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EA lowers bookings expectation on strong dollar, gaming slowdown

by Staff GBAF Publications Ltd
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By Tiyashi Datta and Aditya Soni

(Reuters) -Electronic Arts Inc lowered its annual bookings forecast on Tuesday as the publisher of “FIFA” and “Apex Legends” struggles with this year’s surge in the U.S. dollar and a gaming industry slowdown from pandemic heights. The company now expects annual bookings – an indicator of future revenue – between $7.65 billion and $7.85 billion, compared with $7.90 billion to $8.10 billion earlier. After a meteoric rise during the pandemic, videogame sales have been easing this year due to a lack of major releases and lower spending by consumers facing decades-high inflation.

That, coupled with the industry’s prolonged supply-chain challenges, also pressured quarterly revenue from Sony Corp’s PlayStation 5 and Microsoft Corp’s Xbox content and services.

Overall, the gaming market is expected to grow just 2% in 2022, according to data from research firm Newzoo, a far cry from 2020’s 23% jump. A near 17% rise in the U.S. dollar this year has also stifled growth, with EA forecasting a roughly $200 million hit to annual bookings. The company earns more than half of its revenue from outside the United States.

Wedbush Securities analyst Michael Pachter said “poor mobile execution” was also a concern.

“They haven’t efficiently integrated their big mobile acquisitions and bought games that were in decline when they closed Glu, Codemasters and Playdemic.”

EA had no major releases for most of the year, but it could get some support from the October launch of “FIFA 23” – the latest installment in its popular soccer franchise.

“FIFA 23” had the best launch week of any game in the series and it looks set for more demand thanks to the soccer World Cup in Qatar next month. EA’s second-quarter adjusted sales of $1.75 billion was slightly higher than analysts’ estimates, according to Refinitiv data. Its adjusted profit also beat expectations.

(Reporting by Tiyashi Datta and Aditya Soni in Bengaluru; Editing by Devika Syamnath)