The company singled out three reasons for the the anticipated shortfall. Primarily, it said, it underestimated the effects of the Holiday 2004 video game hardware shortage. (Retailers were regularly out of stock of Xbox and PlayStation 2 machines, as Microsoft and Sony were unable to keep up with demand.)

Also, momentum the company saw in its third quarter software sales did not continue into the holiday period. Similarly, titles released in the fourth quarter did not live up to expectations. The company specifically cited lower than expected sales of its "Need for Speed" and "NFL Street" franchises.

EA president Larry Probst also acknowledged sales of competitive titles, including "Half-Life 2" and "Grand Theft Auto: San Andreas" have cut into sales. "World of Warcraft," a massively multiplayer game from powerhouse developer Blizzard, he said "has had an impact on everyone in the industry."

"Everybody in the industry has been surprised with 'World of Warcraft,'" he said. "I can tell you from firsthand observation that there are people who haven't played games in years who are now spending 15 to 20 hours a week playing 'World of Warcraft'."