Stocks of all major game publishers dip on news.
Videogame industry bellwether Electronic Arts reported a 90% drop in net revenue for the quarter ending March 31, compared to the same quarter last year. This caused its stock to fall about 11%, according to after hours trading reports, and dragged down shares of fellow game publishers.
Net income of the firm behind such videogame titles as the “NBA Street” and “The Lord of the Rings” series fell to $8 million or 2 cents a share, from $90 million, or 29 cents per share, reported for the same quarter last year. The results are far below EA’s earnings forecast, which the company lowered in March to $1.62 per share.
EA blamed its weak results on lower prices and sagging sales of existing games, as well as higher costs for games being developed for the next generation game consoles coming to market this year and next. And the outlook doesn’t get much better, with EA forecasting a per-share loss of between 22 cents and 38 cents for the current quarter.
The dismal earnings report tainted the industry at large, with shares of all major game publishers sagging on the news. This comes despite positive sales figures reported on by analyst firm NPD Group, which said videogame retail sales in the first quarter reached $2.4 billion—an increase of 18% over the previous quarter and 23% the first quarter of 2004.
However NPD figures include sales on all videogame software platforms, including console, portable and PC. EA makes games for console platforms, which experienced the slowest growth among all categories, at 7%.