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EA Posts $16 Million Loss, Looks to Next-Gen Games
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."
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.
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".
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It must be 'cause of them rascally pirates!!
I readed the article and they don't seem to blame piracy about their loses...
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 next-gen consoles at below-cost. They are predicting to lose $1 Billion each on hardware sales and marketing next year.
Also, games are losing their mass appeal. Surveys show that the number of gamers is no longer increasing, and may actually be decreasing, while the cost of producing games is skyrocketing. Games that are based on original I.P. are rare, with sequels, movie cash-ins and sports games comprising the bulk of products.
Microsoft and Sony can't keep cutting each others' throats forever, and the games industry definitely needs to expand and capture new audiences if it is to survive.
Interestingly, it was Nintendo who saved the industry last time, by coming up with a product that was different, and by conceiving a revolutionary (but controversial) business model. I think it is worth watching them at E3 to see what their plans are for the next console generation.
...what everyone here knows is just another Dreamcast in the Xbox 360 Yeah, we all know how Microsoft throws billions into a product only to go bankrupt by it...
The sky above the port was the color of television, tuned to a dead channel...
"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 are rested and energetic enough to be fully productive. Also several things to do with the environment (or lack thereof) EA provided for their employees, and their style of management, are factors that I would think lead to poor efficiency.
What EA did with their employees may have worked had whips and granite blocks been involved, but these are creative and intellectual workers, so EA's attempt to maximize how much they get from an employee was extremely counterproductive.
Perhaps now that the lawsuit has clued them in, EA will change their employee management style to something that is actually efficient, as opposed to just unnecessary brutality. For the sake of their employees, let us hope so.
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?
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.
stuff |
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!
Madden 2007, Madden 2008, Madden 2009, Madden 2010, Madden 2011...
You must think in Russian.
I have nothing really insightful to say. I just hate EA.
You've already spelled out GNAA once. Why do have to keep repeating yourself? We get it.
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.
but don't you mean 'football'?
---- "XML is like violence. If it doesn't fix the problem, you aren't using enough."
It's amazing how many anonymous cowards post bad things about the 360.
But, if our good friend the A/C would actually read the articles he may have noticed the Gamefly 'most popular rentals' chart next to the story.
The chart lists the 10 top rentals for the week ending May 1. 6 of those games are for the 360.
There must be some interest...
No reason to lie.
They must be putting all their development $$ into Spore - the game that will save EA
Who would want to even pirate Madden 2036? Sure, warez collectors have everything, but most pirates tend to copy good games =)
Melissa
"Screw Sun, cross-platform will never work. Let's move on and steal the Java language." - Visual J++ Product Manager
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.
That negates the logic found in your post.
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 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.
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.
not really. MS has over $14 billion in operating income. They might not be making a profit, but they're far from going bankrupt.
MS makes a shit load of money off of windows and office. They actually do have money to throw around getting into other markets if they want without going broke.
I hear the respawn time sucks though.
Hope they're happy with the result of their sacrifices for their company.