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More On SEC Probe Into Game Publishers
Thanks to Reuters for a follow-up article discussing the SEC investigation into videogame publishers, in which Acclaim, Activision and THQ are already a part. Analysts elaborated on the probe: "..the investigation was probably considering two key questions: at what point in a game's release did the publisher recognize revenue from its sale, and whether reserves taken as insurance against weak sales were being used to smooth out revenues." This may mean the rush to get product out at the end of the financial year, as recently occurred with Tomb Raider, may be changed somewhat: "For example, some video game publishers book software revenue on the day the product is shipped. A more conservative approach could be to book revenue the day a retailer takes possession of the goods." Update: 07/21 22:14 GMT by S : There's also a good CNN Money article discussing the implications of this probe.
I dont understand exactly what Acclaim did illegal (other than make a bunch of shitty games). And it's not like they have a "We are the only game publishers" Patent.
So, why is the SEC doing this?
Why would the SEC bother with video game publishers when the Enron crooks are still running around?
I can't understand why they continue to waste time with the little fish when the Enron and Global Crossing executives are all running around spending money they stole from employees and retired people.
The SEC is doing what avid videogame players have wanted to do for years.
I think their revenue models are screwy anyway. Take into consideration the people that reserve [deposit] or preorder the games [full price], doesn't that count? Would they also benefit from introducing the title a little cheaper? I wait for a PC or console [PS2] game to drop from $50-$60 USD range down in the ballpark of $20. Many of my friends just rent their console game, about $5, finish it and never wind up buying the title.
-- Some days you're the dog; some days you're the hydrant.
Will Smith was acquitted of rape, but he might run for office.
This sounds exactly like what Microsoft was accused of doing a year or two ago. Did anything ever come of that?
It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
EA is the biggest publisher so they make the largest political contributions and are therefore so far exempt from the probe. Check.
All other publishers are named or have already been named for this investigation into their accounting practices, even though the practice is standard throughout the industry. Check.
The watchdogs state in the article that they understand the current practice and don't see much wrong with it but they suspect the SEC will require a change. Check.
The new rules are likely to hurt bubble publishers such as Midway and Acclaim and not trouble the big boys EA, Activision and Take-Two who could more easily transition to deal with the new rules. This would also logically exclude all foreign publishers without a US trading stock. Check.
So, the big dogs win and the small fish lose. Stock prices fall sharply throughout the industry for a time, potentially breaking the smaller houses entirely. All of this, despite the fact that noone has really complained that they lost their retirement because of these stocks like we saw with Enron, when in fact the entertainment software industry has been stable to strong throughout the downturn. Check.
Thanks SEC, keep up the good work.
So, what? Do you want to wait until people *do* lose their retirement funds with no chance of compensation before stuff like this is uncovered? Revenue recognition is a shady area, even if it is common in the industry. The difference between "common industry practice" and illegal activity is literally pennies.
If this was three years ago, and the SEC was saying that it wanted to investigate Enron, would you be defending them as well, saying that "well, it's really standard practice throughout the industry, and nobody's complained about losing their retirement money yet..."