EA Banking On The Future

CNET has a good look at the financial plans for gaming giant Electronic Arts. They've spent big money preparing for the shift to next-generation systems, as well as their exclusivity contracts with major sports leagues. An interesting commentary on one of the movers and shakers in the industry. From the article: "The stakes for EA and the entire game industry will be huge in the coming months. Microsoft, Sony and Nintendo all intend to deliver new game consoles over the next year, forcing game makers to spend big to prepare their titles for the new platforms. EA spent $633 million on research and development in fiscal 2005, which ended June 30. That's 20.2 percent of its total revenue, 24.1 percent more than it spent the year before on R&D, and 57.8 percent more than it spent two years ago. In the current fiscal year, some analysts estimate the company's R&D spending could go as high as $725 million."

Comments

One can dream...

[Metapsyborg]

that they will go bankrupt, but us gamers will never get that kind of lucky break.

Funny statistics

[CrazyJim1]

"That's 20.2 percent of its total revenue, 24.1 percent more than it spent the year before on R&D" At first I read that as EA spent negative 3.9 percent the year before on R&D.

Re:Funny statistics

[hermit7323]

$633 mil is 20.2% of their total revenue. Which happens to be 24.1% more than they spent last year (about $480.5 mil).

Missing from the financial reports

[BlackCobra43]

The amount of money spent on strong-arming and trust-building.

EA wil be the death of the video game industry. Mark my words.

Re:Missing from the financial reports

[Anonymous Coward]

Indeed.

Money spent on screwing gamers: Millions.
Money spent on actually making good games: 0.

Its sad to see that they've made the majority of their money from eating smaller companies, firing huge amounts of employees, and reaping the benefits of their hard work.

And thats not even getting in to "Phoning it in" with exclusivity contracts which degrade sports games in general.

Re:Missing from the financial reports

[Anonymous Coward]

Nah.. if anything, the bloated industry will only 'de-evolve' into something leaner. Just as we see in Hollywood, where low budget, low profile films are becoming more and more chique.

Although, this industry, as it is now, will be fine for quite some time, just as long as there are millions upon millions of fat-assed, quick thumbed, spoiled rotten children ( or adults for that matter) The appetite for electronic entertainment isn't going away any time soon.

Re:Missing from the financial reports

[RoadDoggFL]

They're not "your words" if they've been said a thousand times before.

R&D? Remake & Distribute?

[malchus6]

EA spent $633 million on research and development in fiscal 2005 Ok, then why is it that all we get is "Sims 12: Surfin The Web", and a host of other Great sequals? Do you need to pay $633mm to finally come up with "Oh yeah, we can put out another Battlefield and NEed for Speed". Or is that $633mm spent on buying exclusivity and licenses of established brands?

Re:R&D? Remake & Distribute?

[Anonymous Coward]

EA has some amazing tools for cross-platform development and code reuse. Their R&D spending is no doubt focused on expanding those tools to include the next-gen consoles, handhelds and advances in PC tech.

(This does not stop them being wankers of the first order. But, hey, burnout is pretty good.)

Great Games

[Anonymous Coward]

EA makes fun, enjoyable games and that is what they are in business to do. A business is about making profits not giving away their money to employees becuase they don't feel like they are paid well or treated properly. If you don't like your job move on.

I'm not trying to flame but give a different point of view.

Re:Great Games

[NitroDudE]

mmm posted anonymously, still smells smokey....

Re:Great Games

[Anonymous Coward]

How about this: Your point of view is myopic.

EA makes fun, enjoyable games and that is what they are in business to do.

No, they don't. They buy up other companies who make fun, enjoyable games, then turn them into "franchises" where there is little support, and no service.

A business is about making profits not giving away their money to employees becuase they don't feel like they are paid well or treated properly.

A business is different things to different people. While profits should be the main goal of a company, it doesn't have to be.

But thats not even the point of outrage. Its about a little thing called "Ethics". Abusing your employees = lack of ethics. Abusing your monopoly to gain exclusivity contracts = lack of ethics. Buying a company, firing most of the employees, and turning the game into a stinking pile of crap = lack of ethics.

If you don't like your job move on.

Yeah, I'm sure this gives a company the right to do anything to its employees.

Re:Great Games

[leland242]

"If you don't like your job move on.

Yeah, I'm sure this gives a company the right to do anything to its employees."

