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[Woopah]

I'm curious what will happen to MKW sales once the de facto bundle is the Pokémon one. I really like MKW and I think it's the best in the series but I don't know how well it is perceived in Japan.

Speaking of Pokémon I can really see Z-A beating the absolute sales records of the series considering the gigantic install base of Switch / Switch 2.

The bundles coming to an end will slow MKW down a bit, but legs should still be strong.

I don't expect ZA to match the sales of Pokémon S/V. If it can match or exceed the sales of Legends Arceus, I'd call that a success.

I keep seeing this sentiment over and over in these threads, but I don't think PS5 consoles would fly off the shelves in Japan even if they were cheaper. The system is just too big and bulky for most people over there, and the platform is no longer in tune with their tastes, as Sony clearly chases the Western market these days.

They wouldn't fly off the shelves, but a lower price would help somewhat

When you say Sony chases the Western market, what would you like then to do to chase the Japan market? As in, what type of games should their studios be making?

 

[Mozza]

Doomed since 1983... lol

 

[yurinka]

Sony seems fubared in Japan. Maybe the handheld turns it around.

No, physical game sales are a very small portion of the total game revenue both in Japan and worldwide (and way smaller when talking about the revenue and also including addons and game subs), and Sony dominates the digital game revenue.

Sony also has around half of its active userbase still in PS4, meaning a lot of money made by their games comes from PS4, not only PS5.



Let's see the worldwide case (graphs with fiscal years, not calendar years):

• Nintendo makes a bit more revenue than Sony with physical games (162.8 bn yen last fiscal year)
• Sony makes way more revenue than Nintendo with digital game revenue, digital game sales+addons+subs (2634 bn yen difference last fiscal year)
• In the last fiscal year regarding total game revenue (a.k.a. conent and services, a.k.a. physical+digitall full game sales+addons+game subs), Sony made 3081.5 bn yen and Nintendo made 610 bn yen, a 5:1 difference in Sony's favor
• In the last fiscal year, physical sales were only a 3.93% (case of Sony) and 46.56% (case of Nintendo) of their total game revenue (a.k.a. content & services revenue, a.k.a. full game + addons + game subs sales)
• Combining Sony and Nintendo, in the last FY physical game revenue was 405.2 bn yen, 10.98% of the their total physical + digital software revenue (3691.5 bn yen)
• PS (4+5) has a 1.24:1 advantage in HW sales units over Switch (1+2) worldwide
• In digital revenue we see that late 2020/early 2021 (PS5 launch window) there's a big spike particularly in the Sony side, then goes a bit down and keeps steady during a couple years and then during a couple years goes up in the Sony side. Pattern isn't the same in Nintendo
• In physical revenue there isn't a lot of difference between the companies, combining them we see that since 2018 it has been pretty much flat was a small drop in year ending in March 2020 (pre-PS5 release) and very small peaks from April 2021 to March 2022 (Switch software sales peak year) and from April 2022 to March 2023 (PS5 software sales peak year) that more or less compensate each other. We see an important drop in April 2024-March 2025 (pre-Switch 2 + gradual decrease of PS5 physical sales since the peak), that started for PS5 a year before.

Now let's see the Japanese case, graph of Japanese gaming revenue per calendar -not fiscal- year (orange=mobile, blue=PC, green=console digital, pink=console physical) from the Famitsu White Book:

• In 2024 calendar (not fiscal) year of the game revenue in Japan (only software, not counting hardware or accesories):
  • 1,119 bn yen were physical console game revenue (4.67% of the total, 29.25% of consoles)
  • 2,707 bn yen were digital console game revenue (11.30% of the total, 70.75% of consoles)
• So physical console game revenue in Japan (this time including MS) is 29.25% of the total console game revenue, higher than the Sony+Nintendo one worldwide (10.98%), a substantial different that would be pretty smaller if in this graph aren't counting game subs
• We see digital console game revenue had a high growth in 2020, then goes a bit down and gets mostly flat during a couple years and then grows during a couple years. Pretty much the same pattern than in worlwide PS numbers, console that dominates digital game revenue
• Switch (1+2) has a 2.3:1 advantage in Japan over PS (4+5), very different than worlwide, where PS has a 1.24:1 advantage
• We see physical sales pretty much flat (matching the combined PS+SW WW sales) with the only more or less meaningful events a tiny peak in 2020 (I assume covid + Animal Crossing) and mostly a drop during 2023 and 2024 (matching WW numbers particularly of PS)

So, TLDR:

• Physical console games revenue in Japan is under 30% of the total consoles game revenue, and under 5% when also counting mobile and PC
• Over 70% of the console games revenue in Japan is digital
• In digital console games revenue Sony has a 5:1 advantage over Nintendo worldwide, and the evolution of the digital console games revenue in Japan seen in the graph is almost the same than the Sony worldwide one and very different than the Nintendo one
• Worldwide PS4+PS5 have a 1.24:1 advantage in units versus Switch 1+2, but in Japan it's very different (Switch has 2.3:1 advantage). Meaning, Switch is better positioned than Sony in Japan regarding installbase, but the distance is very small compared to the 5:1 distance Sony has in digital game sales worldwide
• Meaning, despite Nintendo having a bigger console installbase and and better physical game sales in Japan, pretty likely like in the rest of the world Sony also has a considerable advantage in digital revenue over Nintendo in Japan. And being digital revenue 70% of the total console game revenue in Japan, pretty likely PS (which remember, includes both PS4+PS5) makes more money from games than Nintendo, as also happens worldwide

 

[Woopah]

No, physical game sales are a very small portion of the total game revenue both in Japan and worldwide (and way smaller when talking about the revenue and also including addons and game subs), and Sony dominates the digital game revenue.

