EA Earnings Down, Talks Next-Gen Issues

Gamasutra reporst that EA is reporting lower than expected earnings for the third quarter and fourth quarters. They also discuss some of the problems related to next-gen consoles PS3 and Xbox 360. From the article: "Probst noted that EA seemed to be keeping its 25% game market share for 2005 on current-gen game platforms, and was looking at closer to a 30% market share on both the Xbox 360 and PSP, meaning that, though the company was doing relatively well, it was still down on expectations. Finally, the EA execs mentioned specifically: 'Our expectation is that both the PlayStation 3 and Revolution will launch in calendar '06... our expectation would be the second half of calendar '06', meaning that the next-gen installed base can start to be built up starting next year."

Comments

Real Reason

[mwheeler01]

Maybe the real reason EA's earnings are down is that they make formulaic games. They just acquire a license and then slap it on top of a crappy engine and voila, another game that gets put on the shelves just because it has the EA label. Not ALL EA games are like that but they seem to be the exception rather than the rule.

Re:Real Reason

[Grifty]

Having been a subscriber to Ultima Online since months after its initial introduction, I can honestly say I will probably never buy another EA game once I've weaned myself from this addiction.

Their annoyingly desperate money-grubbing nickel-and-dime business practices, as well as their poor production qualities really cement this decision.

Between buggy releases and the poor attempts to fix them and poor customer support (Via phone, but especially their piss-poor Game Master responses) I'm not at all surprised their revenues are down.

I don't get it...

[Song for the Deaf]

Wasn't buying exclusivity to the NFL and eliminating the competition supposed to make them more money?? I just don't get it.

Re:I don't get it...

[vertinox]

Wasn't buying exclusivity to the NFL and eliminating the competition supposed to make them more money?? I just don't get it.

Maybe they weren't flogging their under paid programmers hard enough...

Re:I don't get it...

[hal2814]

Madden sold just fine this year. Unfortunately for EA, it probably didn't sell well enough to make up for the wad of cash they paid the NFL for an exclusive license. Given that the NFL LOVES exclusive licensing, I imagine the NFL told EA that if they didn't pay for the exclusive, they'd sell exclusive rights to someone else.

Re:I don't get it...

[some_guy_john]

EA has plenty of cash to stay around for many years

Makes sense

[TheSkepticalOptimist]

I am sure overal game sales are slowing down because of the anticipation of next generation consoles. Why start wasting money on last year's technology when next-year's is just around the corner. Instead of wasting a few hundred on games now, save up and get that new $500 game console.

But in reality, EA is another company deluded into finding a scapegoat for loss of sales instead of pointing directly to themselves. Like Hollywood, Television, and Music, video games are becoming more boring and derivative. Even with the anticipation of new game consoles, offering impressive new graphics, are we really motivated to drop $1000 on a new system and games just for improved graphics?

Look at the PC gaming industry, one where a new video card offering impressive new graphics performance comes out every 6 months. Games like Quake 4 and Doom 3 have bombed simply because they are just current updates to old game ideas.

EA is one of those companies heavy into developing derivative franchises. All they do is make a few graphics tweaks and update the graphics engines and release the same games over and over again, especially in their Sports division. Has any new gameplay feature been added to their sports games? Last I checked, Tiger Woods Golf features a new character generation system to create a custom looking character, and you can win clothes for your character. Nice to see EA using The Sims' character engine in other games, but they have done nothing to really improve upon the golf game genre.

Like the rest of the entertainment industry, stop finding blame in the consumers for loss of sales. Start offering us stuff we want to spend money on, and you will eventually see your pockets grow with profit again.

Re:Makes sense

[patternjuggler]

But in reality, EA is another company deluded into finding a scapegoat for loss of sales instead of pointing directly to themselves. Like Hollywood, Television, and Music, video games are becoming more boring and derivative.

This looks like the autoreply for articles about the games, movies, and music business. The fourth derivative of profit over time flipped to a negative sign? Earnings are down a tenth of a percent? Trot out your list of grievances and post them to slashdot. Please try to post early, or think of a way to articulate the same sentiment in a novel way, or else dozens of other posters will have the exact same 'Why can't developers just make good games/I'm tired of FPSs' message and beat you to the mod points.

The Blame Game

[Winterblink]

EA doesn't see the PSP getting to installed base that the company had previously expected, either in North America or Europe

Of course lack of sales of EA games on the platform would have nothing to do with the fact that most PSP EA games are ports from consoles. And shitty ports at that, with little or no features taking advantage of the handheld form factor at all.

