Electronics Arts: The market no longer wants to play
EA
By Antoine Alves d'Oliveira
The share price corrected sharply after its outlook for 2025 was revised downwards. Revenues from its blockbuster FC 25 are disappointing, and competition will be tough in the months ahead.
A year and a half ago, the video game publisher launched EA Sports FC 24, the new version of its flagship franchise, previously known as FIFA. Having failed to reach a financial agreement with the eponymous organization for the renewal of the license, Electronic Arts preferred to change the name of the game. According to the English-language press, the amounts demanded by FIFA were in the region of 2.5 billion dollars over 10 years.
Disappointing results
Was the name change a mistake? We probably don't have enough hindsight to answer this question with any certainty. But we do know that the latest news is not reassuring. The company has just lowered its guidance for 2025, with sales estimated at $2.22 billion for the third quarter of its fiscal year. Analysts surveyed by FactSet were expecting $2.51 billion. These forecasts caused the share price to fall by 17%.
The American video game publisher, which had initially forecast 5% growth in net bookings, is now forecasting a 5% fall, citing the recent slowdown in its "Global Football" business after two consecutive years of double-digit growth. Indeed, the performance of its main FC 25 franchise has been disappointing, with in particular a decline in Ultimate Team mode purchases, which are made after the purchase of the game itself in order to progress faster; this is what is known in video game jargon as microtransactions. Another title recorded a disappointing performance: Dragon Age. 1.5 million players were counted during the quarter, 50% less than Electronic Arts' forecasts.
Too many games...
Electronic Arts ' underperformance is symbolic of an industry where supply has become too abundant for demand. The growth in sales seen during the Covid pandemic prompted studios to produce more games. Games that are now on the market, while demand has slowed. According to calculations by the Financial Times, 19,000 games were released on the Steam platform in 2024.
To put it simply, publishers have started producing games as if all gamers were going to spend 10 hours a day in front of their consoles for the rest of their lives, spending their entire leisure budget on video games. This is obviously not the case, especially as inflation has forced consumers to make trade-offs in their spending. And the price of games has risen in recent years. The classic price of a AAA game (blockbusters like FIFA or Call of Duty) is now 80 euros, compared with 60 to 70 euros a short time ago.
... and GTA VI
Electronic Arts ' warning follows those of other big names in the sector. Sony, for example, recently closed two studios following the monumental flop of Concord, with its development costs of 200 million euros. Closer to home, Ubisoft continues to disappoint investors. Star Wars Outlaws was an abject commercial failure, and the release of the next Assassin's Creed keeps being postponed.
And there's more to come, as they'll soon have to face GTA VI. The most eagerly awaited video game in history could be released at the end of 2025, 12 years after the last version. An eternity by industry standards. And according to estimates, the new opus of the blockbuster by Rockstar Games, owned by Take-Two Interactive, should exceed $1 billion in revenues... thanks to pre-orders alone.
End game for EA?
Despite positive performances over the past two years, the stock has significantly underperformed its benchmark Nasdaq100 index (+20% versus +94% between the beginning of 2023 and the end of 2024). And despite the price adjustment following the revision of targets, valuation remains high. At 30.3 times 2025 earnings, Electronic Arts is admittedly slightly below its 10-year average (31 times), but this still seems too high given the uncertainty surrounding results. Earnings revisions have been trending downwards in recent months.
For the time being, 's analysts therefore agree with the conclusions of their colleagues at Wedbush, who believe that the share is "dead money" until Electronic Arts unveils its guidance for the full year, which traditionally takes place at the beginning of May, on the occasion of the 4th quarter results.
Antoine Alves d'Oliveira