Take-Two forecasts weak annual sales as lack of major titles hits gaming industry – Reuters
Aug 8 (Reuters) – Take-Two Interactive Software Inc (TTWO.O) on Monday became the latest videogame publisher to forecast weak annual sales, providing further evidence that absence of major releases and easing COVID-19 curbs have reined in the industry’s growth.
Shares of the New York-based company dropped nearly 7% in extended trading.
The “Grand Theft Auto” publisher said it expects full-year adjusted sales between $5.8 billion and $5.9 billion. Analysts expected $6.32 billion, according to Refinitiv data.
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The gaming industry, considered by some analysts as “recession proof”, has started to see some weakness as people worried about high inflation have started spending less on discretionary items such as hardware and accessories. According to research firm NPD, consumer spending on video games in the United States fell 11% in June.
“I don’t believe the entertainment business is recession proof or even necessarily recession resistant,” said Take-Two Chief Executive Officer Strauss Zelnick, adding that the decline in consumer spending and increase in inflation will have an impact on the industry.
Last week, rival Electronic Arts Inc (EA.O) forecast quarterly adjusted sales below estimates, while Activision Blizzard (ATVI.O) had also delivered a disappointing second quarter. read more
Several other companies have also cautioned of a slowdown in gaming. Earlier on Monday, chipmaker Nvidia Corp (NVDA.O) warned of lower second-quarter revenue on weakness in its gaming business, while last month PlayStation-maker Sony trimmed its forecast on waning consumer interest in video games. read more
Take-Two’s forecast factored in contributions from mobile game maker Zynga, which it recently acquired in a $11.04 billion in a cash-and-stock deal.
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