Game Industry Finance Cheat Sheet Summer 2025 Edition, 14/08/2025
Nintendo on the march, PlayStation makes its digital fortune, and Xbox struggles to strike the right tone
This week’s Video Games Industry Memo is sponsored by Modulate.
Modulate is the voice intelligence company behind ToxMod, the voice moderation platform that increases player retention by up to 30%
We wade through the latest video game financial results to help you look clever
Xbox and Avalanche Studios announce the pause of another development project
We dive deep into the quirky RPG that inspired Toby Fox of Undertale fame
Hello VGIM-lings,
After two weeks of Tom in a row, Other George is here. It might not be the George you were hoping for, but it’ll have to do.
Time has marched on once more, as it tediously does so. That means it is once again time for everyone to drop their financial results.
And while that information is intriguing to say the least, who among us can be bothered to wade through dozens of powerpoints, spreadsheets, and tables? I offer myself as tribute.
In this edition of the finance cheat sheet, we’re taking a close look at the results of the Big Three - Nintendo, PlayStation and Xbox - and a passing glance at the rest of the industry’s juggernauts.
So, if you want to seem like you know what you’re talking about when discussing growth in the industry, this week’s newsletter is for you. On with the moderately humorous show!
The big read: Finance cheat sheet summer 2025 edition
Nintendo - Switch 2 goes vroom
Wintendo: The incredibly successful release of the Nintendo Switch 2 at the start of June has seen the Japanese giant's results pop off for its latest quarter. Net sales hit $3.8bn (¥572.3billion), a 132% increase compared to the same quarter last year. This is particularly impressive given that Nintendo admits it has struggled to produce enough units to keep up with demand in some regions. Wowzers!
Slim margins: Switch 2 sales far exceeded Nintendo’s already high expectations. However, expensive-to-produce consoles don’t generate massive profits for companies. And Nintendo even admits that the profit margin on the Switch 2 is even slimmer than that of its predecessor. This means that, despite selling an incredible six million units, Nintendo’s net profit is “only” up $646m (¥ 96 bn) or 18.6% compared to the same quarter last year. Rubbish, eh?
Softly software: While hardware sales are roaring, Nintendo’s software sales are roughly on par with the same quarter last year. Sales of Switch 1 games exceed Switch 2 games by a ratio of around 3:1, which makes sense given the new console’s thin launch lineup. Only Mario Kart World has done gangbusters, selling 5.63million units as almost everyone who bought a new Switch piled in on its fancy launch title (often as part of a console bundle).
USA Today: Trump’s tariff madness briefly caused Nintendo panic earlier this year, and the Switch 2’s fast start in the States shows us why. The Americas make up Nintendo’s largest market by far, accounting for 40.5% of net sales - almost double Europe, its next largest market. The Switch 2’s successful launch in the territory has led to Nintendo forecasting a net profit of $2bn (¥300bn) for FY26.
Tandemondium: But with it forecasting its results based on the hefty tariff rate levied during Trump’s early days back in office, its forecast is at the mercy of a man who changes, delays, or pauses rates more regularly than his fake tan. And with Nintendo Switch 1 prices already going up in North America to account for increased costs due to Trump’s trade policy, tariffs will play a big role in deciding Nintendo’s success this year.
PlayStation - Digital profits soar
Born out of the USA: Tariffs also play a large part in Sony’s financial report. Like Nintendo, the company is putting buffers into its estimates to try to plan for Trump’s erratic policy setting. Since the start of the year, Sony has cautiously suggested it’ll be less impacted by tariffs than expected while noting that its forecast may “vary significantly” in the future. This matters a lot because 34% of PlayStation’s profits this quarter were made in the USA - the company’s largest market. Eep.
Console war is over: Tariffs aside, Sony’s story for the quarter is pretty much the opposite of Nintendo's. Sales of hardware, games, DLC, PS Plus and the like are up $482m (¥71.6billion) or 8% on last year, but operating income is up $557m (¥82.7billion) - a massive 127% increase on the same period in 2024. Sony puts this down to “increased sales” of both games and services, which, interestingly, appears to have been helped by Microsoft assuming the role of the biggest third-party publisher on the platform. The cheeky, gamer-defying devils.
Digital future: But Microsoft’s shifting Xbox strategy isn’t the only reason why PlayStation is in good health. Digital game sales leapt by 40.6% year-on-year to $397m (¥59billion) as PlayStation’s publishing partners and players accelerated their moves away from buying games in a physical format.
Sealed fates: One bum note from PlayStation’s result is the expected negative “impact of the delay in the launch timing of a first-party title” on the company’s bottom line. While the game isn’t named and shamed, it is almost certainly Marathon, Bungie’s live-service shooter, which was indefinitely delayed following a shonky alpha test. However, Sony’s financial report says that it’s expected this fiscal year, which means it has until March 2026 to make it onto the release slate.
