:Take-Two Interactive Software Inc 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 percent 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.
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 percent 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 forecast quarterly adjusted sales below estimates, while Activision Blizzard had also delivered a disappointing second quarter.
Several other companies have also warned of a slowdown in gaming. Earlier on Monday, chipmaker Nvidia Corp 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.
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.
“We’re seeing probably a bit more softness in mobile,” said Zelnick.
Although adjusted sales grew 41 percent to $1.0 billion for the quarter ended June 30, it was still below Street’s expectation of $1.1 billion.