Ahead of the holidays, the biggest game releases from EA, Take-Two, and Activision have received poor reviews, capping a difficult year for the industry
Dan Gallagher / Wall Street Journal :
Context & Ripple Effects
This caps an arc the coverage has been tracing for two years: EA itself warned in late 2020 that the pandemic gaming bump was waning and forecast a weak quarter, and by January 2021 the industry's post-2020 questions — how to follow a record spending year, how to avoid another Cyberpunk 2077 — were already on the table. The poor holiday reviews for the three biggest publishers' flagship releases land right at the moment that bump was expected to fade.
There is precedent for what a weak holiday lineup does to the P&L: in 2019, Sony's games operating income fell 14% in the holiday quarter amid a relatively weak-looking release slate. The subsequent EA earnings report in this corpus shows the same pattern in miniature — revenue up, but net income down sharply.
First-order effects
- The three publishers head into their holiday-quarter earnings with critically weak flagships, and EA's Q3 results confirm the hit: net income of $66M versus $211M a year earlier, even as net bookings rose to $2.6B.
- Retail and digital storefronts lose their usual review-driven holiday tailwind, leaving the publishers' marketing spend carrying titles that word-of-mouth is not supporting.
Second-order effects
- With new releases underperforming critically, EA's bookings growth had to come from its established live-service and back-catalog business — shifting internal resource allocation and investor attention toward those lines.
- Activision's quality problems compound beyond reviews: it pulled the Game Pass PC version of Call of Duty: WWII offline after reports of players' PCs being compromised, adding a trust dimension to a year of weak reception.
Third-order effects
- Two weak-slate holiday quarters in three years (Sony in 2019, the big three in 2021) point toward an industry structure where annualized franchise quality, not slate volume, determines holiday earnings — raising the cost of shipping a poorly reviewed flagship.
- If spending normalizes as EA forecast back in 2020, publishers face pressure to cut development risk, which favors fewer, bigger bets and more live-service reliance — a consolidation of creative risk at the top of the market.
The trend: As pandemic-era gaming spending normalizes, the industry's biggest publishers are finding that holiday slate quality — not slate size — is the swing factor for earnings.