MONSTER Q3 earnings, SPOOKY Q4 outlook for games marketing – Games Growth with Upptic

Are games and marketing flying or falling? In this episode of Games Growth with Upptic, Upptic CGO Warren Woodward and Upptic Marketing Director Xander Agosta discuss the heights of Q3, the worries of Q4, and the monsters all around us! Dive into the financial earnings, industry trends, and market dynamics of the gaming and marketing sectors. Here are some key takeaways from the episode.

Q3 in Gaming: Performance and Forecasts

The gaming industry showed promising results in some areas while highlighting challenges in others. This earnings season brought mixed news for major publishers and platforms as they gear up for the holiday season.

Call of Duty’s Record-Breaking Release

A standout for Q3, Call of Duty Black Ops 6 achieved the highest three-day opening sales in the franchise’s history. Available through Microsoft’s Game Pass, it saw substantial player engagement and was particularly successful in its release across platforms like PlayStation and Steam. Interestingly, Microsoft chose not to release specific revenue numbers, focusing instead on overall Game Pass subscriptions. The success of Call of Duty underscores Microsoft’s strategy to differentiate its offerings through exclusive, high-quality content — a marked shift from prior cycles where quick turnaround was emphasized over development quality.

Electronic Arts (EA) Earnings: Strong Q3, Soft Outlook

Electronic Arts (EA) also reported a successful Q3, with revenue rising by 5.8% year-over-year to $2.03 billion. However, EA has set conservative expectations for the next quarter, projecting a 17.6% decline year-over-year. Analysts foresee a 5.1% revenue dip over the next year, signaling a broader challenge within the industry. A combination of post-COVID normalization, reduced studio funding, and development downscaling is likely causing the dip in EA’s projections.

DFC Intelligence: Hope for a 2025 Gaming Rebound

Analyst group DFC Intelligence predicts a significant upswing for the gaming industry starting in 2025. They anticipate record growth in the PC and console segments, increased spending on hardware, a possible new console cycle within five years, and a shift toward live-ops gaming. However, while some analysts remain bullish, others suggest a slower return to pre-pandemic growth. The industry appears in a holding pattern, waiting for new revenue streams and infrastructure improvements to gain traction.

Q3 in Marketing: Strong Demand Across Major Ad Platforms

On the marketing side, the ad industry has seen robust growth, with digital ad sales at Reddit, Snap, and YouTube showing impressive year-over-year gains.

Reddit’s Ad Revenue Surge

Reddit saw substantial growth, with ad revenue jumping 56% year-over-year to $315.1 million. This surge is attributed mainly to Reddit’s increased ad inventory and aggressive placement strategies, including new “conversation ads” in comment threads. Reddit’s strategy echoes Meta’s long-standing approach of increasing ad placements to boost revenue.

YouTube’s Q3 Growth: A Record Performance

YouTube reported $8.92 billion in advertising revenue for Q3, surpassing forecasts with 12.2% year-over-year growth. Since adding a consent prompt for tracking on iOS, YouTube has become a more attractive platform for performance marketers. The new prompt has expanded ad capabilities on iOS, no doubt helping YouTube capture a more competitive share of ad spend.

Snap and Alphabet: The Brand Spending Boom

The ad earnings boost wasn’t limited to Reddit and YouTube; Snap and Alphabet (Google) also experienced gains. Brand spending has remained steady, bolstered by election-related ad buys – a trend expected to influence Q4 figures even more significantly.

Industry Vibes and Long-Term Trends

The games industry seems to be shifting to a long-haul, cautious approach. While new funding is emerging, investment deployment remains tentative, signaling a “steady but slow” growth outlook. Meanwhile, market consolidation and rising ad costs are challenging smaller studios and businesses.

The advertising industry’s Q3 performance signals a dominant trend: the big platforms are getting bigger. With increased ad placement and AI-driven targeting, the largest players continue to capture market share, which could squeeze out smaller platforms and advertisers over time. Election season spending is another factor to watch as it inflates advertising costs temporarily.