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EA struggles to keep up with declining console game sales

A big hit from lower-than-expected sales of Medal of Honor Warfighter -- along with overall softness of the retail market -- forced EA to scramble to keep its numbers up during this last important December quarter.
A sharp spike in EA's digital sales was not enough to offset retail game decline during its last crucial December quarter. Packaged games generated $568 million during the quarter ending December 31, a 23 percent drop from the $738 million they brought in during the same period in 2011. CEO John Riccitiello says the decline was due to consumer spending reflecting the console generation change, as Sony and Microsoft prepare to unveil their new systems. While EA's hits continue to do well for the company, "the losers are getting hit hard," CEO John Riccitiello said. Packaged game sales across the board were lower than the company anticipated, but shooter sequel Medal of Honor Warfighter was blamed specifically in a conference call with EA's investors. The franchise is now essentially dead, and is no longer a part of EA's stable of IPs going forward. "Metal of Honor didn't deliver, and we underestimated the overall softness of the console goods sector," said Riccitiello. The hit was so bad, EA's recently-hired CFO Blake Jorgensen said, that the company went into a sort of emergency mode to turn things around, reducing headcount and spending on external expenses such as marketing while focusing on generating revenue for its proven hits (FIFA, Battlefield 3, Need for Speed Most Wanted). Despite this, and despite a 17 percent growth in the digital sector, the result was a quarter that missed company guidance and analyst estimates. Adjusted revenue clocked in at $1.18 billion, versus analyst projections of around $1.29 billion. Losses were reported at $45 million.

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