Any idea how EA scores when it comes to salary? I mean, something is keeping these abused code monkies in thier cubes...

Re:Great Games

[nanowired]

Probably agreements of non-competition that last 40 years. Im sure I named it wrong, so heres the description. A Contract saying you will not work for another company to produce video games. IE you cant quit and go to blizzard, because its in violation of that contract.

Re:Great Games

[KDR_11k]

Nope. They simply hire kids out of college that dream of making games and are willing to put up with anything in order to live that dream, at least for a few years. Non-compete agreements are rare to nonexistent in the games industry because most companies don't want to keep paying money to some grunt just so he doesn't talk out any "secrets" (non-compete contracts are only legal if the company keeps paying money to the employee during the non-compete time). A single grunt can't do that much damage anyway.

Re:Great Games

[Scudsucker]

I mean, something is keeping these abused code monkies in thier cubes..

Debt?
Mortgage?
Kids?

Econ 101

[imstanny]

In a market that has a fast level of rotation/innovation... tech, games, etc. High R&D costs is nothing short of a requirement for survival in an industry.

Re:Econ 101

[hermit7323]

Thowing money at people telling them to make great games won't make great games. You need an original staff, not burnt out coders who are replaced every couple years.

Re:Econ 101

[KDR_11k]

No, you only need good people in the positions that are in charge of making the game good. The average coder has the job of coding exactly what his superiors tell him, he has no direct influence on the game design. The lead guys rarely get replaced, only the grunts have a high turnover rate.

wait a minute...

[brizok]

wasn't there a story posted earlier this month about how EA just banked on other peoples research and pretty much only came out with sequels.....? or am I thinking of something else?

Easy there fellas.

[MrCopilot]

Do you know how much research it takes to find people who can work 20hrs a day for next to nothing in the U.S.? Sure anybody could do it in India or China, but in California.

Not to mention the numerous meetings to discuss this years catchphrase and logo changes. "EA Sports...It's in the Game." that's 5 million right there.

Then there was all the crack they had to buy for the NFL to give EA the exclusive deal. Plus 64 Research assistants had to scour 32 Cities to find the best priced DrugDealers. Very impressive PowerPoint Presentations that should be linked with Google Maps for the rest of us.

So please before you go banging up on them, remember they have problems too, just like you and me.

I should clarify that some of my favorite games were published by this Soulless Corp. (Undying, AM's Alice, NHL 98, Madden 2001, 2 out of 3 LOTR Movie games)

Don't forget the "Madden effect"

[Hadlock]

While EA has it's fingers in a lot of different pies (genres), EA has had control of the Madden football franchise for the last 15+ years, a title that has consistently been in the top three titles for all systems for as long as anybody can remember. Unless John Madden starts raping and eating small children and ruins the franchise's name, they'll continue to have the income to support the "risk" of investing in R&D.
 
Does EA indulge in unfair/unethical buisness practices? Yes. Are they the 800 lb gorilla of the console game world? Yes. But at least it's nice to see companies pouring cash in to their R&D, unlike traditional R&D companies like HP who have all but given up on developing new technologies. I'd love to see EA take advantage of the next-gen consoles, and give us what we've always wanted - truly photo (video?) realistic sports games, and efficent use of the paralell processing that these games will be so heavily dependant upon in the comming decade.
 
Here's to a billion dollars in R&D by 2009!

Re:Don't forget the "Madden effect"

[Otter]

Unless John Madden starts raping and eating small children and ruins the franchise's name...

Remember, this is the man who popularized the turducken. Adding a fourth layer ("chilturducken"?) isn't entirely out of the question. (In fairness, his cookbook is surprisingly good...)

Re:Don't forget the "Madden effect"

[kaptron]

Unless John Madden starts raping and eating small children and ruins the franchise's name, they'll continue to have the income to support the "risk" of investing in R&D.

Or... what if something unfortunate were to happen to him... $633 million in R&D, huh?

Hmm.....

We can rebuild him. We have the technology. We have the capability to make the world's first Bionic Madden.
He will be better than he was before.
Better... stronger... faster... eat more turkey legs than ever. Able to incoherently ramble fluently in 35 different languages. And with the biggest goddamn Madden bus you've ever seen.

We have the technology. It's in the game.

SimFinance?

[kyouteki]

Did anyone see the title and think that EA might be making a bank simulator in the future?