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The Almighty Buck

EA Posts $16 Million Loss, Looks to Next-Gen Games 85

Posted by Zonk
from the big-get-smaller dept.
kukyfrope writes "Electronic Arts recently released its preliminary financial results for the fourth quarter and fiscal year ended March 31, 2006. While net revenue was up 16 percent to $641 million for the fourth quarter, the leading video game publisher suffered a net loss of $16 million. During the same period last year EA posted net income of $8 million. 'We are well into the console transition and now have more than 30 next generation games in development,' said Warren Jenson, Chief Financial and Administrative Officer."
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EA Posts $16 Million Loss, Looks to Next-Gen Games

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  • Contributors (Score:5, Insightful)

    by Kelz (611260) on Thursday May 04, 2006 @02:51PM (#15265091)
    A couple factors probably contributed to this:

    The lack of an established next-gen console: The X360 had shortages across the board from manufacturing, and EA didn't have enough launch titles. People with the system bought a very high percentage of the games that were availible, but EA didn't have enough to really take advantage of that.

    The labor lawsuit. The settlement probably put them back quite a bit, as well as hurting their "efficiency" by having to let developers work less hours, and paying for the settlement.
    • Plus the fact that EA released a lot of crappy (and buggy) shit last year.
      • I completely agree. Me and my wallet will never be lured by any EA title again, so long as they don't go and buy out somebody like Blizzard. The problem is that there seems to be a lot of companies now following in EA's footsteps when it comes to release quality and time to patch serious flaws (i.e. Activision / Ininity Ward for Call of Duty 2).
        • Don't worry Blizzard was bought by Vivendi Universal so EA can't have them... of course that means they will be driven into unprofitability by bad management an turned into a brand for releasing buggy and uninspired first day abandonware(see Serra).

          Yeah... the PC gameing industry is in trouble right now and the sucess of WoW will only lower the amount of creativity.

          Even now people (and not a minortiy) look at a game like Oblivion and say "why would you play a single player game? You can't PvP or show off yo
      • plus they have shitty customer service. BF2 I had to buy the European maps to get the latest patch. If I didnt get the latest patch I wasnt able to play online on ranked servers anymore because they had the latest patch.
        • Yeah, their latest wheeze is turning off the servers for their online console games as soon as the new version is released (and being EA, this is only a year). Despite the fact that the games are hosted peer-to-peer anyway, they just provided a (crappy) matching game lobby service.

          For example - Burnout 3, no longer playable online.
          SSX 3 - No longer playable online. Best one about this is, SSX On Tour (the sequel) does not even have an online element!

          These are the actions of a company that doesn't give a tos
    • Re:Contributors (Score:4, Insightful)

      by CastrTroy (595695) on Thursday May 04, 2006 @03:01PM (#15265183) Homepage
      I think it has more to do with the quality of games produced. They can't expect to make money year after year releasing Madden, NHL games, and Movie spinoffs which don't really bring anything new to the gaming world.
      • Re:Contributors (Score:1, Insightful)

        by Anonymous Coward
        Problem is "Madden, NHL games, and Movie spinoffs" have been enormously profitable even up to last year. So you need a better reason than "everyone suddenly and uninmously got sick of them". Especially when there's very obvious external factors like the next-gen consoles.

        Sony has basically Osborned themselves with all their BS about the Playstation 3 being out in Spring 06 (and now it might be Spring 07).
      • "They can't expect to make money year after year releasing Madden, NHL games, and Movie spinoffs which don't really bring anything new to the gaming world."

        EA could make money on those games if they did a good job making them - hell, EA was one of the companies that proved how well sequels can do, and good movie tie-in games have a historuy of success going back to the beginnings of the game industry. EAs problems stem from relying on hype from gaming publications to sell games - but consumers are quickly c
      • I think it has more to do with the quality of games produced. They can't expect to make money year after year releasing Madden...

        Except Madden is consistently one of the best-selling console games. It's a cash-cow for EA. If anything makes them money, it's Madden.

        The question is, will they capture the players who plaid only the NFL2K series previously? From the stats I looked at I didn't see a marked increase.
    • I wonder how much money WoW and other MMORPGs have siphoned out of the gaming market...
      • Uhh...can you rephrase the statment? WoW and other MMORPGs are *part of* the gaming market, so they can't siphon money out of it.

