Gamestop warning on Star Wars game premature

Electronic Arts Inc has little to fear from retailer GameStop Corp's (GME.N) warning about weak sales for EA's just-released “Star Wars” title, with analysts agreeing it was too early to predict its success or failure.

The videogame publisher's shares fell as much as 7 percent on Monday after GameStop said its sales of “Star Wars: Battlefront” were weaker than anticipated.

Analysts and one top investor in EA said it was premature to conclude that the warning was a sign of weak demand.The comments from GameStop, the world's largest videogame retailer, do not reflect digital videogame sales and come days before Black Friday, traditionally the biggest shopping day in the

United States.GameStop's warning is “really being driven by an acceleration of digital downloads,” Cowen & Co analysts said.

“It's too early to sound any alarm bells,” said Christopher Merwin, an analyst at Barclays. “The success of 'Star Wars Battlefront' will be largely dictated by how it does digitally.”

The videogame industry has been shifting to distributing games digitally in recent years, with increasing bandwidth and easier access on consoles allowing players to download their favorite titles, rather than purchase physical copies.

Digital, a higher-margin business, has been growing steadily, and comprised nearly 52 percent of EA's revenue for the year ended March 31.