Sony also has around half of its active userbase still in PS4, meaning a lot of money made by their games comes from PS4, not only PS5.



Let's see the worldwide case (graphs with fiscal years, not calendar years):

• Nintendo makes a bit more revenue than Sony with physical games (162.8 bn yen last fiscal year)
• Sony makes way more revenue than Nintendo with digital game revenue, digital game sales+addons+subs (2634 bn yen difference last fiscal year)
• In the last fiscal year regarding total game revenue (a.k.a. conent and services, a.k.a. physical+digitall full game sales+addons+game subs), Sony made 3081.5 bn yen and Nintendo made 610 bn yen, a 5:1 difference in Sony's favor
• In the last fiscal year, physical sales were only a 3.93% (case of Sony) and 46.56% (case of Nintendo) of their total game revenue (a.k.a. content & services revenue, a.k.a. full game + addons + game subs sales)
• Combining Sony and Nintendo, in the last FY physical game revenue was 405.2 bn yen, 10.98% of the their total physical + digital software revenue (3691.5 bn yen)
• PS (4+5) has a 1.24:1 advantage in HW sales units over Switch (1+2) worldwide
• In digital revenue we see that late 2020/early 2021 (PS5 launch window) there's a big spike particularly in the Sony side, then goes a bit down and keeps steady during a couple years and then during a couple years goes up in the Sony side. Pattern isn't the same in Nintendo
• In physical revenue there isn't a lot of difference between the companies, combining them we see that since 2018 it has been pretty much flat was a small drop in year ending in March 2020 (pre-PS5 release) and very small peaks from April 2021 to March 2022 (Switch software sales peak year) and from April 2022 to March 2023 (PS5 software sales peak year) that more or less compensate each other. We see an important drop in April 2024-March 2025 (pre-Switch 2 + gradual decrease of PS5 physical sales since the peak), that started for PS5 a year before.

Now let's see the Japanese case, graph of Japanese gaming revenue per calendar -not fiscal- year (orange=mobile, blue=PC, green=console digital, pink=console physical) from the Famitsu White Book:

• In 2024 calendar (not fiscal) year of the game revenue in Japan (only software, not counting hardware or accesories):
  • 1,119 bn yen were physical console game revenue (4.67% of the total, 29.25% of consoles)
  • 2,707 bn yen were digital console game revenue (11.30% of the total, 70.75% of consoles)
• So physical console game revenue in Japan (this time including MS) is 29.25% of the total console game revenue, higher than the Sony+Nintendo one worldwide (10.98%), a substantial different that would be pretty smaller if in this graph aren't counting game subs
• We see digital console game revenue had a high growth in 2020, then goes a bit down and gets mostly flat during a couple years and then grows during a couple years. Pretty much the same pattern than in worlwide PS numbers, console that dominates digital game revenue
• Switch (1+2) has a 2.3:1 advantage in Japan over PS (4+5), very different than worlwide, where PS has a 1.24:1 advantage
• We see physical sales pretty much flat (matching the combined PS+SW WW sales) with the only more or less meaningful events a tiny peak in 2020 (I assume covid + Animal Crossing) and mostly a drop during 2023 and 2024 (matching WW numbers particularly of PS)

So, TLDR:

• Physical console games revenue in Japan is under 30% of the total consoles game revenue, and under 5% when also counting mobile and PC
• Over 70% of the console games revenue in Japan is digital
• In digital console games revenue Sony has a 5:1 advantage over Nintendo worldwide, and the evolution of the digital console games revenue in Japan seen in the graph is almost the same than the Sony worldwide one and very different than the Nintendo one
• Worldwide PS4+PS5 have a 1.24:1 advantage in units versus Switch 1+2, but in Japan it's very different (Switch has 2.3:1 advantage). Meaning, Switch is better positioned than Sony in Japan regarding installbase, but the distance is very small compared to the 5:1 distance Sony has in digital game sales worldwide
• Meaning, despite Nintendo having a bigger console installbase and and better physical game sales in Japan, pretty likely like in the rest of the world Sony also has a considerable advantage in digital revenue over Nintendo in Japan. And being digital revenue 70% of the total console game revenue in Japan, pretty likely PS (which remember, includes both PS4+PS5) makes more money from games than Nintendo, as also happens worldwid

The trends in Japan are different to worldwide though.

