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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Video game developers have gone from levelling up to powering down. Small studios are shutting up shop, games are being cancelled and nearly every week brings news of more lay-offs. Even publishers of blockbuster franchises are no longer immune.
Take Electronic Arts, the California-based company behind Madden NFL and Apex Legends. Its shares fell by nearly a fifth — or more than $7bn — last week after it said the latest iteration of its tent-pole football franchise, rebranded from Fifa to EA Sports FC, drew in far fewer gamers than expected. So did its new Dragon Age game.
EA now expects net bookings — the industry’s way of recording customer spending on games and within them — to miss the $7.5bn to $7.8bn range it gave three months ago.
Knocking 18 per cent off a company’s market valuation in response to an 8 per cent cut to sales guidance may look extreme. But football is by far EA’s biggest cash cow, accounting for nearly half of total net bookings last year, according to analysts. Its enduring popularity has provided EA with a defensive moat against stagnating global spending on video games, which peaked in 2021 at $193bn, according to Newzoo.
Competition for gamers’ attentions and wallets is getting fiercer in 2025. Nintendo plans to launch a new Switch console while Take-Two Interactive will release a new instalment of its hugely successful Grand Theft Auto franchise.
At 16 times forward earnings, EA now trades at a sharp discount to other major video game stocks. Take-Two is on a multiple of 52 times. Even France’s Ubisoft, shares in which have been hit by disappointing sales of new releases and production delays to its new Assassin’s Creed game, is trading at 29 times.
There are other ways to play the gaming sector — and that don’t depend so much on a knack for developing blockbusters. Roblox, for example, acts as an engine where users create and share their own games. That makes it more like a gaming version of Alphabet’s YouTube, which hosts content without having to make it.
Roblox offers something EA doesn’t: growth. Due to report earnings next week, its revenue is expected to have risen 20 per cent in the latest quarter even though it remains lossmaking, according to LSEG, where EA and Ubisoft’s top lines are shrinking. And the stock has gained by about two-thirds over the past 12 months. New games, new rules, new winners.
pan.yuk@ft.com
