EA slashes booking expectations on strong dollar and gaming slowdown

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By Tiyashi Datta and Aditya Soni

(Reuters) – Electronic Arts Inc lowered its full-year bookings forecast on Tuesday as the publisher of ‘FIFA’ and ‘Apex Legends’ grapples with the surging U.S. dollar this year and a slowing gaming industry by compared to pandemic peaks. The company now expects annual bookings – an indicator of future revenue – between $7.65 billion and $7.85 billion, down from $7.90 billion to $8.10 billion previously. After a meteoric rise during the pandemic, video game sales have slowed this year due to a lack of major releases and a drop in spending by consumers who have faced high inflation for decades.

That, coupled with protracted industry supply chain challenges, also put pressure on quarterly revenue from Sony Corp’s PlayStation 5 and Microsoft Corp’s Xbox content and services.

Overall, the gaming market is expected to grow just 2% in 2022, according to data from research firm Newzoo, a far cry from 2020’s 23% jump. A nearly 17% rise in the US dollar this year also stifled growth, with EA predicting a roughly $200 million drop in annual bookings. The company generates more than half of its revenue outside the United States.

Wedbush Securities analyst Michael Pachter said “poor mobile execution” was also a concern.

“They didn’t effectively integrate their large mobile acquisitions and buy games that were in decline when they shut down Glu, Codemasters and Playdemic.”

EA hasn’t had any major releases for most of the year, but it could get some backing from the October launch of ‘FIFA 23’ – the latest installment in its popular football franchise.

‘FIFA 23′ had the best launch week of any game in the series and it looks like there will be more demand thanks to the FIFA World Cup in Qatar next month. EA’s second-quarter adjusted sales of $1.75 billion were slightly above analysts’ estimates, according to Refinitiv data. Its adjusted profit also exceeded expectations.

(Reporting by Tiyashi Datta and Aditya Soni in Bengaluru; Editing by Devika Syamnath)

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