In the gaming world, conservative estimates also mean plummeting shares. And this applies even to the largest independent video game maker. California-based video game developer and publisher Electronic Arts, Inc. (EA) brought down its profit outlook, resulting in a 6 percent share slump for the third quarter. The gaming media giant admits a “mixed” performance for the last fiscal year. Delays in title releases such as “Mercenaries 2: World in Flames”, “Battlefield: Bad Company” caused EA earnings to fall below Wall Street’s predictions. “Spore”, the much-awaited game from SIMS creator Will Wright is expected to hit shelves not before the 2008 fall holidays, later than the expected April-June 2008 release.
Loss and profit teetered between 2 cents per share and 3 cents per share, respectively. The profit estimate for the full fiscal year shifted from the wider 85 cents-$1.15 range to the narrower 93 cents and 98 cents. Conservative measures (deferring 231 million dollars’ worth of sales of online games for later periods) prevented total sales from breaking the 1.73 billion mark, just short of the 1.74 expectation of analysts. However, such titles as “The Simpsons Game”, and “Need For Speed Pro Street” propped up revenues, with the latter garnering the best-selling game spot for the last quarter. This resulted in a seventeen-percent leap in total revenue. Another game, “Rock Band”, distributed for Viacom kept quarterly revenues afloat.
A combination of expenses and a “flat” market (according to company Chief Executive John Ritticello), are viewed as the main reasons for the pulled-back estimates. Despite its rank as the number one game publisher, EA’s lack of competitive titles led to the loss of three points’ worth of market share in the United States and Europe.
“Losing share is just not acceptable,” Ritticello admits. Prospects look dimmer for the first half of this year as Vivendi SA’s merger with Activision, the company behind such hits as “World of Warcraft” and “Guitar Hero”, threatens to create a rival for EA. Lazard Capital Markets analyst Colin Sebastian, however, paints a rosier picture for EA, citing its “very good” lineup for the next months. Said lineup should be promising enough to keep EA’s market share growing.
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