Stiff competition is "eating into the sales and profits of Electronic Arts, Take-Two Interactive and other major video game companies," and the "problem" is Fortnite, according to Paul La Monica of CNN.com. Shares of EA dipped 13% yesterday, a day after the company "reported sales that missed forecasts." It also "issued weak guidance for the next quarter." Take-Two "beat estimates, but the company's outlook was disappointing" as the stock dropped 11%. Jefferies analyst Timothy O'Shea said games like Fortnite are "applying intense pressure" on EA. He added that everything "except EA's successful FIFA soccer franchise 'struggled'" in Q3 (CNN.com, 2/6). BLOOMBERG NEWS' Christopher Palmeri noted Take-Two and EA "both tanked" in the latest quarter, "yet another sign that the phenomenal success of Fortnite is looming large on the industry" (BLOOMBERG NEWS, 2/6).
POLITICAL FACTOR: Take-Two Chair & CEO Strauss Zelnick on the earnings call yesterday said that the Trump administration's trade talks with China "could ultimately be a win for the video game industry." VARIETY's Brian Crecente noted the comments came as the Chinese government "comes out of a regulatory overhaul that slowed the approval of a variety of entertainment products, including video games." Zelnick said that his company's "NBA 2K Online" is doing "well" in China. He said, "We think Asia is an enormous opportunity. Specifically, China’s a great opportunity." Earlier in the week, EA also spoke during its earnings call on the impact China’s regulations have "had on the company and how these recent changes have presented more opportunity." EA CEO Andrew Wilson: "China is a very particular marketplace. We certainly see robust growth opportunities for 'FIFA'” (VARIETY.com, 2/6).
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