Electronic Arts Inc. shares dropped Wednesday on rumors that one of its big game releases will be pushed into next year, another instance of a growing trend of industry delays amid the pressures of developing games with an at-home workforce that need to be flawless.
That follows on the heels of recent delays from rival Take-Two Interactive Inc. TTWO, +0.50%, which last week announced a four-month delay of new versions of its “Grand Theft Auto” franchise. Take-Two shares were up 0.2% in recent activity.
Benchmark analyst Mike Hickey, who has a buy rating and a price target of $188 on EA, said he wouldn’t be surprised if “Battlefield 2042” was delayed given a “rollout schedule was ambitious in scope.”
“We suspect the game could still be released in FY22 and would be opportunistic on a pullback,” Hickey said. “If the game is delayed out of F3Q22, we think ATVI’s upcoming Call of Duty premium release will have the most to benefit.” Activision Blizzard shares were up 0.3% at last check.
NPD Group analyst Mat Piscatella said in emailed comments that delays that have occurred in 2021 shouldn’t come as a surprise.
“So long as the pandemic persists, companies will be wary to put firm release dates out there, and those that do get announced will be subject to delays,” Piscatella said. “Just a bit of the new normal for a while, I’m afraid.”
“We’ve been seeing a number of delays for months now because videogames are very difficult to make in the best of times, and they get much harder to make with a newly primarily remote workforce and all of the challenges people are faced with in these not-so-best of times,” Piscatella said.
Benchmark’s Hickey also noted that “we suspect developers are struggling with productivity during the extended work from home scenario.”
“The stakes are higher than they’ve ever been for the biggest games,” NPD’s Piscatella said. “They’ve required more investment and time to make, and the difference between a hit and a miss to the financials can be massive.”
Many publishers are also mindful of last year’s buggy release of the long-awaited and overdue “Cyberpunk 2077” from CD Projekt SA CDR, +1.10% that forced distributors like Sony Corp. 6758, -1.46% to offer full refunds.
While Activision and Take-Two were trading at slight gains, and Playtika Holding Corp. shares PLTK, +0.04% rose 0.6%, other videogame-related stocks were trading lower.
Zynga Inc. ZNGA, -2.20% shares were down 2.6%, Unity Software Inc. U, +0.43% declined 0.2%, Roblox Holding Corp. shares RBLX, +0.06% were flat, and shares of app-monetization company AppLovin Inc. APP, -2.21% shares fell 4%.
In the broader market, the S&P 500 index SPX, +0.88% rose 0.8% and the tech-heavy Nasdaq Composite Index COMP, +0.83% gained 0.6%, while the iShares Expanded Tech-Software Sector ETF IGV, +0.92% was up 0.6%.