Electronic Arts Cuts Booking Expectations as Spending Slows

UTC by Godfrey Benjamin · 3 min read
Electronic Arts Cuts Booking Expectations as Spending Slows
Photo: Depositphotos

EA expects the total annual booking for the current fiscal year to come in between $7.07 billion and $7.17 billion.

The gaming industry has continued to take a unique beating as evident in the projections of major players like Electronic Arts Inc (NASDAQ: EA). According to a recent report from Reuters, the gaming giant has cut down on its bookings projection as consumer spending is now focused on other essential things as inflation continues to skew demands away from gaming.

Electronic Arts is the game publisher renowned for such titles as FIFA, Mass Effect, Star Wars, and Grid Legends amongst others. The company occupies a niche that has remained competitive over the past decade and whose survival is dependent on whether it is able to launch new thrilling titles.

For the company, its debut of Star Wars Jedi: Fallen Order recorded an instant hit worldwide and it has accrued as many as 20 million players. Another title, Apex Legends topped 25 million players according to an earlier report from Coinspeaker.

In a very dramatic twist, the proposed launch of the new Star Wars Jedi: Survivor has now been postponed by 6 weeks from its expected date of launch. The launch is now slated for April 28.

This new title is expected to complement the latest release of FIFA 23 and help the company regain its market share in the gaming world. While the company remains optimistic, the recent data shows that recent releases have not gathered as much traction as they had hoped as a result of the reduced spending.

The sentiment also engulfs the broader gaming world as the industry fell by 4.3% over the past year according to data from NewZoo. With firms like Electronic Arts stepping up their game in projected releases, chances are the fortune of the industry will be turned around.

Electronic Arts and the Conservative Expectations

According to the company, it now expects the total annual booking for the current fiscal year to come in between $7.07 billion and $7.17 billion. This figure compares to its earlier projection of $7.65 billion to $7.85 billion.

While many consumers now have more pressing priorities, the expectation is that the tapering of interest rates by the Feds will make a difference in changing the situation. On the interest rate front, the most recent update is billed to be shared today as the US Federal Open Market Committee (FOMC) wraps up its 2-day policy meeting today. A 25 basis point increment is expected according to analysts.

Electronic Arts lowered expectations to fall in line with its third-quarter adjusted sales and profit which underperformed when compared to what analysts were expecting.

“Weak, but not a disaster,” Wedbush Securities analyst Michael Pachter said of the results, adding the “Star Wars” title delay led to a “huge shift of earnings” into next year.

“Demand in free-to-play is down a bit, my best guess is that consumers are freaked out by inflation and fears of a recession,” he said.

The better bet for Electronic Arts will remain to continue its innovations and outcompete its peers.

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