(Reuters) -Electronic Arts shares sank more than 7% on Wednesday, a day after the videogame publisher projected quarterly net bookings below expectations due to high competition and muted spending by gamers.
Legacy videogame publishers such EA are not only struggling with slowing spending, but also fighting for top spots with new entrants like Warner Bros Discovery (NASDAQ:WBD), whose "Harry Potter"-based game "Hogwarts Legacy" was among the best-selling games this year through May, according to market research firm Circana.
Elevated inflation has forced gamers to get picky with the titles they choose, with many returning to only their favorite franchises because of tight budgets.
EA said "Star Wars Jedi: Survivor", the latest videogame based on the storied Star Wars franchise launched in April, did well, while it saw lower in-game spending in multi-player shooter game "Apex Legends".
"This quarter, net bookings were below expectations, largely driven by underperformance from Season 17 (of Apex Legends)," CFO Stuart Canfield said in a post-earnings call.
EA forecast net bookings in the range $1.70 billion to $1.80 billion for its quarter ending Sept. 30, below analysts' estimate of $1.81 billion, according to Refinitiv data.
The company, which kept its fiscal 2024 booking forecast intact, expects to debut in September "EA Sports FC", EA's new football franchise after it ended its partnership with FIFA last year.
In the first quarter, the company posted net bookings of $1.58 billion, compared with Refinitiv estimates of $1.59 billion. It earned $1.14 per share on an adjusted basis, compared with expectations of $1.02.
Several analysts said the profit was driven by a shift in some of the marketing spend for "EA Sports FC" to the current quarter from the first.
"The FC marketing push is what to watch during the Q," said Jefferies analysts. "With 2 months to go, and an extra ~S100M to spend, we expect a significant marketing push is imminent."