"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.

NPD Q1: NPD analyst Mat Piscatella said that, according to the new Q1 2022 Games Market Dynamics report from The NPD Group, U.S. spending on video game hardware, content and accessories reached $13.9B in the quarter, a decline of 8% when compared to Q1 2021. Content spending fell 7% vs last year, while hardware slipped 15%. Despite the Q1 declines compared to a year ago, the U.S. video game market continues to trend well above pre-pandemic levels. Reasons for the Q1 decline likely related to return to experiential spending, lack of available new generation hardware, and the Q1 2021 stimulus comp. Nintendo Switch (NTDOY) sold the most units of hardware during Q1 2022 in the U.S., while Xbox Series (MSFT) led hardware in total consumer spending. Bandai Namco's (NCBDY) "Elden Ring" was the best-selling premium game of the quarter in dollar sales. In content, subscription was the leading growth segment with mid-single digit percentage consumer spending gains when compared to a year ago, Piscatella added.

NINTENDO EARNINGS: Earlier on Tuesday, Nintendo reported a year-over-year decline in FY22 revenue and operating profit, though the company noted it sold 235.1M Switch software units during the year, bringing the Switch's total software unit sales number of 822.18M. Switch hardware sales rose to 107.65M units, and the company said it expects to ship 21M more Switch consoles in the current fiscal year. Additionally, the game maker announced that a 10-for-1 split of the company's common stock is scheduled to take effect on October 1, 2022.

Looking again at software, Nintendo said that "Pokemon Brilliant Diamond/Shining Pearl" sold a combined 14.65M units during the fiscal year, while "Pokemon Legends: Arceus" sold 12.64M units. "Mario Party Superstars" moved 6.88M copies, "The Legend of Zelda: Skyward Sword HD" sold 3.91M units, and even 2017 game "Mario Kart 8 Deluxe" sold another 9.94M units, bringing its lifetime sales number of 45.33M.

Looking ahead, Nintendo said it expects to report FY23 net sales of JPY1.6T and operating profit of JPY500B. The company believes it will continue to "convey the appeal" of all three Switch hardware models, and that upcoming releases like "Xenoblade Chronicles 3," "Splatoon 3," and "Pokemon Scarlet/Violet" may help strengthen sales. The report came a day after Gamesindustry.biz's Christopher Dring noted that "Nintendo Switch Sports," which released in late April, has remained in first place in U.K. boxed sales for the second straight week.

XBOX CLOUD: Late last week, Microsoft announced that it had partnered with Epic Games to make "Fortnite" available on supported browser-enabled devices for free with Xbox Cloud Gaming in 26 countries. Starting last Thursday, players only need a Microsoft account and an iOS, iPadOS, Android phone or tablet, or Windows PC with internet access to play "Fortnite" on the cloud. Investors in Epic Games include Tencent (TCEHY), KKR (KKR), Disney (DIS), and Sony (SONY).

As part of the announcement, the Xbox maker noted that, since launching Xbox Cloud Gaming in 2020, more than 10M people around the world have streamed games through Xbox Cloud Gaming as part of Xbox Game Pass Ultimate. "Our continued growth and ability to enable new business models has been driven by the way we've evolved cloud to make it part of the Xbox ecosystem," the company said. "We started off on Android only running off Xbox One S servers in our datacenters. Since then, Cloud Gaming upgraded to Custom Xbox Series X servers, and launched on Windows PCs, Apple phones and tablets, Xbox One and Xbox Series S X, and we've even started rolling it out on Steam Deck. We've also seen the community load it up on some unconventional devices via browser, although it looks like they were having a lot of fun. In total, players across all 26 countries have played on more than 6,000 types of devices, from various flavors of Android phones to a range of PCs and iPhones from all generations."

Additionally, VentureBeat's Jeff Grubb reported last week that Microsoft has plans to expand Xbox Cloud Gaming through television, as the company is working to release an Xbox Cloud-enabled gaming streaming device, according to people familiar with the plans. Within the next 12 months, the company will release a device that will likely look like an Amazon Fire Stick (AMZN) or even a smaller Roku-like (ROKU) puck, the author said. The device would enable users to access movie and TV services as well as a library of video games through Xbox Game Pass Ultimate. In addition, Microsoft is working with Samsung (SSNLF) to develop an Xbox game-streaming app for Samsung smart TVs, an app which is expected to debut within the next 12 months, Grubb noted.

OTHER STORIES TO WATCH:

• The FTC will investigate Sony's proposed $3.6B takeover of "Destiny" maker Bungie, The Information reports [more]
• Blizzard (ATVI) unveiled a new mobile game "Warcraft Arclight Rumble" [more]
• Activision Blizzard CEO Bobby Kotick is being sued by NYC officials who claim he rushed to secure a takeover offer from Microsoft in an effort to escape liability for misconduct, Axios reports [more]
• Former Nintendo of America president Reggie Fils-Aime told the Washington Post that he was unaware of recent labor-related claims about the company while he was there [more]
• Electronic Arts (EA) is working on a "Lord of the Rings" free-to-play mobile game [more]
• Ubisoft (UBSFY) has moved development of the upcoming "Prince of Persia: The Sands of Time" remake to Ubisoft Montreal [more]