(Reuters) – Videogame publisher Take-Two Interactive Software Inc disappointed investors on Wednesday with its adjusted revenue forecasts for the current quarter and the full year, sending its shares down as much as 14 percent.
This comes a day after rival Electronic Arts cut its annual revenue outlook as its newest “Battlefield” title sold about a million fewer units than expected, amid growing competition.
Shares of EA and Activision Blizzard, set to report results next week, were down between 9 and 15 percent, stoking fears that the rise of online, free-to-play battle-royale games like “Fortnite” and “PUBG” are putting a dent in traditional game sales from publishers like EA, Activision Blizzard and Take-Two.
The battle royale format in multi-player gaming, which allows dozens of players to battle each other to the death until the last survivor, became wildly popular in 2018 thanks to the two games which are also credited with introducing newer audiences to gaming.
Take-Two said its western adventure blockbuster “Red Dead Redemption 2” had sold 23 million units since its launch on Oct. 26.
However, the company said it is adjusting its fourth-quarter sales expectations, as some of the estimated sales of “RDR2” were accelerated into the third quarter.
For the current quarter, the company forecast adjusted revenue in the range of $450 million to $500 million, well below analysts’ estimates of $601 million.
The highly awaited “RDR2”, launched after multiple delays, made over $725 million in worldwide retail sales during its opening weekend.
“RDR2” was also the best-selling game of 2018, according to research firm NPD.
Take-Two also raised its full-year adjusted revenue forecast range to between $2.89 billion and $2.94 billion, but that was still below analysts’ average estimate of $2.98 billion, according to IBES data from Refinitiv.
The company’s shares were down 10.2 percent at $96.39 in late morning trade.
Take-Two reported revenue of $1.57 billion for the third quarter, beating the average analyst estimate of $1.50 billion, benefiting from strength in its “RDR2”, “NBA 2K19” and “Grand Theft Auto” titles.
“Grand Theft Auto V”, launched in 2013 by the company’s Rockstar Games studio, has been driving its revenue since then.
When asked about Red Dead Redemption’s success in comparison to “GTA V”, Chief Executive Officer Strauss Zelnick told Reuters, “We would never want to make the prediction that anything will be as successful as Grand Theft Auto.”
Reporting by Arjun Panchadar in Bengaluru and Kenneth Li in New York; Editing by Maju Samuel