Take-Two forecasts weak 2021 sales

Take-Two Interactive Software Inc., on Monday, was the latest videogame publisher to forecast weak annual sales, giving further evidence that the absence of major releases and easing COVID 19 curbs has reined in the industry's growth.

The Grand Theft Auto publisher said full-year adjusted sales will be between $5.8 billion and $5.9 billion. According to Refinitiv data, analysts predicted $6.32 billion.

The gaming industry, considered by some analysts as recession proof, has started to see weakness as people worried about high inflation have started spending less on discretionary items such as hardware and accessories. According to the research firm NPD, consumer spending on video games in the United States fell 11 per cent in June.

I don't believe that the entertainment business is recession proof or even recession resistant, says Take-Two Chief Executive Officer Strauss Zelnick, adding that the decline in consumer spending and increase in inflation will have an impact on the industry.

Electronic Arts Inc forecast quarterly adjusted sales below estimates last week, while Activision Blizzard had also delivered a disappointing second quarter.

A slowdown in gaming has been cautioned by several other companies. Last month, Sony trimmed its forecast on waning consumer interest in video games, as chipmaker Nvidia Corp warned of lower second-quarter revenue on weakness in its gaming business.

Take-Two's forecast included contributions from mobile game maker Zynga, which it recently acquired in a $11.04 billion cash-and-stock deal.

Zelnick said that we're seeing a bit more softness in mobile.

Sales increased 41 per cent to $1.0 billion for the quarter ended June 30, but it was still below Street's expectation of $1.1 billion.