As you note, PS has a userbase and software unit sales advantage over Switch worldwide. Whereas Japan its the opposite, with Switch having the higher userbase and higher software unit sales.

And while it's true that Sony has a big lead over Nintendo in digital sales, that lead becomes a lot smaller when you take the accounting differences into account (but still big). Likewise when we say "In the last fiscal year, physical sales were only a 3.93% (case of Sony)" we again need to note that Sony counts digital revenue differently from physical revenue.

PS may very well make more MTX revenue in Japan than Switch, but we don't really know. But in terms of physical/digital software and hardware sales Switch has the clear advantage.

 

[yurinka]

The trends in Japan are different to worldwide though.

As you note, PS has a userbase and software unit sales advantage over Switch worldwide. Whereas Japan its the opposite, with Switch having the higher userbase and higher software unit sales.

The only big difference they lean more to portables. Which means their mobile gaming has a slightly higher percentage than worldwide and in consoles they lean more to portables than to home consoles compared to worldwide.

This Japan vs WW difference in hardware installbase I detailed obviously must affect the software revenue, but remember, Sony's advantage in software (particularly digital) is way bigger.

As I also detailed, worldwide PS has a worldwide advantage of 5:1 in software revenue and 1.24:1 in units, meaning a software revenue per unit of around 4 times Switch.

So if my maths aren't wrong, making a rough extrapolation estimate if in Japan Switch has an installbase difference of 2.3:1 and per unit PS also make in Japan 4x the software revenue than Switch makes, then in Japanese sofware revenue would be 2.3:4 (so 1.74:1) in Sony's favor. PS or Switch behavior per console may change a bit per console in Japan vs worldwide regarding buying games/addons/subs, changing the real difference vs the rough extrapolation estimate, but highly doubt the change would be so big to compensate that 1:74:1 difference.

So, even if in -like in worldwide- Switch would make more revenue selling physical games and having more hardware units sold, PS would have more software revenue in Japan due to their big difference per unit in digital software revenue (a huge chunk of that coming from addons).

And while it's true that Sony has a big lead over Nintendo in digital sales, that lead becomes a lot smaller when you take the accounting differences into account (but still big). Likewise when we say "In the last fiscal year, physical sales were only a 3.93% (case of Sony)" we again need to note that Sony counts digital revenue differently from physical revenue.

PS may very well make more MTX revenue in Japan than Switch, but we don't really know. But in terms of physical/digital software and hardware sales Switch has the clear advantage.

In the digital side Sony has all digital full game sales + addon sales + game subs sales reported separatedly. In the digital side, Nintendo reports digital version sales of titles also available physically as one thing, and in a separate side report together digital only games + addons + game subs. So the only way you have to compare directly Nintendo vs Sony digital revenue is counting all digital full game sales + addon sales + game subs sales.

I didn't count there Sony's software revenue outside PS ('other software', PC+Switch+Xbox+mobile revenue) and Nintendo's software revenue outside 'dedicated gaming device' Switch (mobile revenue).

To get their total software revenue, or 'content and services' revenue we add the physical game sales revenue to that digital game sales + addon sales + game subs sales revenue.

 

[Woopah]

The only big difference they lean more to portables. Which means their mobile gaming has a slightly higher percentage than worldwide and in consoles they lean more to portables than to home consoles compared to worldwide.

This Japan vs WW difference in hardware installbase I detailed obviously must affect the software revenue, but remember, Sony's advantage in software (particularly digital) is way bigger.

As I also detailed, worldwide PS has a worldwide advantage of 5:1 in software revenue and 1.24:1 in units, meaning a software revenue per unit of around 4 times Switch.

So if my maths aren't wrong, making a rough extrapolation estimate if in Japan Switch has an installbase difference of 2.3:1 and per unit PS also make in Japan 4x the software revenue than Switch makes, then in Japanese sofware revenue would be 2.3:4 (so 1.74:1) in Sony's favor. PS or Switch behavior per console may change a bit per console in Japan vs worldwide regarding buying games/addons/subs, changing the real difference vs the rough extrapolation estimate, but highly doubt the change would be so big to compensate that 1:74:1 difference.

So, even if in -like in worldwide- Switch would make more revenue selling physical games and having more hardware units sold, PS would have more software revenue in Japan due to their big difference per unit in digital software revenue (a huge chunk of that coming from addons).




In the digital side Sony has all digital full game sales + addon sales + game subs sales reported separatedly. In the digital side, Nintendo reports digital version sales of titles also available physically as one thing, and in a separate side report together digital only games + addons + game subs. So the only way you have to compare directly Nintendo vs Sony digital revenue is counting all digital full game sales + addon sales + game subs sales.

I didn't count there Sony's software revenue outside PS ('other software', PC+Switch+Xbox+mobile revenue) and Nintendo's software revenue outside 'dedicated gaming device' Switch (mobile revenue).

To get their total software revenue, or 'content and services' revenue we add the physical game sales revenue to that digital game sales + addon sales + game subs sales revenue.

