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Warner Bros. Discovery’s (NASDAQ:WBD) recent $200 million hit due to the poor performance of its Suicide Squad: Kill the Justice League video game is the latest sign of trouble for the beleaguered video game industry.
During WBD’s earnings call, finance chief Gunnar Wiedenfels called the game’s release “disappointing” and blamed it for the $400 million plus year-over-year decline in first-quarter revenue for its Studio Segment.
The game, widely panned amongst critics and players, also significantly underperformed compared to last year’s top-seller, Hogwarts Legacy, chief executive David Zaslav added.
Developed by Rocksteady Studios, Suicide Squad launched in early February to negative critical reception and low player numbers on video game distribution platform Steam.
According to Steam Charts, the game has averaged 204 players in the last 30 days. Player numbers peaked at over 13,000 on launch.
In contrast, Sony’s (SONY) Helldivers 2 has averaged 115,000 players in the last 30 days, with over 458,000 peak players in February.
Tough Year Ahead
The first few months of 2024 have been rather dry for major video game launches, and the rest of the year does not look much better.
Nintendo (OTCPK:NTDOY) said earlier this month that it will unveil the successor to its Switch console sometime before the end of the fiscal year, as the company forecast a sharp drop in profit amid declining Switch sales. Nintendo’s fiscal year ends March 2025.
Media reports in February said the Japanese entertainment and video game giant was pushing back the new console until next year.
Take-Two’s (TTWO) Rockstar Games reportedly issued a return-to-office mandate for remote workers as it attempts to release Grand Theft Auto VI to market in early 2025.
However, the game might not be released until late 2025 or 2026 as production has lagged behind schedule, the report added.
Electronic Arts’ (EA) fourth-quarter profit and sales dropped year-over-year as the video game developer failed to launch any major titles.
According to research firm Circana, total U.S. video game sales for March grew just 4% to $4.89 billion, while hardware sales tumbled 32%. Mobile spending accounted for 89% of the growth.
Year-to-date ending March, U.S. video game sales rose 6% to $14.67 billion, with hardware sales down 24%.
“Total US Video Game spending being up 6% in Q1 2024 despite a 24% drop in hardware spending and *looks at everything else* shows how diversification has made the market more resilient. I’m still holding to my -2% 2024 forecast, for now, but there’s a clear path to annual growth,” said Circana analyst Mat Piscatella in a post on X (formerly Twitter).
Despite video game sales holding up, it’s been a difficult year for the people who make video games.
In January, Tencent’s (OTCPK:TCEHY) (OTCPK:TCTZF) Riot Games announced it would lay off 11% of its workforce. Unity (U) also announced a 25% reduction in its workforce, while Amazon’s (AMZN) live-streaming site Twitch announced plans to cut about 35% of its workforce.
Last month, Take-Two (TTWO) said it would reduce its workforce by about 5%. Microsoft (MSFT) is reportedly shutting down four video game studios under its Bethesda banner. The news is a follow-on to Microsoft’s announcement earlier in the year about cutting some 1,900 roles from its video game workforce.