October 29, 2019 / 8:09 PM / 16 days ago

EA's forecast hit by delay in basketball game launch, shares slip

(Reuters) - Electronic Arts Inc (EA.O) has postponed the release of its basketball game NBA Live to coincide it with the launch of new gaming consoles next year, the video game publisher said on Tuesday.

FILE PHOTO: The Electronic Arts Inc., logo is displayed on a screen during a PlayStation 4 Pro launch event in New York City, U.S., September 7, 2016. REUTERS/Brendan McDermid/

The company’s shares, which were up after the bell on better-than-expected results, dropped about 5% on news of the postponement.

Sony’s (6758.T) next-gen PlayStation “PS5” and Microsoft Corp’s (MSFT.O) Xbox Project Scarlett are expected to launch next year during the holiday season.

“New consoles are always an opportunity to drive more innovation in our EA Sports games” Chief Executive Officer Andrew Wilson said on a post-earnings conference call.

The delay affects EA’s full-year forecast for adjusted revenue that fell short of analysts’ expectations.

The company is also hit by forex headwinds and delayed launch of a VR version of “Medal of Honor” for Oculus, the virtual reality company owned by Facebook Inc (FB.O), Chief Financial Officer Blake Jorgensen told Reuters.

“So the combination of those three things is roughly 100 plus million dollars and that weighed on our increasing guidance for the full year”, Jorgensen added.

For the full year, EA expects adjusted revenue of about $5.13 billion, below estimates of $5.19 billion.

The postponement overshadowed EA’s better-than-expected quarterly revenue that was boosted by the continued success of its battle royale sensation “Apex Legends”.

The company said strong growth in EA Sports titles, that includes FIFA Ultimate Team as well as Sims 4, its life simulation franchise, boosted live services by 39% in the quarter, from a year earlier.

The beat comes at a time when console-based game franchises are competing with mobile-based, free-to-play games with engaging formats, challenging the dominance of traditional publishers like EA and its rivals Activision Blizzard (ATVI.O) and Take-Two Interactive Software Inc (TTWO.O).

EA, the company behind franchises like “FIFA” and “Battlefield” also expects current-quarter revenue above analyst estimates, boosted by excitement around its upcoming launches “Star Wars Jedi: Fallen Order” and “Need For Speed: Heat”.

The company expects adjusted revenue for the current quarter to be about $1.94 billion, edging past estimates of $1.93 billion, according to IBES data from Refinitiv.

EA is set to launch its new “Star Wars” title on Nov. 15 that follows the story of one of the last surviving Jedi. Its flagship racing series also gets a new title on Nov.8, whose initial trailer garnered over 8 million views.

On an adjusted basis, revenue rose 4.5% to $1.28 billion, beating analysts’ expectation of $1.25 billion.

Reporting by Ayanti Bera in Bengaluru; Editing by Shailesh Kuber

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