We still need to take into account the difference in reporting. When Nintendo reports digital software revenue, it only includes the revenue that it gets to keep. When Sony reports digital software revenue, they report the combined revenue of themselves and every single third party publisher.

Obviously third parties make a huge amount of money from Playstation. So if we were to remove their revenue and just compare Nintendo to Sony themselves, the gap would not be 5:1.

Playstation physical unit software sales in Japan in 2024 were 4,554,550. Sony's digital ratio globally for that time was around 75%, so that would give them total unit sales of around 18,218,200.

Switch software shipments in Japan in that same period were 34,070,000. To make it like-for-like we'd have to remove the unsold physical games from that number, but then add in the sales of digital only games.

So as you can see, the unit sales gap between Switch and PS is very different in Japan vs. the worldwide situation.

 

[yurinka]

We still need to take into account the difference in reporting. When Nintendo reports digital software revenue, it only includes the revenue that it gets to keep. When Sony reports digital software revenue, they report the combined revenue of themselves and every single third party publisher.

No, they report the same: sales a.k.a. revenue, which is the money that company gets by selling stuff. In this case, a console platform holder sells directly 1st party physical games and anything on their digital store: 1st and 3rd party digital games, addons and subs.

Regarding 3rd party physical games, they aren't sold by these platform holders, so they can't account all the money paid for them as their revenue, because it's something other company sold. In that case it only counts for them as revenue the royalty these 3rd party pays them for selling/shipping a physical copy of a game for their console.

Later, after having got paid what they reported as the revenue there are several things reported as expenses they pay, which includes stuff like the 70% royalty for the 3rd party digital games/addons sales to their 3rd party publisher, servers, transaction commisions, refunds, taxes, etc.

The big difference in digital software revenue comes from Sony having a bigger active userbase (PS has in a month aprox. the same amount Nintendo has in a year) and making more average money per user, mainly with addons, selling some of their top selling games more expensive, a considertably bigger percentage of full game sales sold digitally and having way more subscriptions plus charging them at a more expensive price.

Most of these digital revenue numbers were for Sony during the FY that ended this March like twice they were in the FY that ended in March 2020 (the last one before releasing the PS5) even if they were reporting them in the same way during this period.

Playstation physical unit software sales in Japan in 2024 were 4,554,550. Sony's digital ratio globally for that time was around 75%, so that would give them total unit sales of around 18,218,200.

Switch software shipments in Japan in that same period were 34,070,000. To make it like-for-like we'd have to remove the unsold physical games from that number, but then add in the sales of digital only games.

Yes, as I mentioned Switch sells more physical games than PS worldwide. So obviously as shown in your rough estimate in Japan too, and even with a bigger difference than in worlwide because Switch has a way bigger installbase than PS in Japan (while is smaller worldwide). And on top of that Switch has a considerably bigger percent of full game sales that are physical than PS.

As explained above, this is perfectly compatible with Sony making way more total software revenue, and specifically digital revenue, both worldwide and in Japan, due to generating way, way more revenue selling digital full games, addons and game subs. More than compensating the way smaller lead Switch has in Japan (a country where over 95% of all game revenue -counting beyond console- is digital and not physical).

 

[Woopah]

No, they report the same: sales a.k.a. revenue, which is the money that company gets by selling stuff. In this case, a console platform holder sells directly 1st party physical games and anything on their digital store: 1st and 3rd party digital games, addons and subs.

Regarding 3rd party physical games, they aren't sold by these platform holders, so they can't account all the money paid for them as their revenue, because it's something other company sold. In that case it only counts for them as revenue the royalty these 3rd party pays them for selling/shipping a physical copy of a game for their console.

Later, after having got paid what they reported as the revenue there are several things reported as expenses they pay, which includes stuff like the 70% royalty for the 3rd party digital games/addons sales to their 3rd party publisher, servers, transaction commisions, refunds, taxes, etc.

What you said here is 100% accurate for Sony, but it is not true for Nintendo.

We've been over this in our previous discussions, but when Nintendo report digital revenue they say (emphais mine) "When calculating digital sales, sales of Nintendo software are recognized as gross sales, while sales of software released by other software publishers are recognized as net sales."

Sony includes 100% of digital third party revenue (gross sales) whereas Nintendo only includes the royalties (net sales).

Yes, as I mentioned Switch sells more physical games than PS worldwide. So obviously as shown in your rough estimate in Japan too, and even with a bigger difference than in worlwide because Switch has a way bigger installbase than PS in Japan (while is smaller worldwide). And on top of that Switch has a considerably bigger percent of full game sales that are physical than PS.

As explained above, this is perfectly compatible with Sony making way more total software revenue, and specifically digital revenue, both worldwide and in Japan, due to generating way, way more revenue selling digital full games, addons and game subs. More than compensating the way smaller lead Switch has in Japan (a country where over 95% of all game revenue -counting beyond console- is digital and not physical).

Sorry, I realised I hadn't given you a key bit of informaiton, physcial Switch numbers.

