#29 - Record revenue for Xbox

Spider-Man 2 hit a launch-day record, more layoffs are hitting the industry and Fallout TV series is coming next year

Author

Bobby Voicu
October 25, 2023

The biggest mistake you can make is not adapting to changes.- Anton Kvashnevskiy, Nexter

Hey there!

📣 If you only read one piece of news today 📣

Microsoft's Q1 2024 earnings show a record $3.9bn Xbox gaming revenue, a 9% increase YOY, driven by first-party titles and Game Pass.

Xbox content & services revenue increased 13 percent.

Xbox hardware revenue saw a 7% drop.

Overall, Microsoft reported for the quarter GAAP revenue up 13% YOY to $56.52 billion and net income up 27% to $22.29 billion.

🎉 But we have so much more:

Starfield set a new record for Game Pass subscriptions on a single day. Ever. And it includes both of us writing here, at The Power-Up.

James Schmalz is no longer CEO of Digital Extremes and PS5 cloud streaming is now available in Europe – but don’t worry, it will come to the US soon enough.

And Spider-Man 2 is really going big.

Don’t miss The Power-Up Chronicles section at the end of this newsletter. It has stories about

  • the internal reasons for the Unity’s Runtime Fee fiasco

  • the Esports Business and Gaming Summit

  • how to monetize a mobile RPG

Welcome to The Power-Up #29

Biz Reel

📈 Microsoft's Q1 2024 earnings show a record $3.9bn Xbox gaming revenue, a 9% increase YOY, driven by first-party titles and Game Pass.

✨ Starfield contributed to this increase, setting the record at launch for the 'most Game Pass subscriptions added on a single day ever'. The game has surpassed 11 million players, and nearly half of all hours played were on PC.

👨‍💼 And while we're still in Redmond: Microsoft has removed the Xbox Game Pass growth target from CEO Satya Nadella's compensation criteria. Instead, Nadella's incentives now focus on the broader performance of Xbox Content and Services, with his earnings reaching $48.5 million for the 2022/23 fiscal year.

🤑 AppQuantum has launched a new program, Core is the King, to financially support selected hypercasual and hybridcasual mobile game developers with up to $1 million.

💰 In 2022, over 12% of French game studios reported sales exceeding €10 million, while over half had annual revenues below €300,000, according to a report by SNJV.

Industry Level-Up (or Down)

👋 Veteran PlayStation producer Connie Booth has reportedly left Sony Interactive Entertainment after nearly 30 years, as revealed by God of War designer David Jaffe.

🪧 Experis Game Solutions employees are seeking unionization, with a primary goal of securing a family-supporting wage.

😔 Roblox Corp has laid off 15 employees in its LuoBu (Roblox China) unit after reassessing its operational structure, but remains committed to its long-term vision in the Chinese market.

👋 Digital Extremes CEO and founder James Schmalz is stepping down, with Steve Sinclair, the studio's current chief creative officer, set to replace him.

😔 Media Molecule, the developer behind Dreams, is facing layoffs impacting 15-20% of its staff.

Round-Up

🎉 Lords of the Fallen achieved 1 million sales in just 10 days after its release on multiple platforms. Despite initial criticism and comparisons to Dark Souls, updates have enhanced the game's performance and experience.

📺 Amazon Studios' Fallout TV series, produced by Jonathan Nolan, Lisa Joy, and Todd Howard, is set to premiere on April 12, 2024, starring Walton Goggins and Ella Purnell.

🕷️ Spider-Man 2 has become the fastest-selling PlayStation Studios game, with 2.5 million copies sold on its launch day.

👎 Less than 1% of Netflix's 247.15 million subscribers engage in gaming daily, with an estimated 2.2 million users playing daily as of September.

👨‍💻 An international police coalition from 11 countries dismantled the hacker group Ragnar Locker, responsible for major cyberattacks, including the 2020 Capcom breach.

💨 PS5 cloud streaming is now available for PS Plus Premium members in select European countries, allowing games to be streamed at 2160p and 60fps with the right bandwidth. The feature expands game accessibility, with North America set to receive access by the end of October.

