May 11, 2012
In today's video, Tamara looks at Electronic Arts (Nasdaq: EA ) , which released earnings this week that showed a decline in subscriber numbers even as sales grew 26%. Activision Blizzard (Nasdaq: ATVI ) was another big gamer to report, although it had much more encouraging results -- beating estimates on both the top and bottom lines. These traditional video-game creators have to adapt to a shift toward casual and social games to better compete with companies such as Zynga (Nasdaq: ZNGA ) . While Zynga has yet to prove that its free-to-play model can turn a worthwhile profit, its number of daily active players continues to climb as others lose subscribers.
Diminishing sales of physical video games is another area of concern in the sector. GameStop (NYSE: GME ) on Thursday said it now expects same-store-sales to fall 12.5% when it reports its fiscal first-quarter earnings. This is partially due to game creators like EA and Take-Two Interactive (Nasdaq: TTWO ) , which keep pushing back release dates for newer versions of their hit games.
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