        If you mean, how much market share did they take from console game producers due to a market advantange, then your statement makes sense. Or, if you asked how much higher energy prices took out of the gaming market, that would make sense.

        • Look at it this way: if you spend $15 for a subscription fee (or however much) instead of buying a $60 game that month, then that's $45 that could be considered "siphoned off."

          I have no idea how widespread this is (I don't play WoW myself), but that's how I interpret the question, and I think it makes a valid point.

    • "as well as hurting their "efficiency" by having to let developers work less hours"

      I think you are being sarcastic here, but I felt I should point out: As I've heard from the ea_spouse blog and many other places, the way that EA uses their employees is not "efficient". Just because they had them working like dogs from 9am - 10pm all week long does not mean that they were being efficient. There are quite a few reasons for this, such as the fact that an employee is only really worth their wage when they ar
  • There's far too much emphasis places on whether a company recorded a profit or a loss in any one year by the media. By itself a profit or a loss is largely meaningless. In this example there's a clear justifiable reason why EA posted a loss. It was expected. The time to worry is when a company posts an unexpected loss, or a series of losses. This is not "stuff that matters".
    • By itself a profit or a loss is largely meaningless.

      I keep trying to decide... do you work for General Motors or the Federal Government?

    • There's far too much emphasis places on whether a company recorded a profit or a loss in any one year by the media. By itself a profit or a loss is largely meaningless.

      Someone grew up during the .com boom...
    • by hambonewilkins (739531) on Thursday May 04, 2006 @04:09PM (#15265806)
      I agree. And even worse is attention focused on earnings per share (EPS). Both factors the company can completely tweak at will, in a way. Revenue and growth in revenue is far, far more important.

      For example, lets say halfway through the quarter EA realizes its R&D costs are way too high and that their profits will be lower because of it. If investors are all jazzed about profit/loss, they could fire their work force or stop R&D in order to show a profit.

      It's a relatively meaningless number unless, as was stated, it is a long trend of losses or it was completely unexpected (and without a decent explanation).

    • That negates the logic found in your post.
    • Wow, so as long as I run a company that never expects anything but losses I'm on top of my game? Whether the company expected it or not is not the only factor.
  • by whoop (194) on Thursday May 04, 2006 @02:59PM (#15265156) Homepage
    It must be 'cause of them rascally pirates!!
  • That's strange... (Score:3, Informative)

    by dalmiroy2k (768278) on Thursday May 04, 2006 @03:00PM (#15265173)
    I readed the article and they don't seem to blame piracy about their loses...

    • Does that matter? They're still blaming everything else, except for what counts. That is, their complete inability to develop new and interesting games, and their focus on regurgitating the same game every year and/or looking to movie franchises to help them out.

      I'm sure EA's still a great company, they have a lot of awesome technical ability and the ability to wield it on all different platforms. But someone there needs to remember that technical prowess is useless without creativity in this industry.
      • I'm sure EA's still a great company...
        How so? They make crappy games, they aren't making money and their employees hate them enough to sue. What could possibly qualify them as a "great" company? EA has absorbed some great companies (Westwood, Bullfrog, etc) but they didn't rub off.
    • Who would want to even pirate Madden 2036? Sure, warez collectors have everything, but most pirates tend to copy good games =)

      Melissa
  • by Anonymous Coward
    I predict that we are heading for a crash like the one that occurred in the 1983, and killed off most games publishers.

    Back then, games had got too staid and predictable, being nothing but cash-ins on existing IP (E.T. is the prime example). Competition within the business was fierce, with home computers such as the C64 slashing their prices and console prices being slashed to compete.

    We are now seeing a similar situation. There is a ridiculous price-war going on, with Microsoft and Sony both selling their
    • I had to undo my moderation for this topic because I need to find out if you have been under a rock for the past few months or just don't pay attention to anything that has the word Nintendo in it. They have this product that is now called the Wii which is their planned "Revolution" with which they plan on make a massive change to the way that games are being played, this is the next generation plan from Nintendo. It would make sense that they wouldn't change their current business model too much, as it has
    • The first video game crash's circumstances are, however, very different than what is going on now.

