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[markatisu]

Grand Slam Tennis for 360 and PS3 "delayed indefinitely." I think it makes sense to wait for Sony's motion controller and Natal to release that game.

Source: http://kotaku.com/5330042/ea-sports-active-so-successful-its-delaying-other-games

Could be, or they could have seen Virtua Tennis horrific combined sales and decided it was not worth the cost to watch two editions sell less than the 67k opening month of the Wii version.

By the time Sony and MS have their motion ready to go there will be another GST ready to go since its obvious EA can turn it into a franchise.

 

[border]

In reaction to dying brands (such as Need for Speed), one of EA's major goals this generation was to get out hit internals new IPs through experimenting/reconstructing their internal studios, such as buying out Bioware/Pandemic, having DICE do Mirror's Edge, and reconstructing EA Redwood Shores into Visceral Games. They also pushed the EA partners program to get and further diversify their portfolio of games (although EA reportedly gets a small cut of the profits in order to make the partnership more attractive). EA has attempted to jettison itself of its reliance on licensed properties. They recently ended their Godfather license since the growth of that IP was in Paramount's hands, not EA's hands. EA has attempted to take a different 'licensed' IP route through well-known, non-copyrighted IPs, such as Dante's Inferno. Allegedly, they are looking into the Jack the Ripper 'IP' for another game.

Great, thoughtful post. But what is your take on SWTOR? I think it will easily be the biggest MMO since World of Warcraft, but ultimately it is in the hands of Lucasarts. Obviously EA wants to control their IP....so why purchase Bioware when their biggest project is going to leave them beholden to another IP holder?

 

[speculawyer]

Kinda sad that they lost so much considering the success of Sims 3, Fight Night, and EA Sports Active.

And now they have NCAA, Madden, and Tiger Woods.

 

[Opiate]

THQ and Majesco

THQ made 6 million dollars this quarter -- that's a pittance in this world. For the four months previous to that, they lost ~431 million dollars. I wouldn't really qualify them as a positive.

 

[border]

People keep saying they need to cut the fat if they want to report positive earnings, but damn.....how much fat needs to be cut?

You figure one studio might have 35 people making an average of 75K per year (which would translate to maybe 20K per quarter) .....even if they killed the entire dev house, they would only save $700,000 in a single quarter. If they shut down 10 studios the savings would only be 7 million (ignoring the revenue loss from the games they might have created).

I still can't figure out how the #1 game publisher in the country can manage to lose 1/4 of a billion dollars in 3 months.

 

[Dalthien]

THQ made 6 million dollars this quarter -- that's a pittance in this world. For the four months previous to that, they lost ~431 million dollars. I wouldn't really qualify them as a positive.

And it took the release of two high-profile (UFC and Red Faction) titles in the quarter just to basically break even for the quarter. That doesn't instill a lot of confidence in THQ if they have to rely on multiple strong properties (extremely strong sales in the case of UFC) each quarter just to hope to break even.

 

[Parham]

THQ made 6 million dollars this quarter -- that's a pittance in this world. For the four months previous to that, they lost ~431 million dollars. I wouldn't really qualify them as a positive.

True. In retrospect, I should have just said Majesco.

 

[charlequin]

iirc one of their problems was the fact that their traditional, annual money-makers weren't experience the growth needed to sustain the company.

Yup. EA spent a long, long time with a basically slash-and-burn approach to development: lean on a few annual franchises like Madden, buy up hit developers and gut them in the process of forcing them to churn out product faster, work people to the bone to get product out faster. This strategy worked pretty well for some time but was never really generalizable to continued growth; much like in many parts of the industry, the development costs for these annual money-making franchises was going up while sales remained relatively flat.

At the moment a lot of their problem is transitional -- a lot of EA's previous run-it-into-the-ground franchises have been, well, run into the ground, and Riccitiello's new strategy of building innovative and fresh new IPs hasn't really borne fruit, partially (I'd argue) because they haven't really done a good job working out a coherent platform strategy for it.

Activision, sadly.

We'll see how long that lasts. Activision has seized the opportunity to be the "new old EA" by adopting their scorched-earth annual-franchise-entries strategy and applying it brutally (lolz) across the board. This strategy is not sustainable and we already see weakness in the Guitar Hero and Tony Hawk brands that make up such a big part of Activision's business.

(Then again, it's hard to argue with all the free WoW money.)

 

[ZombieSupaStar]

Yup. EA spent a long, long time with a basically slash-and-burn approach to development: lean on a few annual franchises like Madden, buy up hit developers and gut them in the process of forcing them to churn out product faster, work people to the bone to get product out faster. This strategy worked pretty well for some time but was never really generalizable to continued growth; much like in many parts of the industry, the development costs for these annual money-making franchises was going up while sales remained relatively flat.

