Slow Sales for EA Augurs Tough Times for Video Game Business
EA is such a large force in video games that its troubles are, to a large extent, also the industry's. Rival video game company Take-Two Interactive (TTWO) also revised its guidance downward last month and it's not likely that sales of Microsoft's (MSFT) Xbox 360 and Sony's (SNE) PS3 were near the high end of analyst expectations for the holiday season if sales of EA's popular games are doing so poorly.
Microsoft and Sony had hoped that cutting the cost of their consoles would lift sales -- a move that did help in October and November. But American consumers, financially exhausted from years of aggressive use of credit, appear to have withdrawn from their love affair with games.
Rabid gamers may have to make due with their old consoles and outdated versions of their favorite games like "Madden" football and "Halo" for a while. The signs are becoming more and more visible that the video game industry will not be recovering any time soon.