Regarding the rest, well maybe they should be cluing into the fact that they've done nothing innovative for quite some time. Each and every year we get the same games from EA, over and over again, on every platform. What did they think was going to happen?

Re:The Blame Game

[badasscat]

EA doesn't see the PSP getting to installed base that the company had previously expected, either in North America or Europe

Of course lack of sales of EA games on the platform would have nothing to do with the fact that most PSP EA games are ports from consoles.

I think you misread his comment. He didn't say he didn't expect PSP game sales to be what they expected, he said he didn't see the PSP getting to the installed base he expected.

In other words, it's the PSP itself that isn't selling. Which we all already knew, but it's a big deal (for Sony, anyway) when EA says it. EA is famous, at least in recent years, for making or breaking systems - when they very publicly refused to put Madden (or anything else) on the Dreamcast it went a long way towards killing that platform and making the PS2 a success.

If EA is having doubts now about the PSP, it does not bode well for Sony in their war with Nintendo. Like them or not, EA does have 25-30% market share and that's a huge number of people you take with you when you decide to develop for one system or another.

Re:The Blame Game

[Winterblink]

I know, but to be honest not many of EA's games have received glowing reviews. This isn't due to the availability of the hardware, but with the software. Anyone I've talked to who own PSPs (I own one myself) have considered buying an EA sports game but decided against it due to the reviews of others. Not just gaming site reviews either (Gamespot, IGN, etc), but of players themselves who have bought the software and been unimpressed. I guess my point is, EA seems to only be publicly pointing the finger in one direction, when in fact the issue isn't limited to just that one direction.

Re:The Blame Game

[apoc06]

well. in all honesty, have you played any of EA's games for the PSP? with the exception of burnout legends and ssx, most EA games kinda suck. this is the same company that has to issue a recall on its psp version of madden06. keep that in perspective.

sure the system isnt outselling the DS, but who really doesnt think the PSP isnt selling well? theres at least three million PSP owners out there and another seven million PSP units on sale this holiday season. given the fact that this marks the first psp holiday season its on sale to most of the world, those numbers will undoubtedly grow. this is like a company saying that theres only three million xbox live users during its first year, so we wont be making anymore live-aware games.

personally i think its stupid. as most psp owners will tell you, and most ds owners will point out as their main reason for not choosing a psp; its all about the games. owners want more games, and ds owners prefer games that arent available on the psp. ea could stand to make boatloads of money with just the existing psp install-base if they actually created a must own game. instead most of the ea games are sequels and console rehashes that are old hat to most psp owners. psp owners are tired of that. this doesnt sound like good business at all. if they create the games, gamers will follow.look at all the folks that bought a playstation just to play final fantasy vii, or all the people that bought an xbox just to play halo or halo2. software and hardware are always going to be linked. ea has created the most third party psp games [30% of all psp game sales??!?!?!?], but most are lackluster... so obviously psp sales are going to suffer.

You don't want the games if...

[ChowRiit]

Maybe it's partly due to the fact that noone can buy the 360s? Afterall, noone is likely to want to buy games for a console they don't have, so the difficulty in buying the consoles may well be seriously affecting the sale of EAs games for them. The formulaic nature/ports of existing games problem as previously mentioned won't help either, of course...

Reading Between The Lines

[Anonymous Coward]

It sure sounds like EA is pissed off at Microsoft and the 360. Which agrees with the tone of the stuff my friends at the Redwood Shores campus are telling me. Pretty much, "Why are we wasting time with the 360?" "Just another Dreamcast" and so on.

They are going nuts over the PS3 devkits and are doing their best to avoid getting stuck doing 360 work. And of course they are all crazy about the Rev controller stuff.

I would assume EA is looking to scale back their 360 development. The PS2 is flying off the shelves and it hasn't even dropped to 99 bucks yet. And the PS3 is just a few months away. I can't imagine anything but huge amounts of cash from Microsoft is going to keep EA doing 360 dev outside of a few token sports ports.

Re:Reading Between The Lines

[mrluisp]

Dear God I'm having trouble keeping track of all the mistakes in your one single post. Honestly, why bother commenting on things you don't know anything about? Did you even read the article?

