Take-Two's dour forecast deepens concern in videogame industry

NBA 2K22 and Grand Theft Auto 5 by Take-Two Interactive Software Inc are seen for sale in a store in Manhattan, New York City
NBA 2K22 and Grand Theft Auto 5 by Take-Two Interactive Software Inc are seen for sale in a store in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly

Feb 6 (Reuters) - Take-Two Interactive Software Inc (TTWO.O) lowered its annual bookings forecast on Monday, signaling a deeper struggle faced by videogame publishers to keep gamers glued amid a weakening economy and broader slump in the gaming market.

The dour forecast follows the disappointing show from rival Electronic Arts (EA.O) and Xbox maker Microsoft Corp (MSFT.O), increasing fears that the slump in gaming market might sustain this year.

"The repeated misses by major publishers evidences the softer market for video games after a strong period during the last few years and tests their ability to navigate the coming quarters as they compete for consumer attention and spending," said Joost Van Dreunen, a lecturer at New York University Stern School of Business.

Shares of New York-based Take-Two fell 1% in extended trading.

Take-Two Chief Executive Strauss Zelnick said net bookings took a hit as "consumers shifted their holiday spending toward established blockbuster franchises and titles that were offered with pricing promotions in light of macroeconomic conditions."

He added that the trend affected performance of some new releases.

Despite releasing to good reviews on Dec. 2, Take-Two's role-playing game "Marvel's Midnight Suns" was the 14th most downloaded title on Sony's PlayStation 5 in December, trailing even the two-year-old title "Spider-Man: Miles Morales."

As inflation squeezes budgets, more gamers are expected to stick to their favorite gaming franchises, instead of experimenting with newer titles from other studios, analysts have said.

Activision's latest title in this popular franchise "Call of Duty" helped it to beat Street estimates for fourth-quarter adjusted sales on Monday.

Take-Two posted third quarter adjusted sales of $1.38 billion, compared to analysts' estimate of $1.46 billion. Excluding items, it earned 86 cents per share during the quarter.

The company now expects full-year adjusted sales between $5.2 billion and $5.25 billion, compared with $5.4 billion to $5.5 billion forecast previously.

Reporting by Tiyashi Datta in Bengaluru; Editing by Shailesh Kuber

Our Standards: The Thomson Reuters Trust Principles.