Nintendo Increases Switch Fiscal Year Unit Sales Forecast Despite Nine-Month Sales Decline

Nintendo Feb. 6 released nine-month fiscal year 2024 results, which included a projected 15.5 million Switch video game console unit sales through March 31 — up from a previous estimate of 15 million.

The enhanced number comes as the video game manufacturer reported Switch unit sales of 13.74 million unit sales, down almost 8% from 14.91 unit sales in the previous-year period. Switch unit sales plummeted nearly 35% to 3.4 million units from 5.22 million in the prior year period.

Nintendo Switch – OLED Model unit sales increased 6.2% to 8.17 million from 7.69 million units, while Nintendo Switch Lite unit sales increased 9.1% to 2.18 million from 2 million last year.

“Although [Switch] unit sales decreased year-on-year, sales have been stable given the fact that the platform is in its seventh year, and the results were generally in line with our expectations,” Nintendo wrote in the fiscal report.

Pushing the enhanced Switch unit sales estimate is the steady growth in sales for Super Mario Bros. Wonder, which has generated 10.7 million unit sales since its release in October 2023. Indeed, Nintendo increased its forecast for Switch video game sales by 5 million to 190 million units.

“In addition, The Super Mario Bros. Movie, released in theaters in April 2023, had a positive impact on sales of Mario related video game titles. As a result, there were 24 titles that sold over a million copies during the period, including titles from other software publishers,” Nintendo wrote.

The Super Mario Bros. Movie was the No. 1 theatrical release until being supplanted by Warner Bros. Pictures’ Barbie in July. Mario would end the year with $1.36 billion in ticket sales compared with $1.44 billion for Barbie.

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TiVo Owner Xperi Narrows Q3 Loss 92% to $31 Million

Entertainment technology company Xperi Nov. 13 reported a third-quarter (ended Sept. 30) net loss of $31.1 million, which was down 92% from a loss of $399.1 million in the prior year period. Revenue increased 7% to $130 million from $121.6 million in the previous-year period.

Xperi, which owns and operates the TiVo brand, said that Turkish TV manufacturer Vestal began shipping JVC-branded TVs with TiVo operating systems to European retailers. Xperi signed a fourth Smart TV OEM to integrate the TiVo operating system into its 2024 European TV lineup.

The company also signed five new video service providers for the TiVo+ streaming service, which offers up to 160 channels of content curated from more than 800 free ad-supported channels. TiVo+ is now deployed by 30 video service providers in the United States.

“Today’s results reflect the completion of our first year as a standalone company — a year highlighted by significant design wins and strong business momentum across our key growth areas, coupled with solid financial performance, including comparable 6% revenue growth over the prior year trailing twelve months,” CEO Jon Kirchner said in a statement.

Kirchner said Xperi is ramping up distribution of video services powered by TiVo in BMW cars.

“When taken together with ongoing efforts to drive cost transformation, these milestones are important steps toward delivering on our strategic vision, improving profitability, and achieving significant long-term revenue growth,” he said.

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Cineverse Ups Q4 Fiscal Loss, Posts Fiscal-Year 2023 Loss

Cineverse June 29 reported a fourth-quarter (ended March 31) net loss of $3.2 million on revenue of $12.5 million, compared with $16.9 million in revenue in the prior-year quarter and $27.9 million in the previous third quarter (ended Dec. 31, 2022).

Revenue from the content and entertainment business was $11.7 million, an increase of 14.5% from revenue of $10.2 million in the prior-year quarter. This compares with $20.7 million in revenue in Q3, the seasonally strongest quarter, which included $7.6 million in revenue from the release of Terrifier 2 in theaters and the home entertainment market.

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Streaming and digital revenue increased 18.7% to $7.3 million from $6.1 million in the prior-year period, primarily driven by increased contributions from DMR following its acquisition in March 2022, and an 8.1% increase in base distribution revenue due to the theatrical success of Terrifier 2.

For the fiscal year, Cineverse reported a net loss of $10.1 million on revenue of $68 million. That compared with a net income of $1.8 million on revenue of $56.1 million in fiscal year 2022.

Despite the fiscal year reversal of fortune on the bottom line, CEO Chris McGurk said he believes the company has turned a corner pursuing improved monetization strategies.