Yeah, the 360 did not sell as much as EA expected to. But if you had read the article, you would have noted that they also said the same thing for the PSP and the PS2 (the lack of price drop adversely affect PS2 sales). I can't see why you would have a go at MS and not have a go at Sony.

I don't understand why people don't let up on the dreamcast references. This isn't 1999 anymore. And Microsoft isn't Sega. MS has deep pockets and has fully backing the 360. One thing you can count is that they won't fold up this battle. I don't expect the 360 to suddenly become the leader in the market, but it's definitely going to take a larger chunk of Sony's market this time around.

"They are going nuts over the PS3 devkits and are doing their best to avoid getting stuck doing 360 work". Are you shitting me? Have you actually developed for either of these platforms? No? Then please bite your tongue. Ea is definitely not going to let up on 360 development.

"The PS2 is flying off the shelves and it hasn't even dropped to 99 bucks yet." Again I refer you to the article. PS2 sales are sluggish this Christmas. Not that that's bad. The PS2 has a huge install base, but it is not selling as well as expected this holiday season.

You gotta remember, EA is not in it for one specific console. They will port as many of their games to as many consoles as possible. That's what they do. They're mass market, and they want to hit as many possible console as they can make a return on their investment on. I think the bigger issue here is that they didn't see this coming. The market has simply become saturated, and this dip in sales was inevitable.

I will agree with you on the Rev controller, but that's it. EA ain't pissed off at MS. If anything they should pissed off at themselves. Releasing crap like From Russia with Love. For shame. The market simply can't hold anymore. And EA will learn they can't keep popping yearly updates and sequels with the same success year in year out. After all, the bottom falls out, and we're seeing the beginning of it. You think the PS3 will solve everything next Christmas? If anything, they'll be a shortage, and at least the 360 will have a userbase of around 10 million.

Re:Reading Between The Lines

[Anonymous Coward]

One thing you can count is that they won't fold up this battle.

I don't know.. Take Bill Gates' recent comments on the morphing of Xbox Live into Windows Live, and the separate SKU for the "Xbox 360 controller for Windows" and you see where all this is headed...

Never buy from EA

[Mr.Dippy]

I use to be a big EA fan. Up until Madden 2003/2004 I would get excited about the years new sports games and such. Then I started to notice more and more how uninnovative they were at game design and lot of the games for the PC where buggy! I'm looking at you Command and Conquer Generals. Then the overworked developer lawsuit happened and the exclusive NFL deal turned me off forever to the companies games. I'm happy to say that since last year I haven't bought one EA game. I've done my best to explain to family and friends who play games that EA is a horrible company that doesn't deserve our business. Bring back Sega's ESPN games damit!!

Glad to see

[Headcase88]

People got sick of EA and their underpaid/overworked staff, the monopolistic license deals, and lack of innovation and started making a stand. Hopefully now EA will understand that treating your talent with respect and encouraging them to innovate will produce better games and higher sales. That's my hope, even if it's a bit of a long shot.

P.S.: EArnings down would have been a more clever title ;)

Re:Glad to see

[wolfmanXUG]

Well I have stopped buying AE games at least on the PC due to the problems that have been reported with Sims2 and the game not running when you have legal cd/dvd burning software installed. I think the loss of revenue is not any one thing but many things adding up, such as the law suits for developers not being paid for overtime, lazy rehashed titles being pushed out the door that are clearly beta and had not been tested, and many others that other posters will be kind enough to post about.

HA! Bring on the pain!

[Anonymous Coward]

I'm enjoying all of this bad financial news, to be quite honest. EA can rot, as far as I'm concerned.

It's gonna cost $15+ million to make a "good" 360 or PS3 game, so the stakes are much higher for developers this next time around. I see things only getting worse. More industry consolidation, more belly-up development studios, more stagnation, huge bargain bins filled with clearance-priced boring/stale/copycat FPSes/street-crime/racers..

Perhaps a Revolution is needed?

Re:HA! Bring on the pain!

[Headcase88]

"Perhaps a Revolution is needed?"

For those who haven't been paying attention, Nintendo promises that the Revo will be simpler to program for, and Iwata mentioned at both E3 and the TGS that they will financially help fund indie companies develop games for the Revo (we'll see if that really happens).

Here is where Nintendo shows its hand.

[Inoshiro]

The DS is the only game system I am buying genuinely new and interesting titles for. The touch screen certainly helps this, with games like Trauma Center (deviously hard as it is), and such.