In a surprising turn of events for the gaming industry, Electronic Arts (EA) openly announced a significant cut in its full-year bookings guidance. This move has raised eyebrows among investors and analysts alike, as the gaming giant blamed the downward revision primarily on the disappointing performance of its soccer franchise, EA Sports FC. The company, which has been navigating a competitive landscape, saw its shares plummet by 7% in after-hours trading following this announcement. For the fiscal third quarter ending December 31, EA predicts net bookings of approximately $2.215 billion, a stark contrast to its earlier estimates of between $2.4 billion and $2.55 billion.
Looking ahead, EA’s revenue forecast for the December quarter also indicates a decline, with projected earnings falling to about $1.88 billion. The anticipated diluted earnings per share stands at $1.11, a far cry from initial expectations. The full fiscal year outlook, which will conclude on March 31, has now been adjusted to net bookings between $7 billion and $7.15 billion, rather than the previously projected range of $7.5 billion to $7.8 billion. This drastic shift in predictions raises concerns for investors about the company’s growth trajectory and profitability.
The warning signals a troubling trend for one of the most recognizable soccer video game brands. Once tightly associated with FIFA, EA’s soccer games transitioned to the EA Sports FC branding after the conclusion of their partnership with FIFA in 2022. This rebranding effort has not shielded EA from the current slump, highlighting a possible identity crisis for the franchise in an increasingly saturated gaming market. Additionally, EA’s “Dragon Age,” a much-anticipated role-playing title, has also faltered, yielding only 1.5 million players in the recent quarter, falling nearly 50% short of expectations. This underperformance adds to the overarching narrative of uncertainty surrounding EA’s portfolio.
CEO Andrew Wilson acknowledged the ongoing high-quality releases from EA; however, he conceded that both EA Sports FC and Dragon Age had not met the company’s net bookings goals. As the company analyses its performance, it notes the trend of stagnation following two years of remarkable double-digit growth in net bookings for its soccer games. Now, there’s concern that Global Football sales could decline year-over-year, further exacerbating the challenges faced by EA in fiscal 2025. The expectation of lower bookings from online services, particularly live events integral to the soccer franchise, poses another hurdle.
With EA’s planned third-quarter earnings announcement approaching on February 4, stakeholders are keenly watching to gauge how the company plans to navigate these turbulent waters. The evident struggle to adapt to a rapidly changing gaming environment demands swift strategic adjustments to restore confidence among investors and gamers alike. As EA grapples with the ongoing repercussions of brand transformation and market expectations, it must innovate and enhance its offerings to reclaim its position as a leader in the competitive gaming industry.