In recent years, the video-game industry looked like it had found the antidote to the boom-bust cycles that had long plagued the business.
Publishers focused on a few well-known titles and extended their lives through in-game purchases, expansion packs and online tournaments. Electronic Arts Inc., one of the largest players, doubled its market value to almost $45 billion last year as a new era of steady, predicable revenue seemed at hand. Then, like a wrong turn in Pac-Man, it was game over.
The biggest names in games have stumbled this year as marquee titles flopped and online spending came up short. Electronic Arts shares tumbled 13 percent after the company confessed that some its biggest releases disappointed. Take-Two Interactive Software Inc. fell by a similar amount after forecasting sales this quarter that were $100 million below Wall Street forecasts. The results are a reminder that video games are still a hit-driven business, rising and falling based on unpredictable consumers.
Electronic Arts, based in Redwood City, California, is looking to improve sales of Battlefield V by including an every-player-for-himself battle royale mode — like the hugely popular Fornite game — but that won't come until later in the current quarter, Jorgensen said.
Activision Blizzard Inc., down 48 percent from its October high, had a similar disappointment with Destiny 2 and an expansion of that shooting game. So much so, that the company cut its ties to the developer, Bungie, a move that could cost as much as $400 million in lost sales this year. Santa Monica, California-based Activision reports financial results on February 12.
The New York-based game publisher reported quarterly sales that more than doubled and a fivefold jump in profit after selling 23 million copies of the new Red Dead Redemption game.
Take-Two Chief Executive Officer Strauss Zelnick said there could have been some cannibalization of the Grand Theft Auto business as players shifted to Red Dead. He also acknowledged glitches with Red Dead's online game, but said the company is learning and fixing what had been a beta launch.
In-game spending and free-to-play are still working for social-gaming pioneer Zynga Inc. The company reported better-than-expected fourth-quarter sales and profit last week and its shares rose in extended trading. The company credited franchises such as FarmVille and new titles like Merge Dragons! and Empires & Puzzles.
CEO Frank Gibeau, a former Electronic Arts executive, draws a distinction between his company and those that make games for consoles, such as Sony Corp.'s PlayStation 4 and Microsoft Corp.'s Xbox.