Shares of video game makers slid on Wednesday after Electronic Arts and Take-Two Interactive Software delivered disappointing results. Those two stocks, as well as shares of rival Activision Blizzard, were down more than 10 percent.
One reason for the disappointing performance? Competition from Epic Games’ Fortnite.
Fortnite has become a sensation around the world since it was released in late 2017. The game, which features an online battle royale in which hundreds of players fight for survival, is free to play. Players make in-game purchases to upgrade their characters. By late last year, Fortnite said it had 200 million registered users, up from 125 million in June.
In fact, Fortnite has become so popular that Netflix said last month that it considered the game more of a competitor than HBO.
Late Tuesday, Electronic Arts said that unit sales of its newest version of Battlefield had fallen about one million short of expectations and that, as a result, it was lowering its forecast for 2019. Take-Two also offered a weaker outlook than expected.
“Our launch didn’t resonate as strongly as we would’ve liked it to with players, and we were never truly able to catch up,” said Andrew Wilson, the chief executive of Electronic Arts. “And as our competitors continued to build momentum, whether that was Fortnite or Red Dead Redemption 2 or Call of Duty, we continued to kind of stall from where we needed to be.”
As consumers have increasingly embraced free-to-play games such as Fortnite over the past year, sales of traditional console games have suffered.
Shares of Electronic Arts and Activision are down more than 43 percent since the end of June. Take-Two is off 22 percent over that period.