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Electronic Arts Up For Sale?
John Wagger writes "One of the world's largest gaming publishers and developers Electronic Arts has quietly put itself up for sale. While there have already been talks with private equity companies, the talks have not resulted in anything concrete. One of the sources is saying that EA would do the deal for $20 per share (currently at $14.02). Over the past year, EA's stock price has fallen 37 percent. Like other major game publishers, EA has been struggling against growing trend of social and mobile gaming."
EA has a long history of pressuring developers to rush out projects before they are ready. If they claim they are struggling to compete with social gaming, it has way more to do with people not having to download 3 additional patches a game to get a finished product than social gaming being more popular.
Yep, it's totally the market and not the universal hatred that EA has garnered from the gaming community.
Meanwhile: http://www.gamesradar.com/valve-reports-seventh-year-100-sales-growth-steam/
Or perhaps they are struggling with the repercussions of how they treat their customers.
Maybe they should have partnered and kept their products on Steam rather than trying to compete against Gabe. Lord knows I haven't played a PC game from EA since they took all their products off Steam.
I would like to imagine that any financial problems EA is seeing are also a result of their shockingly poor handling of developers, unethical treatment of customers, misguided use of DRM, and famously incompetent management.
It's got to be someone with the same sets of goals, primarily being evil. There are only a few companies I can think of that are evil enough to possibly buy EA.
First off, in the games arena, there's already Zynga. A ZyngEA merger would create the ultimate evil games company.
Next up, in media, would probably be ComcastNBCUniversal. They've got wide coverage in the world of entertainment, and would definitely have some evil synergy with EA. ComcastNBCUniversalEA would also provide 30 Rock with some new material.
Finally, if mobile is where they see themselves lacking, why not AT&T? They're regularly hated by their customers, yet manage to prevent most of them from leaving. EA could definitely benefit from this sort of customer lock-in. EAT&T could really screw with quite a few customers. Dropped calls could become a new game, for example.
anyone who plays games that use EA's "always connected" DRM are going to be screwed shortly.
Anons need not reply. Questions end with a question mark.
Dear Gaben, please use some of that money you keep in your money pool to buy EA, and then make it awesome.
by putting out the same shitty content for 60$+DLC over and over and reducing the player base as they escape to social gaming to find what they want.
Is still upset about Mass Effect 3.
Somewhere along the last decade EA (among others) forgot who its customers were, and even what the term customer means. Put the customer at the center of your business strategy and suprise surprise. Treat them like shit, and they will give you the finger.
EA certainly has a lousy reputation; but it strikes me that video game publishers in general would be a very odd thing to purchase whole if they are selling because of hard times...
Presumably there is the back catalog; but most games don't hold their value that well over time(not necessarily a serious issue if the game still runs on current versions of Windows and you can just shove it out as a download at impulse-purchase prices; but if the game is bitrotten or encumbered in some contractual issue, you probably aren't going to be able to charge enough to make it worth fixing...).
There are also likely some developers/artists/etc. but the demographics of game industry workers seem to skew toward young and mobile. Especially if the ship is sinking you can probably hire them piecemeal, and you can't necessarily retain them if you buy the whole thing.
Would you be paying for the various franchises? How much is it worth to legally sell "Command and Conquer: Kane Cashes It In" vs. selling an otherwise equivalent grim-near-future-warfare-and-alien-minerals RTS?
Surely "Origin" can't be worth much more than the precious metals in the servers it runs on, minus the cost of extracting them.
Again, EA seems like a particularly unpalatable purchase; but I'm a bit confused about the idea of buying any down-at-heel publisher. It seems like being down-at-heel suggests that the whole is not greater than the sum of the parts, and that most of the parts are either optional, not very valuable, or available for purchase either by offering them a bigger paycheck, or by bidding on a chunk of the publisher's corpse...
They also forgot that they were selling luxury goods. A company like Oracle or Microsoft can get away with a certain amount of customer irritation because people use their products to make money and need to plan a migration strategy and spend money to switch away. A game publisher is not just competing with other game sellers, it's competing with other sources of entertainment for a finite budget. In a recession, luxury spending is the first thing that most people cut and that pushes down the supply of dollars that EA is competing for. They made it very easy for people to put them at the top of their spending cut list.
I am TheRaven on Soylent News
This part made me laugh, "EA has been struggling against growing trend of social and mobile gaming." You can only exploit a hit game for a few iterations before you have to get off your ass and come up with something new. But, it's hard to come up with something good when the talented developers get wise to your project [mis]management and either leave or won't work for you. http://ea-spouse.livejournal.com/274.html
[Blue] Control. You get $14 dollars a share and YOU WILL LIKE IT!
