EA’s Soccer Franchise Slump Sparks Concerns
Gaming Giant’s Shares Plummet
Electronic Arts (EA), a leading videogame publisher, has slashed its annual bookings forecast, citing a decline in its established soccer franchise. This news sent shockwaves through the market, causing shares to tumble over 17% in pre-market trading on Thursday.
Sluggish Demand for EA Sports FC 25
The company’s “Global Football” business, which includes the popular EA Sports FC 25 title, experienced a significant slowdown towards the end of the third quarter. This marks a departure from the previous two fiscal years, which saw double-digit net bookings increases. CEO Andrew Wilson attributed the underperformance to sluggish demand for the title, despite its popularity.
Contrasting Trends in Gaming Industry
This decline contrasts with the broader trend of gamers opting for long-running online games, which have seen increased engagement amidst tighter budgets. The EA Sports FC 25, in particular, is one of the company’s most valuable and notable titles.
Revised Forecast and Analyst Expectations
EA has revised its fiscal 2025 net bookings forecast to between $7 billion and $7.15 billion, down from its earlier estimate of $7.5 billion to $7.8 billion. Analysts had expected $7.69 billion, according to data compiled by LSEG.
Impact of FIFA Partnership End
The company’s decision to launch its first “FC” soccer game without the FIFA tag in September 2023 aimed to maintain momentum in its best-selling franchise. However, the partnership’s end has raised concerns about the franchise’s future performance.
College Football’s Impact on Madden Sales
Investors are also worried about EA’s push into college football, which may be eating into the sales of the new Madden title. The company’s attempt to address these concerns by launching a bundle featuring both games has not alleviated the concerns.
Analyst Insights
According to Wedbush Securities analyst Michael Pachter, “The shortfall is mostly due to the introduction of College Football last summer, which was phenomenally successful, but likely caused some cannibalization of Madden NFL sales.”
Preliminary Results and Earnings Expectations
EA expects third-quarter net bookings of about $2.22 billion, below its earlier expected range of $2.4 billion to $2.55 billion. Analysts had expected $2.51 billion. The company anticipates earnings of $1.11 per share, in line with estimates.
Upcoming Financial Results
EA will report its third-quarter financial results on February 4, providing further insight into the company’s performance.
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