Even big, experienced videogame makers get it wrong sometimes. Having all do so at the same time is rare.
In an unusual twist to the holiday selling season, the biggest games from the three biggest game publishers have made notable misfires. Activision Blizzard’s ATVI 0.80% “Call of Duty: Vanguard” has garnered the lowest critic scores of the franchise and has reportedly recorded weak initial sales. “Battlefield 2042” from Electronic Arts EA -0.53% also has fared poorly with critics and suffered from some technical issues during its launch. Bugs also hurt the launch of “Grand Theft Auto: The Trilogy” from Take-Two Interactive Software, TTWO -1.01% with that game also getting savaged by reviewers—a rarity for the popular franchise. It was named the sixth-worst game of the year by the critic score amalgamation site Metacritic.
All three games went on sale in November. They face strong competition from online free-to-play titles such as Epic Games’ “Fortnite.” “Halo Infinite” launched by Microsoft on Dec. 8 also has turned out to be surprisingly strong, following a major delay last year.
EA, Take-Two and Activision have yet to report any financial results from their recent launches. Activision has typically issued some sort of update following its annual “Call of Duty” installment, but the company is now beset with an internal crisis stemming from its alleged treatment of female workers.
EA and Take-Two aren’t facing the same predicament. But both have been affected by the pandemic’s impact on game production, with so many developers still working remotely. At an investment conference on the day of the “Grand Theft Auto” release, Take-Two Chief Executive Strauss Zelnick said “I don’t think work-from-home is as productive,” though he also noted that new technology used in the most cutting-edge games also has an impact on development times. EA had already delayed the release of “Battlefield 2042” by a month to its Nov. 19 launch date, citing the work-from-home challenge.
Investors already were tepid on the videogame sector, given concerns about the industry’s difficult comparisons to last year’s pandemic-fueled surge in game play. Analysts expect combined net bookings for Activision, EA and Take-Two to rise 10% this calendar year following a 23% jump last year, according to FactSet.
EA’s and Take-Two’s stocks were down 4% and 12% for the year preceding their respective game launches, compared with the S&P 500’s 25% gain by mid-November. Both stocks have given more ground since, though nowhere near the selloff that has taken nearly one-third of Activision’s market value since the state of California sued the company over its workplace environment in July.
Activision will likely remain under that cloud as its internal crisis creates additional uncertainty for its future game pipeline. But EA and Take-Two can both manage through their respective misfires. EA’s online, free-to-play “Apex Legends” is competing well in the shooter category; Corey Barrett of MScience noted that the game’s bookings growth “materially reaccelerated in November” in a recent report.
Take-Two, meanwhile, will soon start showing the results of a major buildup of its game pipeline. Analysts expect double-digit growth in bookings for the company’s next two fiscal years compared with a projected 2% drop for the current one ending in March. Given their currently depressed valuations, EA and Take-Two are in a good position to level up.
Write to Dan Gallagher at [email protected]
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