Switch total software shipments were 34,070,000, but its physical sales were 15,160,018. That leaves around 19 million units of digital sales.

So in 2024 in Japan, digital unit sales on Switch were similar to total unit sales across PS4 and PS5. I'm pretty sure that was not the case worldwide, and therefore in Japan the trends are different.

 

[yurinka]

What you said here is 100% accurate for Sony, but it is not true for Nintendo.

We've been over this in our previous discussions, but when Nintendo report digital revenue they say (emphais mine) "When calculating digital sales, sales of Nintendo software are recognized as gross sales, while sales of software released by other software publishers are recognized as net sales."

Sony includes 100% of digital third party revenue (gross sales) whereas Nintendo only includes the royalties (net sales).

Sony also must account their first party revenue as gross sales (because they later remove from there different expenses from there, like the costs of the shop, servers, what did cost them to make these games, etc) and the "30%" -smaller for some key publishers in specific cases- cut from the 3rd party games as net revenue, because that is clean money for them (not counting taxes, that are accounted separatedly).

But in any case, in both cases Nintendo sells and manages the payments of the 3rd party games in the eShop, in the same way Sony does it in PSN. So all the money they generate there is accounted and reported as revenue, independently if the 1st party chunk will be accounted as gross and their cut from 3rd parties will be accounted as net.

In fact it's more complex than this, there is also another difference in how digital 3rd party money is managed: the first party doesn't pay the 3rd party their part just in the moment every single unit is sold. That payment is delayed to remove from there the related refunds or chargebacks and also to reduce the amount of payments/invoices and related paperwork for each publisher, which are bundled and made periodically (as I remember were quarterly).

That '70%+' part of the 3rd party digital revenue obviously is accounted as their own (net revenue), it's something they'll have to pay later, but during that period between the customer paid it and when they pay it to the publisher temporarily helps to grow their cash, and for any company to have more cash is something positive.

In physical the 3rd party behavior is different: the 3rd party is the one who has all the costs of the game, and the one that sells it. From the platform holder's point of view is that when a 3rd party orders to ship X amounts of units of a game, they pay a royalty to the platform holder. If that unit later doesn't get sold or gets returned the publisher will have to eat that cost (the platform holder won't return their part).

Sorry, I realised I hadn't given you a key bit of informaiton, physcial Switch numbers.

Switch total software shipments were 34,070,000, but its physical sales were 15,160,018. That leaves around 19 million units of digital sales.

So in 2024 in Japan, digital unit sales on Switch were similar to total unit sales across PS4 and PS5. I'm pretty sure that was not the case worldwide, and therefore in Japan the trends are different.

You have to remember that the Famitsu weekly rankings, in addition to don't count digital game sales, addon sales and game subs sales, they don't count all the physical game sales: they only count the top 50 games of each week, while in reality there are hundreds or thousands of physical games being sold even if in low quantities each. Meaning, the Japanese physical game units sold reported in the weekly reports are just a part of the total Japanese physical game units sold for all platforms, particularly in terms of percent for those platforms whose games normally doesn't appear in the ranking.

Regarding physical game revenue, Switch gets more worldwide than PS despite having sold less hardware units. So in Japan, since they sold more hardware than PS they must sell more physical full game revenue too. Pretty likely particularly in physical, because Switch has a bigger worldwide percent that comes from physical. And if this happens with revenue it could happen in units too if the 1st vs 3rd party sales ratio would be the same or very similar between PS and Switch (isn't the case). Despite having games generally cheaper, since the percent of games sold is bigger in Switch and they got more money from first party game units than from 3rd party ones, they need less units sold to achieve the same amount of revenue.

In any case, we have to remember that in Japan physical games revenue is just a 30% of the console game revenue and maybe -unlike in the Newzoo worlwide graph I posted- that isn't counting gamesubs revenue. Because in that Famitsu Japanese graph consoles are 16% of the total and in the worldwide one they're 24% and this difference could be explained because of the game subs, but also because of different local behavior (more mobile focused than the other top console countries).

 

[Woopah]

Sony also must account their first party revenue as gross sales (because they later remove from there different expenses from there, like the costs of the shop, servers, what did cost them to make these games, etc) and the "30%" -smaller for some key publishers in specific cases- cut from the 3rd party games as net revenue, because that is clean money for them (not counting taxes, that are accounted separatedly).

But in any case, in both cases Nintendo sells and manages the payments of the 3rd party games in the eShop, in the same way Sony does it in PSN. So all the money they generate there is accounted and reported as revenue, independently if the 1st party chunk will be accounted as gross and their cut from 3rd parties will be accounted as net.

In fact it's more complex than this, there is also another difference in how digital 3rd party money is managed: the first party doesn't pay the 3rd party their part just in the moment every single unit is sold. That payment is delayed to remove from there the related refunds or chargebacks and also to reduce the amount of payments/invoices and related paperwork for each publisher, which are bundled and made periodically (as I remember were quarterly).