Xbox - Steady growth, bitter aftertaste
Cuts, cuts, cuts: One of the big reasons why last month’s mass layoffs in Microsoft’s game division were hard to swallow was the feeling that Xbox was in pretty good health. In his email to staff telling them that they were being given the boot, Phil Spencer wrote that he recognised “these changes come at a time when we have more players, games, and gaming hours than ever before” and that the company’s “platform, hardware, and game roadmap have never looked stronger.”
First party party: And Microsoft’s latest results suggest it has been a case of “money up, jobs down” at Xbox. Revenue on games and services is up 13%, hardware is down 22%, coalescing to an overall increase in gaming revenue of 10% due to “better-than-expected performance from first-party content and Xbox Game Pass."
Crossing the streams: Although the company is warning that revenue will sag by little in the next quarter, it believes that it is well placed to build on the success of this quarter in the years ahead. The strong performance of Microsoft backed games like Sea of Thieves and Indiana Jones: The Great Circle on PlayStation 5 has given it cause for optimism outside of its ecosystem, while the company reports that it is going to strengthen Game Pass further with 40 new Xbox games currently in development (though let’s not ask Rare, The Initiative, or Romero Games what they think about that eh?)
Fall on deaf ears: A “record fiscal year” is a good outcome for investors, but Xbox’s tone deaf handling of employee layoffs might cost it in the long term. In its latest results, the company warned that its ability to stay at the top of the tree depends “on our ability to attract and retain talented employees.” And we’d suggest that hanging the sword of Damocles above every employee who works in the building might not be the best way to achieve that objective.
A message from our sponsor Modulate: Heading to Devcom next week? Join Modulate at our Monday Multiplayer Mixer for drinks, great company, and conversations about what's next in online play.
And join us on Tuesday at Community Clubhouse, when we'll be talking with Activision about how implementing comprehensive anti-disruption and anti-toxicity strategies can enhance player engagement and enjoyment.
Best of the rest
Take Two: The Rockstar publisher had a better-than-expected quarter with net bookings up 17% to $1.42 billion, mostly thanks to Zynga’s lineup of mobile games. Another factor in the company’s unexpectedly strong start to the fiscal year is the popularity of the second GTA 6 trailer, which has increased players of GTA Online by 50% as they eagerly await the sequel.
Tencent: The Chinese giant’s stock price jumped by 5% earlier this week, after the company’s games business posted strong financial results this quarter. Domestic game revenue jumped by 17% to reach $5.6bn (RMB40.4bn), with Honor of Kings, Peacekeeper Elite (PUBG Mobile), and newly released Delta Force doing numbers. International game revenue climbed by an even more impressive 35% to reach $2.6bn (RMB18.8), with Supercell’s Clash Royale picked out for praise in the report.
Roblox: Roblox had a massive quarter in its most recent results. Bookings are up $1.4billion or 51% year-on-year, while Daily Active Users swelled to a borderline unbelievable 111.8 million people after “viral experiences” like Grow a Garden grew its business. It’s a heck of a quarter, especially when we remember that the business was labelled a pedophile hellscape by a short-selling firm last year.
EA: After a wobbly end to last year, EA’s live-service games have performed better than expected, generating $1.29bn net bookings just ahead of guidance. The company has also been boosted by Split Fiction’s ongoing co-op success and a big beta for Battlefield 6. Meanwhile, the importance of single-player games to EA’s bottom line continues to dwindle, with just 17% of its net revenue this quarter coming from solo adventures.
Capcom: Capcom’s latest results painted a mixed picture for investors. On the good side, the company’s operating profit hit $166 million (¥24.6 billion), an increase of 90.8% year-on-year, as re-releases or ports of beloved back catalogue titles like Onimusha 2, Capcom Fighting Collection 2, and Street Fighter 6 did the business. But “soft” sales of Monster Hunter Wilds following its launch quarter have given investors the jitters, leading to a stock price slide.
Square Enix: And this quarter’s reminder that you have to release video games to make money in this industry is Square Enix. The company reported that its net sales slipped by 15% year-on-year to $40 million (¥59.2 billion) because the company did not have a release comparable to last year’s mega-hit Final Fantasy 7 Rebirth. But the company does expect to perform better across the fiscal year as a whole, with Final Fantasy Tactics, Octopath 0 and Dragon Quest 1 & 2 Remastered offering strength in depth across its line-up.
The Bluffer’s Guide to the latest financial results
Do say: Strong performance for the Switch 2, the steadying of the ship at PlayStation and Xbox, plus massive quarters for Roblox and Tencent, suggests that there is appetite for great video games across the world.