[Red] Destruction. Go bankrupt.
[Green] Anti-synthesis. Split apart, releasing all the developers you gobbled up back to their formerly creative ways.
"EA has been struggling against growing trend of social and mobile gaming."
wrong, they have been struggling with overpriced shitware
Zynga isn't doing so well lately, either.
ea is tanking because they are treating their Customers badly. You only get a short term boost in profits the way ea is running their business and after you damage your brand as badly as ea it is more or less ruined. I see ea on game and just skip it without learning anything more about it.
EA has a rich 30 year history behind it. In the past 5-10 years, more power has been put into the consumers hands and has negatively affected their revenues. This is a general trend for the entertainment industry, where a movie/game/etc. can be killed within a day or two of being released. Not defending EA here, instead I'm saying they haven't responded well to this change in the industry.
Annual report is an interesting read:
1) High costs
- $4.1B revenue, $76M profit. Marketing was 21% of net revenue, General/Administrative was 9%, R&D was 29%. When the cost to sell the product exceeds the cost to develop it, there's a major problem.
- There's also a "cost or revenue" which ate into another 39% of the revenue. Other than third-party royalties which can't be avoided, this item looks really suspicious to eat up that big of a chunk.
2) Digital and mobile
- The report admits the current models of AAA console games needs to shift. The risk+cost is too high. Digital and mobile games at a lower overall cost and via direct sales to consumers works better. The acquisition of PopCap will hopefully gain them a strong brand to start in the mobile space. The Sims will continue to dominate the social space.
- I personally think Origin has a chance with PC gamers. However, it has started out really really poorly. You don't take a AAA title and throw a half-baked Beta digital distribution platform against it. For console games, I think digital distribution COULD work if done right. I'm not confident in EA's management to pull it off though given how poorly Origin started out on PC.
3) Work with your Customer ... focus on the customer. I see absolutely nothing listed for how they plan to incorporate their customers into their business model. You can't go into the digital or mobile space and expect to succeed without this incorporated into your strategy. Steam, Facebook and Apple all have gotten a LOT of things right in this regard, like them or hate them, they've gotten it right. ... after the end of EAs fiscal year (March 31st). This would have resulted in a huge loss for the year rather than a small profit.
- Of all the things the annual report is missing
- EA needs to work with their customers, not against them. Do not pull another Command and Conquer 4 and introduce radical change in gameplay to completely destroy one of the best and longest running game series. Do not announce / force a specific release date for a game ahead of time if it needs more polish ala Mass Effect 3.
- Do not focus so much on the short-term, you are destroying your brand equity longer-term by doing so. The tinfoil hat part of me suggests the Extended Cut for Mass Effect 3 was planned all along, but would have taken too long to release
A private purchase may return EA to profitability. It needs some significant changes and this may be the ticket to do so. Really feel sorry for the employees of the company ... they were already putting up with 60-100 hour work weeks ... this will just make things a lot worse. Probably better than the company folding, but not by much.
Compare and contrast:
1990's titles:
Desert Strike
System Shock 2
Start of NHL series
Start of Wing Commander series
Start of FIFA series
Start of Need for Speed series
Ultima Online
Start of NASCAR series
Start of Command & Conquer series
Start of Dungeon Keeper series
Start of SimCity series
Start of Medal of Honor series
00's titles:
American McGee's Alice
Start of SSX series
Start of James Bond series
Start of Harry Potter series
Start of The Sims series
Start of Burnout series
Start of Battlefield series
Dark Age of Camelot
Start of Crysis series
Start of Rock Band series
Start of Skate series
Start of Mass Effect series
Warhammer Online: Age of Reckoning
Start of Spore series
Start of Army of Two series
Start of Dead Space series
Mirror's Edge
Start of Dragon Age series
2012 (expected) titles:
Madden NFL 13
The Sims 3: Supernatural
The Sims 3: Seasons
NHL 13
FIFA 13
NBA Live 13
Medal of Honor: Warfighter
Need for Speed: Most Wanted
Ultima Forever: Quest for the Avatar
EA have some fabulous games and series on that list. Trouble is they are all pre-2010, and all either introduced new genres or built upon existing titles well. The 2010+ titles? Just yet-another-iteration of some of their worst series.
Come on, EA, you bought up Bullfrog and any number of fantastic developers / franchises and then milked them to death while inflicting horrible DRM and pricing on your customers. How about doing what you USED to do, which was START series of games, not run them into the ground?