Aug. 4 (Bloomberg) -- Electronic Arts Inc., the world’s second-largest video-game publisher, reported a first-quarter loss that was smaller than analysts projected after releasing a new version of “The Sims.”

The loss totaled 2 cents a share, excluding some costs, Redwood City, California-based Electronic Arts said today in a statement. That was smaller than the average 14-cent deficit projected by 21 analysts in a Bloomberg survey.

Chief Executive Officer John Riccitiello is boosting marketing spending and focusing on developing games for Nintendo Co.’s top-selling Wii console. The U.S. video-game market shrank 12 percent in first half of 2009, including a 31 percent sales drop in June, according researcher NPD Group Inc.

“The overall pie has contracted, but EA is definitely getting a bigger slice,” said Todd Mitchell, an industry analyst with Kaufman Brothers LP in New York. He rates the stock “buy” and doesn’t own it.

Excluding changes in deferred revenue, sales rose 34 percent to $816 million in the quarter ended June 30, beating the $726.2 million average of 20 estimates.

When changes in deferred revenue are included, the company reported a net loss of $234 million, or 72 cents a share, on sales of $644 million. That compares with a loss of $95 million, or 30 cents, a year earlier. Sales totaled $804 million on that basis a year ago.

During the quarter, the company released “The Sims 3,” a game in which players create and nurture a community of virtual people. The latest edition sold 3.7 million copies, Electronic Arts said.

2010 Forecasts

Electronic Arts gained 91 cents, or 4.2 percent, $22.80 after the report. The shares added 34 cents to $21.89 at 4 p.m. New York time in Nasdaq Stock Market trading and have advanced 36 percent this year.

The maker of “Madden NFL” reiterated earlier forecasts for fiscal 2010, projecting sales of $4.3 billion, excluding the changes in deferred revenue, and profit of $1 a share, excluding some items. Last year, the company stopped providing quarterly forecasts because of potential changes in release dates.

While Riccitiello cut expenses overall, he increased marketing outlays 28 percent in the first quarter to boost sales in the tough economic environment.

“The industry is weaker than we originally expected and we remain cautious,” Riccitiello said on a conference call.

Price Cuts Welcome

Price cuts from console makers would be “welcomed in the marketplace,” Riccitiello said without specifying if Sony Corp., Nintendo or Microsoft Corp. should cut the price.

The company’s “NCAA Football,” released July 14, isn’t selling as well as expected, EA Sports President Peter Moore said on the call. “Madden NFL 10” will be released Aug. 14.

During the quarter, Electronic Arts released the “EA Sports Active” fitness game, the company’s top title on the Wii after selling 1.8 million copies, according to the statement.

Electronic Arts said it is the No. 2 supplier of Wii games based on sales, behind Nintendo, and has a 21 percent share.

“Electronic Arts has been making progress to diversify to the Wii,” said Colin Sebastian, a San Francisco-based analyst with Lazard Capital Markets.

Other game games released during the quarter included the boxing game “Fight Night Round 4” and a new “Tiger Woods” golf title. All the games were in the top 10 of U.S. sales in June, according to researcher NPD.

June marked the fourth consecutive monthly decline for U.S. video-game sales and the steepest drop since September 2000, according to NPD, based in Port Washington, New York.

Falling Wii Sales

Last week, Kyoto-based Nintendo said Wii sales fell 57 percent and profit dropped 61 percent in the first quarter ended June 30. Sony Corp., based in Tokyo, reported a second-straight loss after PlayStation 3 shipments fell 31 percent.

Electronic Arts lost its position as the world’s largest video-game publisher last year when Vivendi SA’s game division merged with Activision Inc. to create Activision Blizzard Inc. The maker of “Guitar Hero” and “World of Warcraft” reports its quarterly results tomorrow after U.S. markets close.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

Last Updated: August 4, 2009 18:43 EDT