Holiday Sales Faltering, EA Cuts Guidance
The November NPD gaming statistics are due within the week but even without the register receipt detail, it’s clear the economy is having an impact on the industry. While some companies are thriving, others are falling apart.
Nintendo’s president Satoru Iwata recently told Reuters that Wii sales more than doubled over the Thanksgiving holiday to nearly 800k units. Microsoft similarly reported a positive initial surge. Xbox sales were up 25% the Black Friday weekend.
Closer to the other pole, fortunes (or shoppers) aren’t being as kind to Electronic Arts. In light of weaker than expected sales, EA announced today that they are lowering their fiscal year 2009 guidance for both earnings per share and net revenue. (The year ends in March).
Exact numbers won’t be announced until February but sales, the company says, just aren’t where they should be. EA had expected a strong holiday showing.
In a statement, EA’s CEO John Riccitiello said that “while we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations.”
Sales for Rock Band 2, Mirror’s Edge and Need for Speed Undercover were expected to be much better.
In a conference call to discuss the news, EA attributed part of the weakness to decisions by retailers to carry less inventory. That tracks with comments others in the industry have made. In an earnings call in November, Michael Griffith, the CEO of Publishing at EA’s rival, Activision, said “With respect to retailer purchasing behavior, what we have heard is that retailers are ordering less up-front and are focusing on chasing the winners, and they are being more cautious with their open-to-buy dollars on second-tier titles.”
In October, EA announced plans to lay off 6% of staff and trim their product porfolion. Pending on the results reported in February, more cuts could be coming.
Not alone in the bleak news, Sony today announced substantial recession related layoffs. Mirroring weakness at rivals, Sony plans to cut 5% of full time staff, or about 8,000 jobs around the company. 5 of 6 factories will also be closed. How much gaming will be impacted is unclear, but it seems no division at Sony is going to get by untouched.
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