Perhaps by now you've noticed the multimedia blitz surrounding video game maker Atari's (NASDAQ:ATAR) upcoming DRIV3R game. I certainly have, with the company creating high-profile television commercials, a flashy website, and a glossy marketing campaign that includes a live-action short film and several Hollywood "name" types. (DRIV3R is pronounced "Driver 3.")
Unfortunately, it looks like too much, too soon. Atari was shooting for a spring release, but last night pushed back to June. Now, the company will need to find a way to maintain the game's buzz it's earned (and paid for)for another several months. It's a tricky and potentially expensive proposition that also stands to hold back sales in the near term. (Investors said boo, and shares fell more than 20% in early trading.)
And those sales have enough hurdles. The company last night lowered guidance for its fiscal Q3 (ended Dec. 31), pointing investors toward revenues of $190 million and net income of between $20.5 million and $22.5 million. Full-year sales numbers, meanwhile, are now seen at $460 million to $470 million, with the net income line at "zero" before a one-time dividend.
That's a serious pull-back. More importantly, though, DRIV3R was supposed to come out late in Atari's underway fiscal Q4, which ends in March. The company couldn't have been counting on it to power Q4 results -- meaning that the holidays really weren't very good for Atari. Guidance given in November pointed toward quarterly sales and profits of at least $215 million and $28 million, respectively, while the full-year figures were expected to come in at least $560 million and $35 million.
Video game makers don't always have the breadth of product offerings or marketing muscle to offset release delays or underperforming titles, both of which bedeviled Atari this holiday season. Giant sector leader Electronic Arts (NASDAQ:ERTS), which Jeff Hwang profiled today, fared much better as many of its games are year-round must-haves.
Foul-ups are compounded in a difficult market environment. Retailers like Electronics Boutique (NASDAQ:ELBO) discounted game hardware in an effort to spark game sales. You could see the effects upstream, as leading console maker Sony (NYSE:SNE) today said holiday quarter game sales rose, but hardware revenues fell. In short, it's a market that didn't give game makers much margin for error.
Buckle up -- Fools are test-driving Atari on our Atari discussion board.
Dave Marino-Nachison can be reached at [email protected].
