EA Deflects Buyout Rumors, Raises Profits, Sheds Jobs

Thanks to GamesIndustry.biz for its article discussing the quashing of rumors regarding media giant Viacom buying Electronic Arts, with Viacom chairman Sumner Redstone (also in the process of privately buying into Midway) saying: "We have looked at the obvious companies like Electronic Arts... but their price is so high, it would be dilutive to our earnings. We have ruled it out." Meanwhile, EA's annual financial report has been released, showing "net revenue for fiscal 2004 was $2,957.1 million, up 19.1 percent", and also confirming "an [in-progress] workforce reduction of approximately 117 personnel in development and administrative departments", following the closure/relocation of "the majority of our leased studio facility in Walnut Creek, California and our entire owned studio facility in Austin, Texas." The financials also note that rising online sales from casual gaming portal Pogo.com was "partially offset by a decrease in subscription net revenue from The Sims Online, Ultima Online, and Earth & Beyond subscription services."

Comments

I Guess Thats Good

[Coyote67]

I guess thats good; the buyout I mean. I doubt the gaming industry needs anymore development being wielded by single parties. EA has too much control in the industry by itself, but EA owned by Vivendi? We're talking about Blizzard, Sierra, and Maxis being controlled by own board of directors, altering gaming so that it exists for the dollar and not for the gamer. Soon enough you'll see games being made not because they are good, but because they will sell on pure name. Soon enough,its the film industry.

I mean Christ! We're talking the majority of our games coming from the same people. Do you really think that is going to create good games?

Re:I Guess Thats Good

[linzeal]

I'm waiting for a game company to be owned wholly by the people that buy the games in the first place. It would be cool to buy a game and get a share of a company or buy a box of cookies and get the same.

Re:I Guess Thats Good

[Babbster]

It's called the stock market. You can buy shares of a lot of companies there, including EA). Considering that EA stock is currently going for $52.66 a share as of close yesterday, I think including a share per game would be more than a little counter-productive.

PS- I don't want games designed by the voting of gamers. That way lies disaster more foul than the corporations we have now. As one example, the beautiful graphics of Wind Waker would have died aborning.

PPS- I would note the good and/or interesting games EA puts out (Battlefield 1942, The Sims, Medal of Honor, SimGolf, Black&White, SSX, etc.) but that might get a little too real.

Re:I Guess Thats Good

[Derkec]

You've hit upon one of the most common pieces of advice for people buying stocks. Buy stock in companies whose products you like and use.

Now, if I bought stock in company A, and they proceeded to hand out shares to everyone who bought their product, I'd be pissed off. Why? Because each share that's handed out dilutes the value of my shares, making me lose money. That's why what you're describing won't happen. All the owners of the company (shareholders) would lose money if this program went into effect. Not many of the owners of the company would support that.

Re:I Guess Thats Good

[linzeal]

Well perhaps give a diluted share that is held in place by being 1/10th the purchase price of said item or the like. I think the idea has merit that all who see the utility of a product should be part of the process to make more of those products.

Re:I Guess Thats Good

[analog_line]

Vivendi? Vivendi?

Forget reading the article, read the goddamned summary. VIACOM. Not Vivendi. Vivendi is a crumbling media company. Viacom is one of the real big dogs.

Re:I Guess Thats Good

[Babbster]

Except that you missed the parent's point: That's exactly how it works now. If you believe in a company's products, and believe that they'll continue to make good products in the future, you can go buy their stock - not a damn thing (except perhaps lack of money) is stopping you.

I would also note that people who buy products ARE part of the process to make more of those products. If company A makes game B which sucks and doesn't sell units then they're far less likely to make game B-2 and will instead move on to game C. In fact, that power is far more influential in terms of content than buying stock (unless you own a large percentage of the total issue) because while the former is based on the product itself, the latter is often based on speculation. Thus, buying a share of stock in Take Two doesn't tell that company that you liked Vice City; it more likely tells Take Two that you think they're going to sell many copies of San Andreas.

Of course, the idea of giving away stock in a company with [presumably good] video games (as has already been pointed out) is silly on its face, but for another, unstated reason: Why give ANY free gift away with a game that is already going to be sold?

So much for innovation

[Hopelessness]

This doesn't bode well for diversity. As they say, don't carry all your eggs in one basket. If a freak meteor or geek riot hits the Viacom HQ once they've finally bought EA, we'll be nearly out of games. Well, there's always Nethack. Or Pong. Or some bad Mario rip-off.

Re:So much for innovation

[Killjoy_NL]

There are a lot of gamestudios in Asia and recently some have popped up in Russia and the Tschech (sp?) republic.

I think it won't be that much of a problem.

Re:So much for innovation

[Anonymous Coward]

In English, it's written as Czech. Alternatively, you could show off and confuse some people more by calling it Ceská republika (there should be an upside down circumflex above the C but slashdot strips it out).

Re:So much for innovation

[Anonymous Coward]

Yeah, like they'd re-locate the dozens of studios and thousands of employees EA has, all into one single facility. Please.

Studio Closures

[a_peckover]

Should we be worried about the layoffs at Maxis and Origin ? It concerns me that EA keep buying out the studios they previously just acted as publishers for - Westwood is another good example, and then shutting them down or relocating their staff from Las Vegas to Los Angeles. While Command and Conquer Generals is a perfectly good RTS, it doesn't feel like a true C&C game. I can't see EA releasing any further GDI vs Nod or Red Alert based games any time soon.

Re:Studio Closures

[mad.frog]

shutting them down or relocating their staff from Las Vegas

If by "shutting down or relocating" you mean "firing most of them and offering most of them unfavorable relocation terms", then yes, this is accurate.

BTW: There were plans for a GDI/Nod based C&C, using the Generals engine, but this was prior to the Vegas closure... so who knows if it is still in the mix or not. It seems that EA is far more interested in exploiting present-day tragedy than in providing epic fantasy.

Typical...

[chromaphobic]

The company is doing well! Revenues are up! Profits are up! You're all fired!

Now pack up your stuff and get the hell out.

Re:Typical...

[mcgroarty]

Hey, if one studio/team/developer isn't effecting a positive return, it doesn't matter if the company is in the black or not. EA isn't a charity any more than any other business is.

Re:Typical...

[Andy Mitchell]

Reducing staff numbers often has very little to do with hard economics and much more to do with sending a clear message to the city that we are serious about "controlling costs", "boosting profits" or some such.

Take ARM for example, got rid of 10% of its staff because profits were down. Still making a profit and had a huge pile of cash in the bank.

Lowered staff morale, reduced their ability to complete projects but the city liked it.

I don't care what they do, just give me my.....

[laddhebert]

I don't care what they do, just give me my (real) 3d client for UO. Gimme. damnit. Tired of waiting.

-L

EA Profitable? I don't think so...

[Mr.Fork]

Hey Bob... what does the average game programmer cost? 50-80k? Hmmm... our shareholders aren't going to like this quarterss numbers. WAIT, I HAVE A BRILLIANT IDEA. Dump a few folks and then remove their salaries from the bottom line. Hey, look Bob, we've got huge profit this quarter! Woo Hoo! BTW Bob, after the report, hire them back as contractors so we can finish that Barbie game they were working on...