Video game software sales are up 30 per cent this year in the US, but the rising tide is not floating all boats – most publishers appear to be holed below the waterline.
Take-Two, publisher of the Grand Theft Auto series, is the latest harbinger of bad news. For its first quarter, covering the peak sales months of November, December and January, it is forecasting a loss of 70 to 85 cents per share on revenues of $175m to $225m.
That’s compared to the analyst consensus of a loss of 4 cents on sales of $311m, according to Reuters Estimates. That huge disparity sent Take-Two’s shares falling nearly 20 per cent in after-hours trading on Wednesday to $9.80.
The price is a long way from the $25.74 takeover offer from Electronic Arts in the summer. EA abandoned talks over a deal in September.
Ben Feder, Take-Two chief executive, said its guidance was “a prudent response to the difficult current and possible future business conditions. However, it seems more a reflection of its inability to produce any top-ten hits for the biggest sales season as a follow-up to the success of Grand Theft Auto IV earlier this year.
The same lack of hits applies to THQ and Midway. THQ announced softness in sales last month and said it was cancelling titles and shedding 17 per cent of its workforce.
Midway said on Tuesday it was getting rid of a quarter of its staff and suspending development of some non-core titles as economic conditions exacerbated its problems.
EA had the eighth best-selling game in November with Left 4 Dead, but was otherwise hit-less. It issued a sales and profit warning last week and complained consumers were confining themselves to buying just the best-selling titles.
They are Microsoft’s Gears of War 2, Nintendo’s Wii Fit, Wii Play and Mario Kart and the latest editions of Activision Blizzard’s Call of Duty, Guitar Hero and World of Warcraft franchises.
Those three companies are the current hitmen of video games, the rest are just missing in action.