Don’t say: “money goes up, jobs go down?” No, Phil Spencer, NO!
News in brief
Another one bites the dust: In further “mixed messages from Xbox” news, Avalanche’s 1970s co-op smuggling adventure Contraband’s development has stopped while both companies “evaluate the project’s future”. You might have thought we’d heard the last of games cancelled due to Xbox layoffs following the demise of numerous games and studios, and the positive language of its execs in its most recent financial results. Alas.
Going solo: Digital Foundry, gamers’ main source of info on all the technical things I don’t understand, has gone independent after being purchased by IGN last year. The company bought its shares from IGN, and plans to fund itself via Patreon, making for yet another crowd-funded games media project born out of necessity following mass industry closures and layoffs. Something I would know nothing about…
Mike is Alone: Mike Bithell, of Thomas Was Alone fame, has let go of “the majority of the full-time staff” at studio Bithell Games. In a statement posted online, Bithell wrote that the lay-offs were a result of failing to secure a new major project following the company’s recent release of TRON: Catalyst. He also said that the situation was similar to that of “many game development teams seeking funding partners,” before encouraging interested parties to pick up his talented former team members.
Battle for the beta: Battlefield 6 won’t be released until October, but an open multiplayer beta weekend has given us an idea of just how popular the upcoming shooter will be. On Steam alone, the game racked up over 300,000 concurrent players at its peak - suggesting that it is on course to beat the live-service malaise that has afflicted much of the industry.
Doctors with Restrictions: Charity speedrunning event RTA Japan has announced that Nintendo has prohibited the use of its games as part of its event, despite its charitable mission to raise cash for Doctors Without Borders. While Nintendo has historically not been keen on streamers and Let’s Plays, its policy had seemingly softened. This news suggests otherwise.
Moving on
Jack Davis is the new Business Development Manager at Keywords Studios… Yvonne Lukanowski has been promoted to Head of PR at Astragon Entertainment… Quinn Collins joins Pocket Tactics as the newest Staff Writer… Siân Mayhall-Purvis has popped up as Gaming Lead at the charity War Child … And Jessica Jung moves to Supercell to lead the new AI Innovation Lab…
Jobs ahoy
Bastion needs a new Account Executive to join the gaming PR giant…The Pokémon Company International asks for a Japanese speaker to become a Bilingual Project Manager… Total War fans can apply to join Creative Assembly as a Co-Development Coordinator… Sheridans is hiring an Associate Lawyer - Games… And indie publisher Secret Mode is looking for an Influencer Relations Manager…
Events and conferences
gamescom, Cologne - 18th-24th August
PAX West, Seattle - 29th August-1st September
Games Industry Law Summit, Vilnius - 2nd-4th September
XDS, Vancouver - 2nd-5th September
Tokyo Games Show, Tokyo - 25th-28th September
Game of the week - OFF
Mafia: The Old Country? Never heard of her.
Instead of discussing that, we’re going to talk about the remaster of a game you’ve never heard of that had a huge impact on every depressed millennial (read: every millennial).
One of the billions of interesting things about OFF is that it’s been available for free for over a decade and remains free now. Really. Click the previous link and play it, if you like.
Yet, people are still droolingly eager to pay money for this masterpiece.
So let’s talk about Death of the OFFthor *groans*. Developer Mortis Ghost loves to tell people their interpretations of the game are correct.
OFF is full of environmental storytelling, hidden moments that lead nowhere, and motifs that don’t always make sense.
Oh, you think the game is an allegory for men’s rights activist culture? Mortis Ghost answers with a resounding “why not”, leaving you with more questions than answers every time you play. And seventeen years after the original release, people are still discussing just what it means - ensuring its influence is still felt today.
Don’t believe me? Undertale auteur Toby Fox has claimed it’s one of his greatest inspirations, and you can see OFF’s concepts dripping throughout his work.
Fox and other heavy hitters have shown how influential the game is to their work by agreeing to compose some original music for the remaster. But it is arguably the release of the third and fourth chapters of Deltarune, the long-anticipated follow-up to Undertale, that truly shows OFF’s influence on the mainstream of games.
So do the deeply meta thing and pay for a free game that’s inspired creators across the world for nearly two decades. It’s the perfect way to celebrate one of gaming’s most quietly influential titles.
Before you go…
The artificial intelligence revolution is expected to disrupt the games industry in lots of ways.
But we’d be surprised if there’s a more literal form of disruption than what studio Secret Lab have experienced over the past few weeks.
Paris Buttfield-Addison, co-founder of the studio, claims that the team has had to field phone calls from customers of a gaming chair brand after ChatGPT accidentally fed the game studio’s phone number to confused punters.
One for posture posterity, that’s for sure.
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