Electronic Arts missed $86 million in the third fiscal quarter. The main reason is high competition
Electronic Arts called its third fiscal quarter difficult. The company not only failed to achieve the expected results, but also lost in digital sales.
Battlefield V
Electronic Arts revenue for October-December 2018 amounted to $1.289 billion.
This is $129 million more than last year. This result may seem good if you do not take into account two nuances.
First. Electronic Arts itself predicted a large revenue for itself. And, most likely, it was a very cautious forecast. But in the end it turned out that he parted with the final one for $ 86 million.
Second. Electronic Arts digitally earned (here by earnings we mean net bookings, which, in addition to net sales, includes deferred transfers from online games coming after the reporting period) $1.199 billion. This is 3% less than a year earlier.
The company’s management explained the drop in sales by a number of factors. Most of them somehow appeal to the strong competition that has developed in the market.
“It was a very competitive year, there was a lot of cool new content for players,” Andrew Wilson, CEO of Electronic Arts, said in an address to shareholders. “In the face of such competition, we faced significant difficulties in the third quarter and did not achieve the expected results.”
The biggest mistake, according to him, concerned the launch of Battlefield V: “In August, we decided that we needed more time to finalize the main gameplay in order to fully unlock the potential of the game as a service. That’s why we moved the release to November. Unfortunately, the late launch meant that the project would appear in a very competitive Christmas season, when big discounts play a big role. Another mistake is the decision to add other modes rather than the battle royale in the first place. This year, the Battle royale mode has become very popular in shooters. As a result of these decisions, we missed the moment and could not achieve the desired sales.”
Battlefield V sales for the third fiscal quarter amounted to 7.3 million copies. This is 1 million less than Electronic Arts had planned.
However, Eric notes that he expects a title in the future. Today, the MAU of the previous game in the series — Battlefield 1 — is 4 million players. Battlefield 4 also boasts good indicators. Five years after the launch, the monthly audience of the game is 2 million people. The annual audience of all brand games reaches 27 million people.
Among the problematic businesses, the management also highlights mobile. The company earned $142 million on games for smartphones and tablets in the third quarter. This is 22% less than in the same quarter a year earlier.
“The mobile market is strong. It is expected to grow by 10% next year. However, growing on it has become a very difficult task. Our data show that the average age of the top twenty games is more than three years. Today it is more difficult than ever to get into this top,” Eric comments on the unsuccessful launch of Command & Conquer: Rivals.
According to the publisher, the game showed good results at the sotflonch stage, but after the global release it could not gain organics as expected from it.
According to Andrew, all the difficulties that the company faced in the third quarter will also affect the results of the fourth fiscal quarter. So Electronic Arts was forced to adjust its forecast for the year in a smaller direction.
The news of this brought down the company’s value on the stock market by almost 20%.
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