“Despite macro-economic headwinds and many industry challenges, fiscal year 2023 marked an important turning point for the newly-rebranded Cineverse,” McGurk said in a statement. “With the successful wind down of our legacy Cinema Equipment [theatrical movie projection] business behind us, Cineverse is now a pure-play content and streaming company.”

Indeed, Cineverse saw streaming and digital revenue increase by 47% over the prior year, despite a choppy overall ad market. Paid subscribers to the company’s branded streaming services grew by 28%, driven by the success of Screambox, which was up 438%.

“At a time when many streamers are rapidly reducing their offerings and pulling titles, we added over 28,000 titles in the last two quarters alone,” McGurk said. “We launched and established our flagship service Cineverse last September, and in less than half a year, it has already become a top 10 channel globally in terms of title count and breadth.”

CFO: Disney’s Direct-to-Consumer Business to Up Q1 FY 2023 Revenue by $200 Million Despite Disney+ Hotstar Sub Decline

On the heels of a record operating loss in its direct-to-consumer business segment, Disney believes the worst is behind it as it readies the Dec. 8 launch of a less-expensive ($7.99) monthly ad-supported subscription plan, in addition to enacting price hikes on existing services.

The company will raise the price of its current ad-free option 38% to $10.99 ($109.99 annually), while the Disney bundle (Disney+, ESPN+ and Hulu) with ads will cost $13.99 monthly, and $19.99 monthly without ads.

Hulu with ads will remain priced at $7.99 per month, while Hulu without ads will still cost $14.99 per month. ESPN+ will remain at $9.99 month.

Disney CFO Christine McCarthy

On the Nov. 8 fiscal call, Disney CFO Christine McCarthy said the company’s new ad-supported streaming services would bow with 100 advertisers, but contribute little to the first quarter’s operating results, ending Dec. 31. That said, McCarthy believes the DTC’s peak fiscal losses are in the rearview mirror and that fiscal results should improve going forward.

“We expect DTC operating results to improve by at least $200 million [in the first fiscal quarter] compared to Q4 2022,” McCarthy said, adding the operating improvement in Q2 would be even higher.

“The prices should begin to modestly benefit [average revenue per subscriber] and subscription revenue in Q1,” she said, adding that the Disney+ price hike revenue gains wouldn’t begin to be realized until Q2.

“We don’t expect the launch of the ad-supported tier of Disney+ to provide a more meaningful fiscal impact until later [in the fiscal 2023] year,” McCarthy said, adding that while content costs will increase between Q4 and Q1 2023, marketing costs should decline to help offset that spending.

The executive believes Hulu and ESPN+ will continue to add subscribers in Q1, while core Disney+ subs will only increase slightly in Q1, reflecting tougher comparisons against Disney+ Day performance and the timing of content releases and promotions. McCarthy expects that trend to reverse in Q2 as new content is released in international markets.

“At Disney+ Hotstar, we are currently expecting subscribers will decline in Q1 due to the absence of the [Indian Premier League] cricket rights,” she said, adding that the company expects to see some subscriber stabilization in Q2.

Earlier this year, Paramount Global, through its Indian Viacom18 subsidiary, wrested exclusive streaming rights to the IPL from Disney for $3 billion.

Disney+ Hotstar remains the streaming platform’s largest (37.3%) subscriber base with more than 61 million subs out of 164.2 million worldwide.

Roku Blames Economy for Q2 Miss as Net Loss Mushrooms

Roku July 28 proved naysayers correct, reporting a second-quarter net loss of more than $112.2 million compared to income of $73.5 million during the previous-year period. Revenue increased 18.5% to $764 million from $645.1 million last year, with player sales dropping almost 20% to $91.2 million, from $112.8 million.

Roku added 1.8 million incremental active accounts to reach 63.1 million. Streaming hours topped 20.7 billion hours, up 19% (3.3 billion hours) from 17.4 billion hours in the previous-year period. Notably, total viewing time was down 0.2 billion hours from the first quarter.

In the shareholder letter, CEO Anthony Wood and CFO Steve Louden suggested that a “significant slowdown” in TV advertising spend in the quarter due to the macro-economic environment “pressured” platform revenue growth. In response to inflationary pressures, the executives believe consumers began to moderate their discretionary spending, and advertisers significantly curtailed spending in the “ad scatter market” (TV ads bought during the quarter).

