Take-Two Interactive Software Inc (TTWO.O) lowered its annual sales forecast on Monday, as the videogame publisher took a hit from this year’s surge in the dollar and a broader industry slump, sending its shares down 17% in extended trading.
The move follows a similar cut by rival Electronic Arts (EA.O) and shows how the sector is struggling with a demand drop caused by the lack of major new titles, lifting of COVID-19 curbs and lower spending from inflation-hit consumers.
Take-Two said it now expects full-year adjusted sales to be between $5.4 billion and $5.5 billion, compared with $5.8 billion to $5.9 billion projected previously.
“Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile,” Chief Executive Officer Strauss Zelnick said in a statement.
In May, Take-Two closed its $11 billion buyout of mobile-focused Zynga, merging the publisher of best-selling personal computer and console games including “Grand Theft Auto” with the creator of “FarmVille.”
But the results show that was not enough to prop up its mobile gaming business, where player spending is under pressure because of runaway inflation and the cost of living crisis.
Overall spending on mobile games is estimated to decline 2.3% in 2022, according to data analytics firm Sensor Tower, after a surge during the pandemic.
Take-Two said its annual forecast also includes a hit of $50 million from a strong dollar. The greenback has surged about 15% so far this year, impacting global companies across sectors.
Some of the pressure is expected to be offset by strong sales of “NBA 2K23” – the latest installment in Take-Two’s popular basketball series. The game has sold nearly 5 million units since its launch in early September.
Take-Two will launch Marvel’s “Midnight Suns” in December. Its development pipeline also includes “Grand Theft Auto VI,” which does not yet have a release date.
On Monday, company executives reiterated that the highly-anticipated game’s development will not be impacted by a leak in September that exposed some early game footage.