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Investors didn’t like Ubisoft and Activision’s earnings

Both stocks plunged on the companies' forecasts.

Investors didn’t like Ubisoft and Activision’s earnings

The outlook is good for console manufacturers, but not so much on the software side.

Image: Protocol

Big Tech companies weren't the only ones reporting earnings this week; some of the biggest players in the gaming industry were, too. And there was a sharp divide: While the outlook's good for console manufacturers, things are less peachy on the software side.

Sony and Microsoft both reported earlier in the week, and both companies' gaming divisions had pretty good quarters. While PS4 sales dropped, unsurprisingly, software and subscription revenue soared. And an optimistic outlook for the PS5 — Sony's hoping to sell 7.6 million by the end of March — and the subscription and software sales that should entail, led Sony to raise its full-year operating income forecast by 13%.

  • It was a similar state of affairs for Xbox. Overall gaming revenue was up 22% year-on-year, driven by a 30% boost in gaming content and services. Both companies' results were a reminder that as game purchases shift toward digital, console manufacturers stand to win big.
  • Facebook, the newest entrant to the console wars, is also doing well: It said Oculus Quest 2 preorders were five times higher than the original Quest's, confirming Protocol reporting that the new VR headset is a huge hit.

But buried in Microsoft's release was one worrying number. While a 30% boost in content and services revenue is good, it's a far cry from the 65% growth it reported in the previous quarter. That's reflective of a broader trend: Gaming's COVID-accelerated growth is slowing down.

To be sure, the situation isn't awful: Growth is still strong. But it does seem that the huge boom from earlier in the year is coming to an end, and we're approaching something more like normality again. In a market with consistently high expectations, normal often isn't good enough.

This story will feature in Protocol Gaming, our weekly guide to the business of gaming. Subscribe here.

App store laws, Microsoft AR and Square buys Tidal

Welcome to this weekend's Source Code podcast.

Cole Burston/Bloomberg

This week on the Source Code podcast: First, an update on Google's user-tracking change. Then, Ben Pimentel joins the show to discuss Square buying Tidal, and what it means for the fintech and music worlds. Later, Emily Birnbaum explains the bill moving through the Arizona legislature that has Google and Apple worried about the future of app stores. And finally, Janko Roettgers discusses Microsoft Mesh, the state of AR and VR headsets, and when we're all going to be doing meetings as holograms.

For more on the topics in this episode:

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Sponsored Content

The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
Protocol | Policy

Far-right misinformation: Facebook's most engaging news

A new study shows that before and after the election, far-right misinformation pages drew more engagement than all other partisan news.

A new study finds that far right misinformation pulls in more engagement on Facebook than other types of partisan news.

Photo: Brett Jordan/Unsplash

In the months before and after the 2020 election, far-right pages that are known to spread misinformation consistently garnered more engagement on Facebook than any other partisan news, according to a New York University study published Wednesday.

The study looked at Facebook engagement for news sources across the political spectrum between Aug. 10, 2020 and Jan. 11, 2021, and found that on average, far-right pages that regularly trade in misinformation raked in 65% more engagement per follower than other far-right pages that aren't known for spreading misinformation.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Protocol | Enterprise

Tony Bates hears the call at Genesys

Running a contact center company isn't as sexy as his previous gigs. But this company could be the best chance for him to make a lasting mark.

Tony Bates arrived at Genesys as CEO after hopscotching through various parts of the tech industry.

Photo: Genesys

Be careful what you wish for. For Tony Bates, that's been running a big tech company.

He rose to Cisco's top ranks but didn't get the No. 1 job. His big CEO break was at Skype when it was poised to go public — but months into that gig, Bates' venture backers sold it to Microsoft instead. After a stint at Microsoft, where some eyed Bates for the CEO job that went to Satya Nadella, he took over GoPro. There, he got cut in a round of layoffs as the camera company struggled. He joined Social Capital, which helped fund Slack and Box, for a gig that lasted a year before tech investor Chamath Palihapitiya blew up the venture capital firm he started.

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Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

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