That '70%+' part of the 3rd party digital revenue obviously is accounted as their own (net revenue), it's something they'll have to pay later, but during that period between the customer paid it and when they pay it to the publisher temporarily helps to grow their cash, and for any company to have more cash is something positive.

In physical the 3rd party behavior is different: the 3rd party is the one who has all the costs of the game, and the one that sells it. From the platform holder's point of view is that when a 3rd party orders to ship X amounts of units of a game, they pay a royalty to the platform holder. If that unit later doesn't get sold or gets returned the publisher will have to eat that cost (the platform holder won't return their part).

That's all true for Sony, but again it's not true for Nintendo.

In practical terms in works the same way. When people buy digital third party games on PSN / the eShop, all of that money will go to Nintendo or Sony. But they don't report it the same way.

If you buy Minecraft digitally for $60 on PS5, that will show as $60 in Sony's revenue figures. You do the same on the eShop and it will show as $18 in Nintendo's revenue figures. The $42 that goes to Microsoft isn't counted as revenue.

Nintendo will still receive the full $60, but they don't include it in their accounts. Their approach is to account for digital software revenue in the same way they account for physical software revenue.

Whereas Sony accounts for digital software revenue differently to how they account for physical software revenue, for the reasons you say above.

I'm not saying there is a right or wrong way, just that we need to recognise that there are differences and this impacts the revenue numbers.

You have to remember that the Famitsu weekly rankings, in addition to don't count digital game sales, addon sales and game subs sales, they don't count all the physical game sales: they only count the top 50 games of each week, while in reality there are hundreds or thousands of physical games being sold even if in low quantities each. Meaning, the Japanese physical game units sold reported in the weekly reports are just a part of the total Japanese physical game units sold for all platforms, particularly in terms of percent for those platforms whose games normally doesn't appear in the ranking.

The numbers I'm giving are from Media Create and cover the whole market. It's not just the top 50 or top 1,000. It's everything. What I've shared are the total physical software sales across Switch, PS4 and PS5.

Regarding physical game revenue, Switch gets more worldwide than PS despite having sold less hardware units. So in Japan, since they sold more hardware than PS they must sell more physical full game revenue too. Pretty likely particularly in physical, because Switch has a bigger worldwide percent that comes from physical. And if this happens with revenue it could happen in units too if the 1st vs 3rd party sales ratio would be the same or very similar between PS and Switch (isn't the case). Despite having games generally cheaper, since the percent of games sold is bigger in Switch and they got more money from first party game units than from 3rd party ones, they need less units sold to achieve the same amount of revenue.

In any case, we have to remember that in Japan physical games revenue is just a 30% of the console game revenue and maybe -unlike in the Newzoo worlwide graph I posted- that isn't counting gamesubs revenue. Because in that Famitsu Japanese graph consoles are 16% of the total and in the worldwide one they're 24% and this difference could be explained because of the game subs, but also because of different local behavior (more mobile focused than the other top console countries).

Digital revenue is a big part of the market, but the key difference is that in Japan it is very likely that there are more digital unit sales on Switch than Playstation. Whereas on a global level there are way more digital sales on PlayStation than on Switch.

What we don't know is if Sony's lead on MTX and subscriptions in Japan makes up for Nintendo's lead in hardware and physical/digital software.

 

[bender]

Switch 2 is a beast.

 

[yurinka]

That's all true for Sony, but again it's not true for Nintendo.

In practical terms in works the same way. When people buy digital third party games on PSN / the eShop, all of that money will go to Nintendo or Sony. But they don't report it the same way.

If you buy Minecraft digitally for $60 on PS5, that will show as $60 in Sony's revenue figures. You do the same on the eShop and it will show as $18 in Nintendo's revenue figures. The $42 that goes to Microsoft isn't counted as revenue.

Nintendo will still receive the full $60, but they don't include it in their accounts. Their approach is to account for digital software revenue in the same way they account for physical software revenue.

Whereas Sony accounts for digital software revenue differently to how they account for physical software revenue, for the reasons you say above.

I'm not saying there is a right or wrong way, just that we need to recognise that there are differences and this impacts the revenue numbers.

Nintendo, like Sony and any other company must include the money they make selling stuff as revenue, if not they'd go to jail and would get sued by their investors.

Even if later there are things substracted from there like royalties, commisions, taxes etc.

The numbers I'm giving are from Media Create and cover the whole market. It's not just the top 50 or top 1,000. It's everything. What I've shared are the total physical software sales across Switch, PS4 and PS5.

Ah ok.

Digital revenue is a big part of the market, but the key difference is that in Japan it is very likely that there are more digital unit sales on Switch than Playstation. Whereas on a global level there are way more digital sales on PlayStation than on Switch.

What we don't know is if Sony's lead on MTX and subscriptions in Japan makes up for Nintendo's lead in hardware and physical/digital software.

Regarding digital revenue, as mentioned before with the extrapolation estimate PS should make around twice the Nintendo one extrapolating their worldwide revenue per unit to the Japanese installbase.

