Video Game Makers Season Of Discontent Begins Tuesday
03 2월 2009 - 10:30PM
Dow Jones News
Video game makers are unlikely to set any high-score records
starting Tuesday, when a trio of top industry players begin
reporting their latest earnings.
On Tuesday, Electronic Arts Inc. (ERTS), publisher of popular
games like "Spore" and the "Madden" football franchise, is expected
to report very conservative guidance for its current fiscal year,
which ends in March, and the year after. It's also expected to
report a modest third-quarter that reflects the Redwood City,
Calif.-based company's relatively weak lineup of games, especially
for Nintendo Co. Ltd.'s (7974.OK) industry-leading Wii game
console.
That's followed on Wednesday by THQ Inc. (THQI), whose
third-quarter fiscal 2009 report is expected to show evidence that
its top-selling games experienced a challenging holiday and its
"Saints Row 2" game isn't living up to expectations. A week later,
Activision-Blizzard Inc. (ATVI), seen as the game publisher best
positioned for the downturn, is expected to report revenue slightly
under its guidance of $1.6 billion.
The expected earnings, which follow a record year of sales for
the industry, could further dent the widely held belief that video
games are recession-proof. With the economy weaker than it's been
in decades, consumers are buying fewer games than they have in the
past and video game sales are falling faster than companies
expected. Since Jan. 9, Ubisoft Entertainment S.A. (5447.FR)
lowered its fiscal third quarter 2009 margins guidance by 1 to 2
percentage points because of rising costs. Meanwhile, Electronic
Arts has warned it will come in under its revenue guidance.
On top of the overall slowdown, consumers appear to be taking
fewer chances on new videogames, sticking instead to tried-and-true
titles and franchises. That's creating a schism in the industry:
The companies with hit titles and the companies without.
Titles that aren't in the top 10 are subject to deep
discounting. Electronic Arts' Madden and NBA Live games can be had
for 16%-to-33% below the retail suggested price of $59.99.
That's left Electronics Arts particularly vulnerable. While all
the price-cutting is expected to goose its third fiscal quarter
sales by as much as 10%, it's also expected to mute profit
growth.
Electronic Arts on Tuesday is also expected to provide updated
fiscal 2009 guidance and provide its first fiscal 2010 guidance.
Investors are bracing for further revisions to its 2009 guidance.
EA announced on Dec. 9 that it would significantly miss its current
financial guidance of 33% to 41% revenue growth, and earnings per
share loss of 21 cents to a profit of 7 cents a share.
On Wednesday, THQ is expected to report revenue slipped 20% to
$405 million, and profit per share sunk to 8 cents, compared to a
year ago's 24 cents a share, the result of a challenging holiday
shopping season that saw many of its top tiles, including "Saints
Row 2," fall below expectations.
Activision is expected to be best, but still shows signs of
wear. It's likely to report a solid quarter based on strong sales
of its "Call of Duty" and "World of Warcraft" games, even though
sales of its signature "Guitar Hero" have appeared to drop off
significantly.
"The recession is having an impact on everybody," said Todd
Greenwald, a video game analyst for Signal Hill Group. "Everyone is
dealing with it."
-By Ben Charny; Dow Jones Newswires; 415-765-8230;
ben.charny@dowjones.com
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