May 8, 2018 / 8:07 PM / 2 years ago

Game publisher EA's first-quarter forecast misses estimates

May 8 (Reuters) - Electronic Arts Inc forecast current-quarter revenue below Wall Street estimates on Tuesday, as the video-game publisher faces rising competition from free-to-play digital games “Fortnite” and “PlayerUnknown’s Battlegrounds”.

The company forecast first-quarter adjusted revenue of $780 million, below analysts’ average estimate of $795.9 million, according to Thomson Reuters I/B/E/S.

The success of games from the “battle royale” genre such as “Fortnite” have somewhat challenged publishers including Activision Blizzard Inc and Take Two Interactive Software Inc.

Epic Games launched the free-to-play “battle royale” mode for “Fortnite” on computers and gaming consoles in September. The mode allows up to 100 online players to battle each other to the death until only one player survives.

Sales at EA’s high-margin digital business however rose 18 percent to $1.10 billion in the fourth quarter as more gamers bought their titles online instead of purchasing physical copies from retail stores.

Net income rose to $607 million, or $1.95 per share, in the fourth quarter ended March. 31, from $566 million, or $1.81 per share, a year earlier.

Videogame companies are required to defer some revenue from certain online-enabled games following a tweak to the U.S. accounting rules.

On an adjusted basis, EA’s revenue was $1.26 billion for the reported quarter, beating estimates of $1.24 billion. (Reporting by Arjun Panchadar in Bengaluru; Editing by Shounak Dasgupta)

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