Electronic Arts Tumbles as Studio Shut, `Star Wars' Game DelayedBy
Title was seen contributing to growth next fiscal year: BI
Battlefront sequel not affected, slated for November release
Electronic Arts Inc. tumbled after the company said it will close its Visceral video game unit and postpone the release of a “Star Wars” title that had been projected to help fuel growth next fiscal year.
About 70 people are employed at Visceral, best known for the Dead Space science-fiction series. The company is looking to shift many of the employees to other projects, Patrick Soderlund, EA’s executive vice president of Worldwide Studios, said in a statement on Tuesday. He said tests during the development process indicated the game needed a major overhaul.
“It has become clear that to deliver an experience that players will want to come back to and enjoy for a long time to come, we needed to pivot the design,” Soderlund said. The company had planned to release the game in fiscal 2019, which starts in April. It is determining the new date.
The stock fell as much as 4.9 percent, the biggest intraday drop since June, and was trading down 2.6 percent to $113 as of 9:42 a.m. in New York.
The action-adventure title Visceral was making isn’t in the same series as Star Wars: Battlefront, a hit since its release in 2015. Redwood, California-based EA will put out the latest version of that game next month.
Still, the Visceral title was factored into many analysts’ estimates, along with another expected hit, Anthem, according to Matthew Kanterman, a Bloomberg Intelligence analyst.
“This game was a driving factor, along with Anthem, for EA to achieve higher growth in 2019,” Kanterman said. “With this game delayed, it puts that view at risk.”
Sales had been projected to grow 9 percent in fiscal 2019, up from 7.5 percent in the current fiscal year, according to the average of analysts’ estimates compiled by Bloomberg.