Shares of EA, Take-Two and other major publishers fell in price after quarterly reports

It would seem, what does Fortnite have to do with it.

Battlefield V
The shares of several large publishers at once sank sharply in just a week, losing at least 13% of the value.

Negative dynamics have been observed before (for several months), but company reports for the third fiscal quarter accelerated the decline in stocks.

• Electronic Arts shares immediately lost 16-19% of their value. As the company points out in its October-December report, it missed $86 million in the quarter. EA called the “late launch” of Battlefield V and the absence of the “battle royale” mode in it on the release its biggest mistake. Let’s add that over the last seven months of 2018, EA shares have already declined by 43%.
• The shares also fell at Take-Two. Having reported for the financial quarter, the publisher noted a decrease in the value of shares by 14%. This is the biggest drop since the end of 2009. And this is despite the fact that Take-Two earned 160% more in annual terms over the quarter (mainly thanks to Red Dead Redemption 2).
• Activision Blizzard and Ubisoft haven’t even had time to report yet, and their shares have already declined by 10%. Note that in the last months of 2018, Activision shares have almost halved. This happened due to modest (according to Blizzard) sales of the Forsaken DLC for Destiny 2 and the announcement of the mobile Diablo: Immortal, which disappointed the community.

Is the market suffering because of Fortnite?

There is an opinion that the giants of the gaming industry are losing the competition to Epic Games and its Fortnite. Experts explain the drop in quotations by investors’ fear of the hit battle royale. Fortnite’s annual revenue is $3-4 billion and continues to grow. Even Netflix, which is not related to the game rendezvous, called this game its competitor.

Fortnite
Nevertheless, a number of analysts do not share the opinion that Fortnite’s successes have a bad effect on the industry.

• On the one hand, the moderate decline in publishers’ forecasts for the fourth fiscal quarter and the full fiscal year partly confirms that their community is more interested in Fortnite.
• On the other hand, according to Berenberg analyst Robert Berg, the gaming market is now “quite healthy”, and the fall in shares does not reflect its real state. Berg noted that Fortnite’s growth is already slowing down — and that the next fiscal year for publishers will be better than the previous one.
• Gamesindustry.biz reminds that a similar situation was with World of Warcraft. This successful MMO with an audience of 12 million players and an annual revenue of $1.5-2 billion provoked a drop in the value of various companies. But in the end, the success of the game led to a noticeable growth of the entire industry. According to analysts, Fortnite can have the same effect on game dev.

Also on the topic:

• Electronic Arts missed $86 million in the third fiscal quarter. The main reason is high competitionTake-Two’s quarterly sales increased by 160%.
• The main driver is Red Dead Redemption 2Square Enix’s operating profit for the year fell by 65%
• Sega expects losses of $55 million at the end of the fiscal year