Soccer game’s popularity scores for EA — and creates a higher bar to clear for growth

Videogame maker Electronic Arts Inc. saw a modest uptick in gaming demand during the holiday season, helped by gains in its “EA Sports FC” soccer franchise, but signaled a slowdown in a key demand metric for its fourth quarter.

Executives said they expected fiscal fourth-quarter net bookings, a gauge of physical and digital sales, of between $1.625 billion and $1.925 billion. EA
when it reported fourth-quarter results last year, said net bookings were $1.946 billion, results that were boosted by soccer’s increasing popularity in the wake of the men’s and women’s World Cup tournaments over the past two years.

EA said it expected net bookings for its full fiscal year of $7.389 billion to $7.689 billion. That compares to a forecast in November for $7.3 billion to $7.7 billion. EA’s fiscal year is set to wrap up around the end of March.

Shares fell 2% in after-hours trade.

The results for the company — known for its soccer and “Madden” football franchises — arrived as it tries to navigate life following the dissolution of its longtime partnership with FIFA, soccer’s global governing body, and a bigger retrenchment in the videogame industry after a surge in digital demand during the pandemic.

For its fiscal third quarter, which ended on Dec. 31, EA reported net income of $290 million, or $1.07 a share. That compared with net income of $204 million, or 73 cents a share, in the quarter that ended in 2022.

Net bookings for the quarter crept 1% higher to $2.37 billion.

“The ‘EA Sports FC’ franchise outperformed Q3 expectations, delivering 7% net bookings growth against a prior year that included the World Cup,” the company said in its earnings release. Chief Executive Stuart Canfield said that “momentum continued through the FC brand transition.”

Videogame developers are navigating a boom and bust in demand following the pandemic, which initially brought more more interest in gaming as many people remained stuck at home. That demand gave way to a boom in concerts and travel, followed by a two-year bout of inflation. Layoffs have followed: Tencent Holdings’

Riot Games announced job cuts this month, and Microsoft Corp.

is also laying people off in its Activision Blizzard and Xbox divisions.

Heading into the results, analysts said they expected holiday-season demand and the popularity of EA’s sports games to drive sales. But thanks to the World Cup bump a year ago, they expected tougher comparisons and challenges following the termination in 2022 of EA’s partnership with FIFA. “EA Sports FC” is EA’s replacement for its FIFA-branded games.

JPMorgan analysts, in a note on Monday, said they also expected strong holiday sales for “Star Wars Jedi: Survivor.” Within EA’s large Live Services segment — which draws sales from subscriptions and add-on purchases for games — they said they expected continued popularity in “EA Sports FC.” They also said they would be watching for more detail on upcoming releases.

Benchmark Research analyst Mike Hickey, in a research note last week, also noted potential challenges for EA’s popular “Apex Legends” shooter game.

“We estimate ‘Apex Legends’ peaked at $1 billion in annual net bookings, ranking as EA’s second-biggest live service,” he said. “However, its performance has recently declined, due to reduced player engagement and strong market competition, in our estimation.”

He continued: “Competitive challenges might be amplified from Fortnite’s significant success, particularly evident during the #FortniteOG event on November 5th, which attracted 44.7 million players and accumulated 102 million hours of gameplay, potentially exacerbating Apex Legends’ growth challenges.”

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