Video-game titans suffer deepening slump
In recent years, the video-game industry looked like it had found the antidote to the boom-bust cycles that had long plagued the business.
Publishers focused on a few well-known titles and extended their lives through in-game purchases, expansion packs and online tournaments. Electronic Arts Inc., one of the largest players, doubled its market value to almost $45 billion last year as a new era of steady, predicable revenue seemed at hand. Then, like a wrong turn in Pac-Man, it was game over. The biggest names in games have stumbled this year as marquee titles flopped and online spending came up short. Electronic Arts shares tumbled 13 percent on Wednesday after the company confessed that some its biggest releases disappointed. Take-Two Interactive Software Inc. fell by a similar amount after forecasting sales this quarter that were $100 million below Wall Street forecasts. The results are a reminder that video games are still a hit-driven business, rising and falling based on unpredictable consumers.
“The market is still healthy,” chief financial officer Blake Jorgensen said in an interview. “The bad news, it’s very competitive.”
Electronic Arts’ latest Battlefield game was the biggest disappointment of the year, selling a million fewer copies than hoped, Jorgensen said. The company delayed the release by several weeks to correct some bugs, putting it in the thick of a competitive holiday season. Its core Madden NFL title also fell short, and the FIFA soccer game was flat from a year ago.