So even if the reality is pretty different, pretty likely -I'm sleepy and tired now to make maths- Sony will be still ahead, mainly due to the fact Sony has better numbers in digital full game sales, addon sales and gamesub sales worldwide. Nintendo is stronger in physical, but I assume pretty likely in Japan too Sony is also ahead (specially looking at how the Japanese evolution of the Japanese console digital revenue mimics the worldwide Sony graph while it's pretty different of the Nintendo WW graph) even if obviusly not with the same distance than worldwide.

 

[ShadyAcshuns]

When you say Sony chases the Western market, what would you like then to do to chase the Japan market? As in, what type of games should their studios be making?

Sorry for the late response. Seems they had everything during the recovery period of the PS3 through the PS4 height: the best of both worlds. I still, to this day, don't understand why they shut down so many Japanese studios and decided to all in on GaaS and CoD at their expense, and I know it's about the money, but having everything already should have been enough for them.

 

[Woopah]

Nintendo, like Sony and any other company must include the money they make selling stuff as revenue, if not they'd go to jail and would get sued by their investors.

Even if later there are things substracted from there like royalties, commisions, taxes etc.

The difference is Nintendo doesn't subtract these things after reporting (gross sales), they subtract them before (net sales).

If Nintendo had lied to investors, then yes they'd be in trouble. But they clearly state in their accounts "sales of software released by other software publishers are recognized as net sales."

If Nintendo were doing what you say they are doing, and actually reporting gross sales while claimimg to report net sales, then that is something they could be sued for.

Why would Nintendo say "net" if they mean "gross"?

Regarding digital revenue, as mentioned before with the extrapolation estimate PS should make around twice the Nintendo one extrapolating their worldwide revenue per unit to the Japanese installbase.

So even if the reality is pretty different, pretty likely -I'm sleepy and tired now to make maths- Sony will be still ahead, mainly due to the fact Sony has better numbers in digital full game sales, addon sales and gamesub sales worldwide. Nintendo is stronger in physical, but I assume pretty likely in Japan too Sony is also ahead (specially looking at how the Japanese evolution of the Japanese console digital revenue mimics the worldwide Sony graph while it's pretty different of the Nintendo WW graph) even if obviusly not with the same distance than worldwide.

The accounting differences obviously makes a big impact to the ratios, but we're also dealing with very different market dynamics.

In the worldwide market Sony has a similar number of monthly users to Nintendo has annual users. Whereas in Japan Nintendo is likely to have at least 2x the number of annual users that PS has mostly users.

Worldwide, Sony will have much higher digital full game net sales then Nintendo. Whereas in Japan, Nintendo will have higher digital full game net sales than Sony had total full game net sales.

BTW I appreciate the details in your response and you making the effort even thoigh you're sleepy

Sorry for the late response. Seems they had everything during the recovery period of the PS3 through the PS4 height: the best of both worlds. I still, to this day, don't understand why they shut down so many Japanese studios and decided to all in on GaaS and CoD at their expense, and I know it's about the money, but having everything already should have been enough for them.

Because it was CoD, GAAS and their Western studios that achieved that revival for PS3/4. So that's what they stuck with.

In Japan the revival of the PSP was largely caused by Monster Hunter, but that wasn't a franchise Sony was able to keep exclusive.

What Japan Studio was doing wasn't moving the needle that much. Even in Japan itself, the games being made by Japan Studios were being outsold by CoD and the games from Sony's Western Studios.

Gran Turismo on the other hand still does decently in Japan, and Polyphonic Digital are still open.

So even in a situation where Japan Studio had the same output on PS5 as they did on PS4 and PSP, Sony's situation in Japan wouldn't be that different.

 

[Woopah]

Switch 2 is a beast.

I don't think we can be sure of this just yet. Hardware sales are very strong, but so far there hasn't been much software success outside of Mario Kart. Interest in the ports from third parties wasn't high.

The platform does have a solid lineup for the rest of the year though, so we'll have a better picture after 2025. We'll be able to see how the new games launch, and judge the legs of some of the games already out.

 

[bender]

I don't think we can be sure of this just yet. Hardware sales are very strong, but so far there hasn't been much software success outside of Mario Kart. Interest in the ports from third parties wasn't high.

The platform does have a solid lineup for the rest of the year though, so we'll have a better picture after 2025. We'll be able to see how the new games launch, and judge the legs of some of the games already out.

If I had a heart, I'd feel it there. Beast!

 

[yurinka]

Why would Nintendo say "net" if they mean "gross"?

I already explained it above: if you pay $100 for a 3rd party game in the eShop, that is gross revenue for Nintendo. Out of it, only most part of the '30% cut' (slightly under $30) will be for Nintendo as net revenue. Same goes for Sony or any other digital store changing their percentage. They must account it in this same way, that's standard for finances / running a company.

A different thing is if they want to explain it in a note of the IR report to let their investors that a really huge chunk of the gross revenue they make in their digital store 'doesn't really belong' to them, that isn't net revenue. That note is optional, so some do it and others don't.

