 trillion yen, down 4% year-on-year, primarily due to decreased hardware sales, although operating income increased by 19% to 140.8 billion yen, indicating strong performance from network services and first-party game titles.
- Strong Music and Imaging Performance: The Music segment saw a 13% revenue increase to 542.4 billion yen, with operating income rising 9% to 106.4 billion yen, while the Imaging & Sensing Solutions unit reported a 21% revenue growth to 604.3 billion yen, driven by strong demand in the high-end smartphone market.
- Optimistic Outlook: Sony raised its fiscal 2025 revenue forecast to 12.3 trillion yen from 12.0 trillion yen, with operating income expectations lifted to 1.54 trillion yen, despite anticipating a 50 billion yen reduction in operating income due to U.S. tariffs, reflecting the company's confidence in future growth.
Sony Reports Q3 Earnings Beat with ¥62.82 EPS
- Earnings Highlights: Sony's Q3 GAAP EPS stands at ¥62.82 with revenue of ¥3,713.68 billion, reflecting a 0.5% year-over-year growth, surpassing market expectations by ¥44.12 billion, indicating the company's resilience in stable growth.
- Joint Venture Outlook: The joint venture with TCL shows promising prospects, although analysts remain cautious about its long-term performance, which may affect investor confidence in future collaborations.
- Music Asset Acquisition: Singapore's GIC partners with Sony Music to acquire music catalog assets, enhancing Sony's market position in the music sector and potentially providing new revenue growth opportunities.
- Market Reaction: Despite solid Q2 results, analysts generally believe that now is not the best time to invest in Sony, reflecting market uncertainties regarding future growth.
TSMC Expands Manufacturing Footprint Amid Risks
- Japan Expansion Strategy: TSMC's plan to manufacture advanced chips in Japan aims to mitigate uncertainties from U.S. tariff policies and potential Chinese blockades, thereby enhancing supply chain resilience, with analysts noting this move will help protect the company from fluctuations in U.S. import tariffs.
- U.S. Buildout Acceleration: While TSMC is ramping up its expansion in Arizona, analysts expect that less than 15% of its most advanced chip production will relocate to the U.S., contradicting the U.S. Commerce Secretary's goal of shifting 40% of Taiwan's supply chain to the U.S. by 2029, indicating limited U.S. market integration.
- Tariff Impact Analysis: Following TSMC's commitment to invest $165 billion in Arizona, President Trump reduced tariffs on Taiwanese imports from 32% to 15%, highlighting TSMC's significance in the global supply chain and its sensitivity to U.S. policy changes.
- Stock Price Dynamics: TSMC shares rose 1.40% to $335.36 during premarket trading on Friday, approaching its 52-week high of $351.33, reflecting positive market sentiment towards its expansion plans.
Super Bowl LX Ads Cost Up to $10 Million for 30 Seconds
- High Advertising Costs: Super Bowl LX commands a staggering $8 million to $10 million for a 30-second ad spot, enticing numerous companies to showcase their products and brands during the NFL championship on February 8, which is expected to attract over 100 million viewers.
- Movie Trailer Lineup: Comcast and Disney are set to feature multiple upcoming movie trailers during Super Bowl LX, including family-friendly films and less suitable options like 'Scream 7' and 'Disclosure Day', indicating a significant advertising investment from both companies.
- Disney's Advertising Strategy: Disney will unveil the trailer for its first Star Wars theatrical film since 2018, alongside ads for 'Hopper' and 'Toy Story 5', continuing its tradition of frequently showcasing movie trailers during the Super Bowl.
- Lionsgate's Comeback: Lionsgate will debut the trailer for the Michael Jackson biopic 'Michael', marking the company's first Super Bowl ad since 2016, demonstrating confidence in this highly anticipated music biopic.
