Console Gaming Demand Has Declined A lot, Says AMD

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AMD Gaming Revenue Down By 48%!

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  • AMD has just revealed that gaming revenue in Q1 2024 is down almost 50% YoY.
  • It states that this primarily due to decreased demand for consoles like the PS5 and Xbox Series S|X, in addition to gaming graphics cards.
  • AMD does not expect demand to improve in the near future.

The gaming industry has faced challenges in recent years, with concerns arising over a perceived decline in player engagement due to games prioritizing monetization over entertainment and encountering technical issues.

The impact of such events appears to have reverberated throughout the gaming industry, as evidenced by AMD’s CFO, Jean Hu, disclosing a significant downturn in gaming demand during the Q1 2024 earnings call.

She states that demand will continue to get worse.

Why it matters: The substantial decline in gaming demand is indicative of underlying issues within the industry that must be addressed. Failure to fix these issues could potentially result in significant challenges moving forward.

AMD Q1 2024 Performance
AMD Q1 2024 Performance

According to the CFO, gaming hardware is no longer as sought after. She also states that demand will only worsen, with the second quarter expected to be even worse than Q1.

Demand has been quite weak. Also [they have] inventory issues.

-Jean Hu

CEO Lisa Su supported this assertion, revealing that gaming revenue for AMD in Q1 had declined by 48% compared to the same period last year. Moreover, it experienced a 33% decrease compared to the previous quarter, resulting in revenue of $922 million.

Gaming operating income was also down 52% year over year. The decrease in gaming revenue is attributed to lower semi-custom revenue and reduced sales of AMD Radeon GPUs, while the decline in operating income is attributed to lower revenue.

Su also noted that first-quarter semi-custom SoC (System-on-Chip) sales declined in line with their projections as consoles entered the latter half of their cycle. She described it as a significant decline that aligns with the typical pattern observed in the console cycle.

The gaming giant supplies hardware to the PS5 and Xbox Series S|X. The former was setting new records last year, reaching 50 million units sold. While the latter’s sales were already slow in 2023, it seems both console giants will suffer worse sales by the end of 2024.

Overall, AMD’s revenue was still up by 2% YoY.

AMD began the year on a strong note but has been impacted by the decline in gaming demand, affecting its performance.

While the technical aspects have certainly contributed to the decline, several other factors have also played significant roles in this downturn.

The gaming industry’s current state has been a topic of discussion, with observations indicating that many developers prioritize profit over crafting games that lead to less consumer interest. Such acts have led to lower trust amongst gamers, resulting in lower revenue.

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