Electronic Arts Cuts Net Bookings Forecast on Strong Dollar

(Bloomberg) -- Electronic Arts Inc., the video game publisher behind franchises such as Madden NFL, cut its forecast for net bookings and widened the profit range for its full fiscal year, citing the strength of the US dollar.

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The publisher, also known for its FIFA football and Star Wars games, said it expects net bookings, which exclude deferred sales from content purchases and other adjustments, of $7.65 billion to $7.85 billion for the fiscal year ending in March. That’s down from a previous forecast for as much as $8.1 billion and is below analysts’ average estimate for $7.93 billion. Earnings per share are expected to be $6.95 to $7.25. Analysts were projecting $7.15.

Redwood City, California-based EA gets more than half of its revenue outside of North America. The shares dropped about 5% in extended trading after the results.

The video game industry, which boomed during the pandemic, has struggled this year, hampered by hardware supply chain issues affecting the availability of new consoles, inflation and a lack of big hits. US spending on video game content fell 7% in September from a year earlier, according to NPD analyst Mat Piscatella. Electronic Arts has yet to release any major new titles in 2022 aside from FIFA and Madden and is still grappling with fallout from Battlefield 2042, which was released last November to mediocre reviews and poor fan reception.

The video game publisher expects several big releases in 2023, including a remake of the horror game Dead Space and the highly anticipated action game Star Wars Jedi Survivor. Next year will also mark the end of EA’s licensing deal with FIFA. The company will instead be releasing new soccer games under the brand EA Sports FC.

EA also announced this week a deal with Marvel Entertainment to develop at least three games inspired by the comic book characters. The first title will be based on Iron Man, the billionaire inventor and superhero who was the subject of one of the first hit Marvel movies, and is being developed by EA’s Montreal-based Motive studio. The company also recently announced a new game in the popular franchise The Sims. On Tuesday, EA unveiled new FIFA World Cup 2022 updates that will be released before this year’s football world cup in Qatar.

During a year of major acquisitions and consolidation for the video game industry, EA has so far remained independent. Rival Activision Blizzard Inc. is in the process of being bought by Microsoft Corp. while Ubisoft Entertainment SA sold a major stake to Chinese gaming giant Tencent Holdings Ltd.

In its fiscal second quarter, EA reported net bookings of $1.75 billion, down 5.2% from a year earlier and below analysts’ estimates. Adjusted earnings per share were $1.45, beating analysts’ estimates of $1.35.

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