      Originally, Atari was the only publisher of games for their 2600 console. When disgruntled developers from Atari wanted to start their own game company (this company being Activision), they just went ahead and did just that and made games for the 2600. Atari attempted to sue Activision for making carts for their system (reason being that it was supposedly be proprietary specification - not intended for 3rd
    • ...a revolutionary...
      http://games.slashdot.org/article.pl?sid=06/04/27/ 1625208 [slashdot.org]
      In case you didn't know...
    • I predict that we are heading for a crash like the one that occurred in the 1983, and killed off most games publishers.

      Yeah, you and every other naysayer since 1985.

      Back then, games had got too staid and predictable, being nothing but cash-ins on existing IP (E.T. is the prime example). Competition within the business was fierce, with home computers such as the C64 slashing their prices and console prices being slashed to compete.

      We are now seeing a similar situation.


      Huh? So Dell is is slashing their price
    • People play more online on the only real massively networked device: the PC. People play longer to PC games than the 10 hours next gen style You are reading this from a computer where you can download a good game next gen is old stuff, crash is coming
  • I wonder just how much of it had to do with EA's various sports-related deals. The rumors of a $1B exclusivity contract with the NFL a few years back certainly raised some eyebrows at the time. Could this small bump in their fiscal affairs have anything to do with it?
    • From what I have seen and heard, a lot of people are boycotting their sports games that have an exclusive license. Why? Because it is anti-competition, and most gamers I know won't put up with that crap.

      Maybe, just maybe, this industry is starting to vote with it's wallet a bit more, and the bigger players are feeling the heat.
  • I guess the '07 lineup of sports games just wasnt that markedly different from the '06 lineup, and none of their fanbase bought it. I am a bit surprised it took this long to happen, but I'm not surprised at all, it should happen to any company that revises essentially the same set of games over and over again.
  • How about EA produce an original, decently funded, game?

    You know, like the ones all those companies that EA has eaten up use to make!
    I think it's strange how a company with so much cash behind it (far more than almost anyone else), can't find a few bucks to produce a game which hasn't been done at least 10,000 times before.

    EA seem to suffer from a problem similar to the "Too many cooks spoil the broth" one, except in EA's case it's too many shareholders spoil the game!

    • As a European, I love soccer. Well, I never had a good soccer game in PC, thanks to EA. Their interpretations of the sport was mediocre at best. They forced me to buy a PS2 so as that I could play ISS Pro.
    • Agreed. My husbad and I keep a long, long wish-list of games we want and buy one off that list generally once a month, in addition to an annual game shopping-spree when he gets his vacation pay. I noticed just two days that there wasn't a single EA game on that list. I'd buy an EA game if they put out a decent one, but none of them that sounded even slightly interesting stood up the harshest critics -- user reviews. We're the people they're aiming at, but they seem to be shooting blind.
  • 30 games (Score:5, Funny)

    by payndz (589033) on Thursday May 04, 2006 @03:43PM (#15265551)
    We are well into the console transition and now have more than 30 next generation games in development

    Madden 2007, Madden 2008, Madden 2009, Madden 2010, Madden 2011...

  • Good. Fuck 'em. (Score:2, Insightful)

    by Gannoc (210256)

    I have nothing really insightful to say. I just hate EA.

    • Agreed.

      EA don't make high-quality games, they just re-release the same old sh*t every year for the sake of making money. I bet none of the managers at EA are gamers or have a clue about games. They're just businessmen who are in it for the big bucks.
  • They must be putting all their development $$ into Spore - the game that will save EA
  • Is the $60 (£50 here in the UK inc VAT!) price point really not affecting their sales as they claim? I don't own an XBox360, but I have a reasonable gaming budget and there is no way I'd pay that much for a game.
  • You know what it is, it's those damn lazy programmers, only putting in 70 hour weeks, because they insist on having time for their precious little families... or sleep.

  • I Suggest (Score:3, Funny)

    by Taulin (569009) on Friday May 05, 2006 @08:52AM (#15269654) Homepage Journal
    I suggest that EA does two things to make up the money. First, get rid of some programmers. They have way too many. Second, the programmers that stay should work a little over time. I mean, they are so lucky working for a oompany that puts out so many great games.
  • Hope they're happy with the result of their sacrifices for their company.

It's a poor workman who blames his tools.

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