🇨🇳 Over 52% of China's population, approximately 500 million people, play video games, with mobile gaming leading due to historical console restrictions. Trends indicate a rise in "cozy" games, diverse gameplay elements within single titles, and a focus on social interactions.

🏙️ Qualcomm's Snapdragon 8 Gen 3 chip focuses on elevating mobile gaming, promising up to 240fps gameplay and improved ray-tracing.

🩸Blizzard is offering a chance to win a gaming PC infused with 'real human blood' alongside high-end specifications, encouraging fans to collectively donate 666 quarts of blood. While the PC boasts advanced components, participants, limited to U.S. adults, will also get exclusive blood-themed item skins in Diablo 4.

🏆 Saudi Arabia announces the Esports World Cup, set to debut next year. The competition aims to boost tourism and is expected to offer the largest prize pool in esports history.

Game Central

🛸 Star Wars: Dark Forces remaster by Nightdive Studios is set to release on 28th February 2024 for PC, PlayStation, Xbox and Switch. The upgrade includes up to 4K resolution at 120fps, high-resolution textures, enhanced lighting, rendering, and gamepad support. 

📦 The Annapurna Interactive Deluxe Limited Edition Collection, featuring 12 games, is available for pre-order exclusively at iam8bit's store for $199.99. Four of the games, including Hindsight and Solar Ash, are getting their first physical release in this limited 2,500-copy collection set to ship in Q4 2023.

🎮 Remedy's upcoming Alan Wake 2 promises to fully utilize the PS5's DualSense controller features, including distinct trigger resistances and immersive haptic feedback for elements like rain.

The Power-Up Chronicles

Inside Unity’s Runtime Fee fiasco: Unity's hasty September Runtime Fee policy was driven by its competition with Applovin and influenced by its declining stock value.

The initial proposal was a 4% revenue share for games earning over $1m, but due to backlash, it was reduced to 2.5%.

The policy was viewed as a move against Applovin and an attempt to reclaim market share. Moreover, larger Unity clients can negotiate these fees, putting smaller developers at a disadvantage.

➡️ An article by Neil Long on MobileGamer.biz

Despite challenges facing the esports industry, such as investor concerns, brand shifts, and organizational contractions, executives remain optimistic about its future. At the Esports Business and Gaming Summit, a survey showed that 38% see media rights ownership as the biggest challenge, considering traditional sports' lucrative deals compared to esports' free livestreams. Interestingly, 48% believe the esports scene will improve by 2024-2025. Despite the optimism, the past year saw approximately 6,400 layoffs in the gaming and esports sectors.

➡️ An article by Alexander Lee on Digiday 

Anton Kvashnevskiy from Nexters discusses effective ad monetization strategies in mobile RPGs, emphasizing the importance of understanding unit economics and maintaining a balanced in-game currency.

He advises careful selection and placement of ads, such as rewarded videos and offerwalls, to ensure they enhance rather than disrupt the gameplay experience.

Regular experimentation and A/B testing, diversifying ad networks, promptly addressing player complaints, ensuring ads align with company values, and staying updated with SDKs are essential for maximizing revenue.

Throughout, Kvashnevskiy stresses the importance of prioritizing player satisfaction and adapting to the ever-evolving mobile gaming landscape.

➡️ Read the full feature on PocketGamer.biz

That’s it for today. Thanks for reading. Stay powered-up until next time.

Bobby & Andrei

Did you know?

Star Wars: Dark Forces is a first-person shooter video game developed and published by LucasArts. It was released in 1995 for MS-DOS and Macintosh, and in 1996 for the PlayStation.

The story is set in the fictional Star Wars expanded universe and begins shortly before the original Star Wars film. The game's protagonist and playable character is Kyle Katarn, a mercenary working on behalf of the Rebel Alliance who discovers the Galactic Empire's secret Dark Trooper Project, which involves the development of a series of powerful new battle droids and power-armored stormtroopers.

Dark Forces shipped more than 300,000 copies in preparation for its launch, a record for LucasArts at that time. According to PC Data, which tracked sales in the United States, Dark Forces had sold 928,469 units and earned $37.1 million in revenue in the United States.