Electronic Arts Projects Lower Bookings Amid Economic Uncertainty
In a recent announcement that has rippled through the gaming industry, video game publisher Electronic Arts (EA.O) projected its full-year bookings to fall short of Wall Street expectations. The forecast comes at a time when the gaming sector is grappling with a broader spending slowdown, attributed to the murky economic landscape.
The news triggered a 2.5 percent decline in EA’s shares during extended trading. Despite the downturn, EA is taking strategic financial steps, having authorized a new three-year stock buyback plan worth $5 billion. Joost Van Dreunen, a lecturer at NYU’s Stern School of Business, noted, “Issuing buybacks will help offset some of the negative sentiment on the short term, but game publishers should be working toward an upswing once the next console generation presents itself.”
The gaming industry has been facing headwinds, with consumers tightening their belts on discretionary spending in the face of rising inflation. Major players like Sony and Take-Two Interactive have responded with aggressive cost-cutting measures. EA itself reduced its workforce by 5 percent in February and scaled back office space as part of its restructuring efforts.
For fiscal year 2025, EA anticipates bookings to be between $7.30 billion and $7.70 billion, which is below the average analyst forecast of $7.76 billion, based on LSEG data. The company’s fourth-quarter bookings also fell short, coming in at $1.67 billion against the expected $1.77 billion. This included contributions from titles such as “Star Wars Jedi: Survivor”.
Analyst Joe Brunetto from Third Bridge commented on EA’s prospects, “EA’s development pipeline remains strong although the timeline comes into question.” He suggested that new releases, including those from the Star Wars franchise, could bolster long-term growth for the company.
Looking ahead to the first quarter, EA is estimating bookings to range from $1.15 billion to $1.25 billion, which is notably lower than the anticipated $1.44 billion. On an adjusted basis, the company earned $1.37 per share in the fourth quarter, which did not meet the expected $1.52 per share.
The gaming giant’s cautious outlook underscores the challenges that lie ahead for the industry as it navigates through economic turbulence and evolving consumer spending habits.