At the moment a lot of their problem is transitional -- a lot of EA's previous run-it-into-the-ground franchises have been, well, run into the ground, and Riccitiello's new strategy of building innovative and fresh new IPs hasn't really borne fruit, partially (I'd argue) because they haven't really done a good job working out a coherent platform strategy for it.



We'll see how long that lasts. Activision has seized the opportunity to be the "new old EA" by adopting their scorched-earth annual-franchise-entries strategy and applying it brutally (lolz) across the board. This strategy is not sustainable and we already see weakness in the Guitar Hero and Tony Hawk brands that make up such a big part of Activision's business.

(Then again, it's hard to argue with all the free WoW money.)

i just hope that it doesnt pull down blizzard with them, arent they like 50/50 though?

 

[Jokeropia]

Their PS3 sales are nearly as high as their Wii sales for the quarter, despite having thrown all their major releases at the Wii.

121 million is nearly as high as 161 million?

 

[codecow]

People keep saying they need to cut the fat if they want to report positive earnings, but damn.....how much fat needs to be cut?

You figure one studio might have 35 people making an average of 75K per year (which would translate to maybe 20K per quarter) .....even if they killed the entire dev house, they would only save $700,000 in a single quarter. If they shut down 10 studios the savings would only be 7 million (ignoring the revenue loss from the games they might have created).

I still can't figure out how the #1 game publisher in the country can manage to lose 1/4 of a billion dollars in 3 months.

Your numbers are way off.

 

[Fyodor Dostoevsky]

"It's been a terrible year people."

"But the movie---"

"--was a substantial loss for the company"

 

[Sonos]

And it took the release of two high-profile (UFC and Red Faction) titles in the quarter just to basically break even for the quarter. That doesn't instill a lot of confidence in THQ if they have to rely on multiple strong properties (extremely strong sales in the case of UFC) each quarter just to hope to break even.

except that now that the code is written THQ can make sequels with small improvements without the R&D costs of creating a new IP. Thats how this industry works.

For a realtime example look at SE. Delays on FFXIII are crazy right? Once this game hits expect spinoffs, similar looking/feeling games, etc to hit the market one after the other.

 

[Rollo Lawson]

i think if they stop blowing money on devving all the annual sports games it would help

 

[Sipowicz]

i'm surprised they're doing so well on the wii

i've found their support for the console to be quite shit

 

[fizzelopeguss]

I fear this new EA is doomed....totally doomed.

 

[Spl1nter]

i think if they stop blowing money on devving all the annual sports games it would help

I dont think they are losing money on the annual sports games. NHL, Madden, Fifa, Tiger all bring in money. I am pretty sure EA Sports will profit in 2010 as their line up and quality of games this year is outstanding (NHL 10 day one).

I am guessing the reason they didnt make money this quarter is due to the costs of creating all the games they release from now till end of Q4 2010. If EA doesnt make money for the Fiscal 2010 year then there is an obvious problem as they have a great line up. Then its time to trim the fat. It seems also that the new EA philosophy of quasi independant studios will help there bottom line in the long term. They are still transitioning out of the old EA business philosophy.

 

[Sadist]

i'm surprised they're doing so well on the wii

i've found their support for the console to be quite shit

what

 

[semiregular]

i'm surprised they're doing so well on the wii

i've found their support for the console to be quite shit

Wat?

Edit: beaten

 

[SmokyDave]

I do hope EA's finances turn around. They ought to be rewarded for the direction they have taken. I fired up Soukyugurentai on the Saturn this weekend and was amazed to see the EA logo! I'd like them to go back to publishing obscure titles, starting with BlazBlue for PAL regions.

 

[soldat7]

Their PS3 sales are nearly as high as their Wii sales for the quarter, despite having thrown all their major releases at the Wii.

The interesting thing is that 360 sales fell off a cliff.

So EA made more money off of PS3 than 360? How is that possible? I don't think I've seen an EA game sell better on PS3...

 

[charlequin]

I dont think they are losing money on the annual sports games. NHL, Madden, Fifa, Tiger all bring in money.

Definitely true, although once again, almost certainly much less money than they were in the past (Madden's sales haven't gone up to match the hike in dev costs, for example.)

So EA made more money off of PS3 than 360?

EA makes much more money off of 360 than PS3 in general, as one might expect. The story here is really that the Wii has gone from performing at PS3-esque levels for EA to performing at better than previous-360 levels.

 

[hc2]

Some of this revenue loss may be deferred from their battle with Rockstar. I imagine they arranged financing and may be paying the costs this year.
And it is a transitional year for the gaming industry, I guess some strategies are being developed to cut costs and switch from the "blockbuster mentality". At least I hope so.

 

[shinnn]

blue = software
yellow = digital content
green = software + digital content

is that right?