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“We expect these challenges to continue in the near term as economic concerns pressure markets worldwide,” they wrote. “In response, we took steps to significantly slow both operating expense and headcount growth.”

Wood and Louden said they remain confident in Roku’s industry leadership in TV streaming, the size of the market opportunity, and the company’s unique assets, including the Roku TV OS, The Roku Channel, and the ad platform.

Indeed, Roku said it surpassed a milestone with $1 billion in upfront advertising commitments going forward.

Wall Street remains less confident. Roku’s stock is down more than 25% in aftermarket trading.

Best Buy Expects Underperforming Second-Quarter Fiscal Result

Best Buy’s fiscal second quarter doesn’t end until July 30, but the consumer electronics retail giant has seen enough dark clouds to issue a warning about its pending fiscal results and fiscal 2023 outlook.

CEO Corie Barry said the retailer entered the year expecting its fiscal 2023 financial results to be softer than last year with the lack of ongoing government stimulus support and unusually strong consumer electronics industry demand coming out of the pandemic.

CEO Corrie Barry

Best Buy remains a major national retailer of packaged media, including DVD, Blu-ray Disc and 4K UHD Blu-ray.

“As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May,” Barry said in a statement.

The company expects Q2 FY23 comparable sales to decline approximately 13%, with revenue approximately 7.5% higher than pre-pandemic Q2 FY20. This compares to 19.6% comparable sales growth in Q2 FY22. The company expects its Q2 non-GAAP operating income rate2 to be in a range around 3.7%. Additionally, the company expects its Q2 ending inventory balance to be approximately flat to the same period last year.

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“As the macro environment continues to evolve, we are proactively managing the day-to-day operations while maintaining our focus on our long-term strategy and growth initiatives,” Barry said.

CFO Matt Bilunas said the current state of the economy makes it difficult to assess the duration of the softer sales environment and the impact on business. He said current planning assumptions for fiscal 2023 include a comparable sales decline in a range around 11% and operating income rate of approximately 4%.

“This compares to our previous guidance of a comparable sales decline of 3% to 6% and operating income rate of 5.2% to 5.4%,” Bilunas said.

In response to the current sales environment, Best Buy said it would continue to actively assess further actions to manage profitability. The retailer plans to provide additional business updates when it releases its Q2 results on Aug. 30.

TelevisaUnivision Ups Q2 Streaming Revenue — and Costs

TelevisaUnivision, the New York-based Spanish-language media and content company, July 26 announced a 10% increase in second-quarter (ended June 30) U.S. subscription and licensing revenue to $296.7 million, from $269.2 million in the previous-year period. Mexican revenue increased 10% to $100.8 million, from $91.8 million.

The increase was primarily due to revenue growth from virtual MVPDs, following carriage at YouTube TV, which began in Q3 2021.

At the same time, expansion into SVOD and AVOD upped quarterly costs. Total operating expenses grew 24% to $723 million. The increase primarily reflected investments in streaming, following the launch of the ViX AVOD service on March 31, and ahead of the ViX+ SVOD service launch on July 21.

Televisa, which merged with Univision earlier this year, is aggressively expanding into the subscription video-on-demand and ad-supported VOD markets with the separate launches of ViX and ViX+.

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“Double-digit revenue growth in the second quarter caps off a stellar first half of 2022,” Wade Davis, CEO of TelevisaUnivision, said in a statement. “I’m thrilled to see advertisers demonstrating their commitment to support and grow with U.S. Hispanic audiences.”

Indeed, pay-TV ad revenue in the U.S. increased 10% to $447.7 million, from $407.2 million during the previous year period. Ad revenue jumped 14% to $220.9 million, from $193 million.

Davis contends that the the strength of legacy TV advertising will transfer to digital

“The fact that the growth of our core business can fund our investments in streaming highlights the power of our unique assets and the quality and focus of our execution,” Davis said. “With our full streaming service launched, we are poised to supercharge the already impressive growth of our core business with the massive global Spanish language streaming opportunity.”

Verizon Fios Video Lost 164,000 Subs in the First Half of 2022

Verizon, like most pay-TV operators, continues to see an exodus of subscribers, losing 86,000 Fios Video subs in the second quarter (ended June 30) — up from 62,000 video subs lost in the previous-year period. Through six months of the year, Verizon has lost 164,000 pay-TV subs, up from 144,000 subs in the previous-year period.

