(Reuters) – Take-Two Interactive Software Inc reported lower-than-expected quarterly revenue and forecast first-quarter sales below analysts’ expectations, as it faces intense competition from free-to-play “battle royale” games “Fortnite” and “PUBG”.
Shares of the company fell 2 percent in extended trading.
The battle royale format, which allows dozens of players to fight each other to death until the last survivor, became wildly popular in 2018 thanks to “PUBG” and Epic Games’ “Fortnite”, two games that are also credited with introducing newer audiences to gaming.
The game publisher, however, met its own fourth-quarter revenue forecast of $450 million to $500 million and its adjusted earnings of 78 cents per share beat expectations of 75 cents, boosted by its “NBA 2K19”, “Red Dead Redemption 2” and “Grand Theft Auto V” titles.
Red Dead Redemption 2 has sold more than 24 million units worldwide till date, the company said.
The game publisher’s adjusted revenue, which the company calls net bookings, in the reported quarter ended March 31 stood at $488.4 million, missing the average analyst estimate of $506.5 million.
New York-based Take-Two forecast first-quarter revenue of $310 million to $360 million, and full-year revenue of $2.5 billion to $2.6 billion. Analysts were expecting revenue of $418.3 million for the quarter and $2.78 billion for the year, according to IBES data from Refinitiv.
Rivals Electronic Arts and Activision Blizzard have also forecast quarterly and full-year revenue below estimates, adding to fears that competition from battle royale games was continuing to eat into sales of big game publishers.
U.S. videogame producers are known to typically give outlook below market expectations, but almost always beat them.
“We expect fiscal 2020 to be another strong year for Take-Two, with operating results currently forecasted to be lower than fiscal 2019, due to the extraordinary success of Red Dead Redemption 2,” Chief Executive Officer Strauss Zelnick said.
Take-Two’s net income fell to $56.8 million, or 50 cents per share, from $90.9 million, or 77 cents per share, a year earlier.
Reporting by Arjun Panchadar in Bengaluru and Kenneth Li in New York; Editing by Shinjini Ganguli