Wii and PS3 has loss in digital distribution and X360 has no numbers before Q4 09. Why?

 

[szaromir]

EA seem to have different accounting methods for each platform, so it only makes sense to compare 4 last quarters in their case. Anyway, the discussion was much more interesting before the platform revenues discussion kicked in.

 

[Chumly]

So EA made more money off of PS3 than 360? How is that possible? I don't think I've seen an EA game sell better on PS3...

Only because they have different accounting standards for each console. They still make more money off the 360 every quarter.

 

[Sipowicz]

what

i think their support for the wii is quite shit

they tend to follow the crowd with low budget lightgun games, cutesy puzzle games, kart racers, fitness sims etc made by their shittiest teams (or outsourced to even shittier ones)

and all of their yearly sports games are crap on wii apart from tiger woods

their pc support is awesome though

 

[faridmon]

i think their support for the wii is quite shit

they tend to follow the crowd with low budget lightgun games, cutesy puzzle games, kart racers, fitness sims etc made by their shittiest teams (or outsourced to even shittier ones)

and all of their yearly sports games are crap on wii apart from tiger woods

their pc support is awesome though

grand slam tennis?

 

[Sipowicz]

grand slam tennis?

i've never played it to be honest

the controls are supposed to be borked and it didn't to well critically, so i took a pass

 

[faridmon]

i've never played it to be honest

the controls are supposed to be borked and it didn't to well critically, so i took a pass

then you should read the official thread. The game is loved by most of the people because of the controls

and Back off with you calling Nerf crap. Its not, and its enjoyable with friends

 

[Sipowicz]

then you should read the official thread. The game is loved by most of the people because of the controls

and Back off with you calling Nerf crap. Its not, and its enjoyable with friends

nah, not really my thing

i'd still like to see a big budget wii game from them by a decent team. preferably not a lightgung game, cutesy puzzle game, kart racer, party game or fitness simulator

 

[Tiktaalik]

I think we're going to see EA be profitable this year. This is the first quarter where we can see positive results of the giant mass of a ship that is EA slowly turning around. They're making more money and growing in the growth areas that they need to grow in, which is Wii and Mobile. This isn't their holiday quarter. On deck they have lots of titles that I think will be strong sellers. Rockband Beatles, Dead Space: Wii and Dante's Inferno I think will do well for EA this year.

Does EA have any more expanded audience Wii titles in the pipeline for the holidays or is this all they have?

We've seen EA's fitness game do well in this second month so I think we could continue to see it have legs through the holidays but it would be good to have them launch another expanded audience title for xmas.

 

[Tiktaalik]

nah, not really my thing

i'd still like to see a big budget wii game from them by a decent team. preferably not a lightgung game, cutesy puzzle game, kart racer, party game or fitness simulator

Consumers want the darndest things

 

[gofreak]

*snip*

No, yellow is just the change in deferred net revenue for the platforms.

Blue is net revenue as conforming to GAAP, Green is another different accounting method I guess.

Looking at the GAAP figures PS3 did more for them than 360, looking at non-GAAP 360 did more for them than PS3.

Don't ask me for the difference between GAAP and non-GAAP though. All I know is that GAAP is a standardised accounting methodology that's supposed to make it easier to compare results across companies.

 

[Parham]

http://i30.tinypic.com/3091tzb.gif

It's surprising to see that their PC games are making that much revenue. But then again, the majority of it could probably be attributed to Sims 3 and Spore.

 

[Opiate]

I think we're going to see EA be profitable this year. This is the first quarter where we can see positive results of the giant mass of a ship that is EA slowly turning around. They're making more money and growing in the growth areas that they need to grow in, which is Wii and Mobile. This isn't their holiday quarter. On deck they have lots of titles that I think will be strong sellers. Rockband Beatles, Dead Space: Wii and Dante's Inferno I think will do well for EA this year.

Does EA have any more expanded audience Wii titles in the pipeline for the holidays or is this all they have?

We've seen EA's fitness game do well in this second month so I think we could continue to see it have legs through the holidays but it would be good to have them launch another expanded audience title for xmas.

I don't agree that EA will be profitable this year, but I do agree that the ship is turning. I'm not sure it's turning fast enough, though. It'll be some time before I think EA is experiencing legitimate growth again, and by the time that happens, Activision will be significantly larger and even Ubisoft may have caught up. We'll see.

I agree strongly that the areas of growth are the Wii and Mobile Gaming (and I strongly prefer this term, as it isn't just the DS or PSP, but the iPhone too). And as you said, EA is moving aggressively in to this space.

 

[faridmon]

nah, not really my thing

i'd still like to see a big budget wii game from them by a decent team. preferably not a lightgung game, cutesy puzzle game, kart racer, party game or fitness simulator

yeah, I'd like another Freedom Fighter game.

wit,I heard EA does not have the IP anymore, is that true?