When the investor checks other metrics like the percent of first party sales and the profit already realizes it.

Worldwide, Sony will have much higher digital full game net sales then Nintendo. Whereas in Japan, Nintendo will have higher digital full game net sales than Sony had total full game net sales.

You're free to think whatever you want, in the rough estimation I did before doing some quick math to extrapolate the available numbers gives me the numbers I posted.

BTW I appreciate the details in your response and you making the effort even thoigh you're sleepy

Thanks

 

[Woopah]

I already explained it above: if you pay $100 for a 3rd party game in the eShop, that is gross revenue for Nintendo. Out of it, only most part of the '30% cut' (slightly under $30) will be for Nintendo as net revenue. Same goes for Sony or any other digital store changing their percentage. They must account it in this same way, that's standard for finances / running a company.

This part I think we agree on. If someone spends $100 on a third party the eshop then Nintendo's gross sales is $100 and their net sales is $30.

So given that Nintendo's digital revenue includes "net sales" from digital third party games, do you think they include the $100 or the $30?

A different thing is if they want to explain it in a note of the IR report to let their investors that a really huge chunk of the gross revenue they make in their digital store 'doesn't really belong' to them, that isn't net revenue. That note is optional, so some do it and others don't.

But Nintendo's note doesn't say it "isn't net revenue". They say it is net revenue.
These are the digital game revenue notes from Sony and Nintendo:

Sony: "Digital Software is revenue from full game downloads of both first and third party titles sold via the PlayStation™Store"

Nintendo: When calculating digital sales, sales of Nintendo software are recognized as gross sales, while sales of software released by other software publishers are recognized as net sales."

Sony is telling investors they include gross revenue for both first and third party games. Nintendo is telling investors they include gross sales from first party games and net sales from third party games.

The two notes do not mean the same thing.

 

[yurinka]

This part I think we agree on. If someone spends $100 on a third party the eshop then Nintendo's gross sales is $100 and their net sales is $30.

So given that Nintendo's digital revenue includes "net sales" from digital third party games, do you think they include the $100 or the $30?

But Nintendo's note doesn't say it "isn't net revenue". They say it is net revenue.
These are the digital game revenue notes from Sony and Nintendo:

Sony: "Digital Software is revenue from full game downloads of both first and third party titles sold via the PlayStation™Store"

Nintendo: When calculating digital sales, sales of Nintendo software are recognized as gross sales, while sales of software released by other software publishers are recognized as net sales."

Sony is telling investors they include gross revenue for both first and third party games. Nintendo is telling investors they include gross sales from first party games and net sales from third party games.

The two notes do not mean the same thing.

Nintendo's (same for Sony) digital gross revenue includes the $100.
Nintendo's (same for Sony) digital net revenue includes the slightly under $30.

Both are revenue/sales, the difference is that net includes having substracted some of the expenses related to the gross revenue of transaction. Other ones get substracted later, outside the revenue.

Sony says their digital revenue includes two main types of products: first and 3rd party. Nintendo says the same, but specifies the difference.

 

[Woopah]

Nintendo's (same for Sony) digital gross revenue includes the $100.
Nintendo's (same for Sony) digital net revenue includes the slightly under $30.

Both are revenue/sales, the difference is that net includes having substracted some of the expenses related to the gross revenue of transaction. Other ones get substracted later, outside the revenue.

Sony says their digital revenue includes two main types of products: first and 3rd party. Nintendo says the same, but specifies the difference.

If you go to PSN and spend $100 on a first party game and $100 on a third party game, Sony will recognise the gross sales for both ($200 in total).

If you go to eshop and spend $100 on a first party game and $100 on a third party game, Nintendo will recognise the gross sales for the first party game and recognise the net sales for the third party game (a little under $130 in total).

When reporting physical games revenue, both Sony and Nintendo only includes the royalties from third parties. But when reporting digital games revenue, Sony includes the gross while Nintendo includes the net.

The net and gross is the same for both companies. But what they choose to report is different.

 

[crackajack]

Nintendo would be having a pretty good run vs its competition despite the Switch being so dang old by now even without including Switch 2, its replacement, in this chart. Like over double the sales and stuff. But they're also beating that with like almost 5 times the sales on top. Dang.

Is this some second hand market surge? People selling their Switch 1 games, so cheapasses buy the necessary hardware new, but games in used condition? Otherwise I am confused why anyone would buy an obsolete platform now. Nintendo isn't doing any cross gen stuff I think?

 

[Woopah]

Is this some second hand market surge? People selling their Switch 1 games, so cheapasses buy the necessary hardware new, but games in used condition? Otherwise I am confused why anyone would buy an obsolete platform now. Nintendo isn't doing any cross gen stuff I think?

Its cheaper than the Switch 2 and gives you access to a big library of games, not only from the past 8 years but also upcoming. There's a fairly good chance that the three biggest games to be released in Japan this holiday season will be available on both Switch and Switch 2.

Then Nintendo already has a couple of Switch games announced for 2026, and I'd be shocked if they didn't have more.