Sony Reports Q3 Profit Beat Driven by Imaging Solutions
- Significant Profit Growth: Sony's Q3 operating profit reached ¥515 billion, a 22% year-over-year increase that surpassed market expectations of ¥460 billion, primarily driven by strong performance in the Imaging & Sensing Solutions segment, reflecting positive impacts from the recovery in the global smartphone market.
- Upgraded Full-Year Outlook: The company raised its full-year operating profit forecast by 8% to ¥1.54 trillion and revenue outlook by 3% to ¥12.3 trillion, indicating optimism about future performance, particularly in the Game & Network Services, Music, and I&SS sectors.
- Increased Stock Buyback: Sony has raised its stock buyback plan to ¥150 billion, aiming to enhance shareholder returns and boost market confidence, despite its shares declining nearly 3% in U.S. market trading.
- Mixed Segment Performance: While the Game & Network Services segment saw a 19% increase in operating profit to ¥141 billion, the Entertainment, Technology & Services unit experienced a significant profit decline, highlighting shifts in market demand and increasing competitive pressures.
Market Turmoil and Corporate Earnings Analysis
- Tech Sector Weakness: S&P futures tumbled due to weakness in Big Tech, with Bitcoin falling below $70,000 for the first time, indicating intensified sell-off in the crypto market that could undermine investor confidence and exacerbate market volatility.
- Job Market Instability: Challenger, Gray & Christmas reported that planned layoffs at American companies hit the highest January total since the global financial crisis, with hiring intentions at their lowest, reflecting the fragility of economic recovery and potential decline in consumer spending.
- Alphabet Price Target Hikes: Following a strong quarterly report, Wall Street analysts raised Alphabet's price targets, yet shares fell over 5% in early trading due to market rotation away from tech, highlighting concerns about future growth amidst competitive pressures.
- Boston Scientific Stock Plunge: Boston Scientific shares sank 17.5% on Wednesday, marking its largest single-day decline in 25 years after disappointing quarterly earnings, although Citi maintained a buy rating, indicating that increased competition could impact its market share.
Sony Reports Earnings, Stock Declines
- Revenue and Earnings Beat: Sony's consolidated sales rose 0.5% year-on-year to $24.11 billion, exceeding analyst expectations of $23.88 billion, demonstrating the company's resilience in a challenging market.
- Gaming Segment Decline: The Game & Network Services division generated revenue of 1.61 trillion yen, down 4% year-on-year, primarily due to decreased hardware sales, although operating income increased by 19% to 140.8 billion yen, indicating strong performance from network services and first-party game titles.
- Strong Music and Imaging Performance: The Music segment saw a 13% revenue increase to 542.4 billion yen, with operating income rising 9% to 106.4 billion yen, while the Imaging & Sensing Solutions unit reported a 21% revenue growth to 604.3 billion yen, driven by strong demand in the high-end smartphone market.
- Optimistic Outlook: Sony raised its fiscal 2025 revenue forecast to 12.3 trillion yen from 12.0 trillion yen, with operating income expectations lifted to 1.54 trillion yen, despite anticipating a 50 billion yen reduction in operating income due to U.S. tariffs, reflecting the company's confidence in future growth.
Sony Reports Q3 Earnings Beat with ¥62.82 EPS
- Earnings Highlights: Sony's Q3 GAAP EPS stands at ¥62.82 with revenue of ¥3,713.68 billion, reflecting a 0.5% year-over-year growth, surpassing market expectations by ¥44.12 billion, indicating the company's resilience in stable growth.
- Joint Venture Outlook: The joint venture with TCL shows promising prospects, although analysts remain cautious about its long-term performance, which may affect investor confidence in future collaborations.
- Music Asset Acquisition: Singapore's GIC partners with Sony Music to acquire music catalog assets, enhancing Sony's market position in the music sector and potentially providing new revenue growth opportunities.
- Market Reaction: Despite solid Q2 results, analysts generally believe that now is not the best time to invest in Sony, reflecting market uncertainties regarding future growth.
