Electronic Arts Inc lowered its annual bookings forecast on Tuesday, as the videogame publisher delayed the release of a title based on the Star Wars franchise and consumers dialed back spending in a sagging economy.
The company's shares fell nearly 7 per cent in extended trading as the results were added to the grim gaming forecast from Xbox maker Microsoft Corp., which fanned fears that a downturn in the industry was going to continue this year.
The gaming market fell by 4.3 per cent in 2022 after two years of Pandemic-driven growth, according to estimates from NewZoo. The drop was due to a lack of big new titles.
EA has pushed out its launch of Star Wars Jedi: Survivor by six weeks to April 28, which would fall into its next fiscal year. The game is a sequel to the 2019 Star Wars Jedi: Fallen Order title that has drawn over 20 million players.
Recent launches did not do enough to draw consumers, who are prioritizing essentials in the face of rising interest rates and still-high inflation, according to the results.
In recent months, the company released Need for Speed Unbound, the latest installment in its FIFA series, expects annual bookings between $7.07 billion and $7.17 billion. It had previously predicted $7.65 billion to $7.85 billion.
Refinitiv data shows that the company's third quarter adjusted sales and profit came in below analysts' expectations.
Weak, but not a disaster, according to Wedbush Securities analyst Michael Pachter, who said the Star Wars title delay resulted in a huge shift of earnings into next year.
My best guess is that consumers are freaked out by inflation and fears of a recession.
EA monetizes free-to- play games by selling virtual items such as loot boxes and characters to people.