Verizon ended the fiscal period with 3.4 million Fios Video subs, down from 3.7 million subs during the same period in 2021.

Meanwhile, Verizon added just 30,000 broadband subs, which was down from the addition of 92,000 high-speed internet subs in the previous-year period. The telecom added 85,000 broadband subs in the first six months of the year, down from 190,000 additions a year earlier.

Verizon, which offers free access to Disney+, Hulu, ESPN+ and Discovery+ to select wireless subs, also saw telecom sub additions plummet 76% to 84,000 from 350,000 net adds in the previous period. Through the half-year, Verizon has lost 42,000 telecom subscribers.

“Although recent performance did not meet our expectations, we remain confident in our long-term strategy,” CFO Matt Ellis said in a statement. “We believe that our assets position us well to generate long-term shareholder value.”

Netflix Posts Better-Than-Expected 970,000 Q2 Sub Loss

Netflix July 19 announced it lost just 970,000 subscribers globally in the second quarter (ended June 30), less than half the 2 million net subscriber loss the streamer had expected.

Netflix finished the second quarter with 220.6 million subscribers worldwide. The streamer now expects to add 1 million net subs in the current third quarter (ending Sept. 30). It added 4.4 million subs in the year-ago period.

“Q2 was better-than-expected on membership growth,” co-CEOs Reed Hastings and Ted Sarandos, and CFO Spence Neumann wrote in the shareholder letter. “Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content, and marketing as we’ve done for the last 25 years, and to better monetize our big audience.”

Across Netflix market regions, the streamer lost 640,000 net subs in the U.S. and Canada to finish the quarter with 74.58 million. It lost 300,000 subs in the Middle East, Europe and Africa to end the period with 73.73 million. Netflix lost 350,000 subs in Latin America where it is now charging select subs a surcharge to allow friends to access the streamer. Netflix ended the period with 39.61 million subs.

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Finally, Netflix’s subscription ace remains the Asia Pacific region, which added 1.09 million net subs to end the period with 33.72 million. The region is home to Netflix biggest global content hit: South Korea’s Squid Game, which has been greenlighted for a second season.

Notably, following the first quarter’s subscriber growth misstep, Netflix adjusted its cost structure base on the current rate of revenue growth. This resulted in hundreds of staffing cuts and office lease reductions, resulting in approximately $70 million of severance costs and an $80 million non-cash impairment of certain real estate leases.

Excluding these items totaling $150 million, and the foreign exchange impact of the stronger U.S. dollar since the Q1 fiscal result, Netflix’s operating profit ($1.62 billion) and operating margin (19.8%) were slightly ahead of the company’s guidance forecast.

‘Spider-Man’ Explodes Sony Pictures Home Entertainment Q4 Revenue

Sony Pictures Home Entertainment May 10 reported fourth-quarter (ended March 31) revenue of $322 million, which was up 131% from revenue of $139 million during the previous-year period. The revenue uptick was primarily driven by the March 15 digital release of box office blockbuster Spider-Man: No Way Home across all online retail channels. The 2021 box office champion was not released on Blu-ray Disc and DVD until April 12.

For the fiscal year, home entertainment revenue topped $764 million, which was down less than 2% from revenue of $778 million in the prior fiscal year.

Fiscal-year theatrical revenue of more than $1.5 billion skyrocketed from revenue of just $53 million in fiscal year 2020 primarily due to the contribution of Spider-Man: No Way Home and other theatrical releases, as well as higher licensing revenue from digital streaming services for new film titles and higher licensing revenue for catalog product. These increases were partially offset by lower home entertainment and licensing revenue generated from prior year releases, due to the absence of significant theatrical releases in the previous fiscal year.

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Indeed, in addition to the timing of the No Way Home packaged-media release, SPHE had just seven 2020 theatrical releases to market in 2021, led by Monster Hunters with a total box office of $38 million. In the FY 2021, Sony released 14 theatrical titles.

Television production revenue increased 27% to more than $1.98 billion from $1.56 billion primarily due to the recording of revenue from the licensing of “Seinfeld” as well as an increase in deliveries of current year titles, as the previous fiscal year was negatively impacted by production delays due to COVID-19. Media Networks revenue for the fiscal year increased 30% to $2.6 billion from $2 billion primarily due to the impact of the acquisition of Crunchyroll.