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EA and Activision Report Booming Profits as Videogames Sales Surge

EA and Activision Report Booming Profits as Videogames Sales Surge

Gaming May 6,2020 0

The two largest public videogame publishers in the U.S., EA and Activision, reported the high profits as Americans retreating into their homes turn to gaming during the pandemic.

Electronic Arts Inc. reported record revenue from live services and doubled its profit, while Activision Blizzard Inc. said that it reached "new heights” in sales that created its best first-quarter profit in history.

EA predicted profits this quarter would triple from the year before to more than a quarter-billion dollars, while Activision forecast adjusted profit of more than $500 million, a 67% increase.

The results include data from March, when COVID-19 spread across the globe and forced people inside their homes. The NPD Group said U.S sales reached their highest March level since 2008.

Activision Blizzard Chief Financial Officer Dennis Durkin noted that in the dot-com bust and the 2008 financial crisis, gaming spending continued to grow in the low- to mid-single digits.

“We think that’s driven by the lost cost of our gaming, which makes it a great value versus other forms of entertainment,” Durkin said in Tuesday’s conference call.

Durkin said the company was benefited by its digital distribution and that gaming is more socially connected than it once was in the past. EA said that the closure of bricks-and-mortar retail stores such as GameStop Corp. hadn’t yet affected sales, as only 20% of EA’s bookings were from physical game purchases last year, compared with 84% in 2009.

For the remainder of the year, both EA and Activision said that they anticipated continuing with a full slate of releases, and executives did not mention delays related to specific titles in the conference calls Tuesday evening.

‘Apex Legends Season 5’ is about to launch, and EA expects to see the next ‘Sims’ expansion and ‘Command and Conquer Remastered’ to both launch in June as scheduled.

Activision Blizzard said in its earnings call that working remotely adds “complexity and challenges” to aspects of game development. Activision Chief Operating Officer Daniel Alegre said that it makes creative collaboration, motion capture and quality assurance, among other things, more difficult. He said the company has taken measures to minimize the impacts and the company continues to expect its slate of titles this year, including a release of “Call of Duty” and a “World of Warcraft” expansion.

Tags: ActivisionElectronic Arts
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