Top game developer sees 2023 in dark shades
First Ubisoft, now Electronic Arts, lowered revenue forecasts for 2023. In the case of EA, this is due to the delay in the release of the game based on the "Star Wars'' franchise, and lower consumer spending on entertainment, including video games. As a result, the company's shares plunged over 9% in pre-market. Pessimistic revenue forecasts for 2023 fit into Microsoft Corp narrative. Last week Xbox producer presented gloomy forecasts for the gaming industry, boosting concerns that the slowdown of the gaming sector may deepen in 2023.
After two years of growth driven by the pandemic, the value of the gaming market fell by 4.3% in 2022, according to estimates provided by the analytical firm NewZoo. The relatively low number of large, global premieres is partly responsible for the poor result. This is what both companies and investors are waiting for.
Reschedule of an important premiere date
EA on Tuesday, along with quarterly results, announced that the release of Star Wars Jedi: Survivor would be pushed back by six weeks to April 28, which would fall into its next fiscal year. The game is a sequel to Star Wars Jedi: Fallen Order released in 2019, which attracted over 20 million players. In most cases, information about postponing a major premiere, once announced, is negatively perceived by the market.
Poor quarterly results
Meanwhile, the results showed that recent releases of Electronic Arts games were not interesting enough to attract the attention of consumers. Also during tmes of high inflation, priority is given to necessities over entertainment.
The company on Tuesday reported fiscal third quarter revenue of $2.34 billion, down from $2.58 billion in the same period in 2021, and below analyst expectations of $2.5 billion. .
Negative forecasts for 2023
As a result of the postponement of Star Wars' game release, the company currently expects revenue in the fiscal fourth quarter in the region between $1.675 billion to $1.775 billion, well below analyst estimates of $2.24 billion.
The company, which released Need for Speed Unbound and the latest installment of FIFA series in recent months, now expects annual revenues in the range between $7.07 billion to $7.17 billion. Previously, the forecasts ranged from $7.65 billion to $7.85 billion.
Conclusions
Goldman Sachs, Intel, Ubisoft and Electronic Arts. More and more companies are making it clear that they expect revenue to fall in 2023 due to the looming recession. Even major game developers, who were about to experience a renaissance after the Covid 2020 boom, do not see 2023 in bright colors. This may lead to the correction of the last bullish wave and create interesting opportunities to acquire securities of companies whose shares are (still) relatively cheap.
Electronic Arts (EA.US) shares fall more than 9% in premarket trading, creating a bearish price gap. In the short term, it is possible that buyers will make an attempt to close the gap given the strong consolidation zone around $140.0.Source: xStation5
