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In response to this year’s currency increase and a broader industry downturn, Take-Two Interactive Software Inc. cut its year sales projection on Monday, sending its shares down 17% in extended trade.
The action, which comes after rival Electronic Arts made a comparable cut, demonstrates how the industry is battling a decline in demand brought on by the absence of significant new games, the easing of COVID-19 limits, and lower spending from customers hurt by inflation.
Instead of the predicted $5.8 to $5.9 billion, Take-Two said it now anticipates full-year adjusted sales to be between $5.4 billion and $5.5 billion.
CEO Strauss Zelnick said in a statement that “our decreased expectation includes movements in our pipeline, variations in FX rates, and a more cautious view of the present macroeconomic environment, particularly in mobile.”
The results, however, indicate it wasn’t enough to support its mobile gaming industry, as player spending is being squeezed by escalating inflation and the cost of living problem. After a spike during the pandemic, total mobile gaming spending is predicted to drop by 2.3% in 2022.
Take-Two completed the $11 billion acquisition of mobile-focused Zynga in May, uniting the developer of “FarmVille” and the publisher of top-grossing PC and console games like “Grand Theft Auto.”
Take-Two stated that his $50 million loss from the stronger dollar was incorporated in the guidance for the entire year. This year, the US dollar has increased by nearly 15%, which has an effect on businesses around the world in all industries.
Strong sales of NBA 2K23, the most recent game in Take-well-liked Two’s basketball franchise, are anticipated to lessen some of the strain. Since the game’s early September release, almost 5 million copies have been sold. Marvel’s “Midnight Suns” will be available via Take-Two in December. The video game “Grand Theft Auto VI” is also in development but has not yet set a release date.
On Monday, corporate leaders reaffirmed that a leak in September that disclosed some early game footage will not have an impact on the development of the much awaited game.