 

[Xiaoki]

We'll see how long that lasts. Activision has seized the opportunity to be the "new old EA" by adopting their scorched-earth annual-franchise-entries strategy and applying it brutally (lolz) across the board. This strategy is not sustainable and we already see weakness in the Guitar Hero and Tony Hawk brands that make up such a big part of Activision's business.

(Then again, it's hard to argue with all the free WoW money.)

Yeah, its not Activision, its Activision Blizzard.

In the first quarter Activision Blizzard made $650 million and of that $281 million was WoW by itself.

Being the biggest video game company in the world is sure giving Activision an ego but Blizzard is still grounded.

 

[Tiktaalik]

Looking at the GAAP figures PS3 did more for them than 360, looking at non-GAAP 360 did more for them than PS3.

Don't ask me for the difference between GAAP and non-GAAP though. All I know is that GAAP is a standardised accounting methodology that's supposed to make it easier to compare results across companies.

EA explains a bit of what the non-GAAP is in the OP. The non-GAAP "provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook."

For example they apparently bought a new building this year and in the non-GAAP that's excluded since they're not going to buy a new building every year. I'm not sure why 360 and PS3 sales would be different. Maybe one time purchases of technologies for 360 or PS3 only?

 

[charlequin]

Looking at the GAAP figures PS3 did more for them than 360, looking at non-GAAP 360 did more for them than PS3.

Don't ask me for the difference between GAAP and non-GAAP though. All I know is that GAAP is a standardised accounting methodology that's supposed to make it easier to compare results across companies.

Generally speaking, the GAAP numbers are going to more accurately reflect a quarter-by-quarter representation of what actual revenues look like, before adjustments, based on a consistent standard of approved accounting procedures. They're valuable in helping to avoid shenanigans when you're a stockholder looking to get accurate information about a company's performance, but not necessarily great for our amateur analysis purposes.

As others have mentioned, EA accounts for various aspects of their business differently on all three platforms, then uses adjustments to bring their numbers in line with what their "real" relative performance on each platform looks like. Purely for purposes of comparing EA's relative performance in the different systems, the revenue percentage figures are your best bet, as they express the current status quo in this area pretty effectively: Wii's shot upwards to become a much larger part of EA's software revenue than it used to be, 360 continues to be larger than PS3 on a quarterly basis, but all the consoles put up far more revenue than the largely irrelevant handhelds.

 

[charlequin]

In the first quarter Activision Blizzard made $650 million and of that $281 million was WoW by itself.

My real point here, I guess, is that I don't think the "Activision side" of the business is operating in a sustainable manner, and if we see revenues shift such that Blizzard is propping up the Activision publishing arm (rather than both sides independently generating profits) we might see some... interesting changes at the company.

I'm not sure why 360 and PS3 sales would be different. Maybe one time purchases of technologies for 360 or PS3 only?

Someone who actually knows about this went into a much better explanation at one point a year or so ago, but at least some of it has to do with the ways that they've allocated certain funds for development and in which certain platform revenues are paid back out to them and from them to the console manufacturers.

 

[Parham]

yeah, I'd like another Freedom Fighter game.

wit,I heard EA does not have the IP anymore, is that true?

If I recall correctly, they still own the IP.

 

[faridmon]

If I recall correctly, they still own the IP.

hoping for another one then. please EA, I want Freedom Fighters 2

was the first one a success?

 

[Sipowicz]

hoping for another one then. please EA, I want Freedom Fighters 2

was the first one a success?

i hope so, freedom fighters was cool. i'd love to see a sequel on pc

 

[Xiaoki]

My real point here, I guess, is that I don't think the "Activision side" of the business is operating in a sustainable manner, and if we see revenues shift such that Blizzard is propping up the Activision publishing arm (rather than both sides independently generating profits) we might see some... interesting changes at the company.

Well, I guess, my point is that EA didnt have a stabilizing partner like Blizzard so they spiraled out of control.

 

[gofreak]

Purely for purposes of comparing EA's relative performance in the different systems, the revenue percentage figures are your best bet, as they express the current status quo in this area pretty effectively: Wii's shot upwards to become a much larger part of EA's software revenue than it used to be, 360 continues to be larger than PS3 on a quarterly basis, but all the consoles put up far more revenue than the largely irrelevant handhelds.

But...the percentages are just based on the GAAP and non-GAAP figures, so it's kind of the same thing as using the dollar figures themselves? Unless I'm missing some other numbers?

 

[Sonos]

Well, I guess, my point is that EA didnt have a stabilizing partner like Blizzard so they spiraled out of control.

But before the merger Activison was coming down with some real hits whereas before they were spiraling out of control. There was a time when all I remember of Activision was Tony Hawk year after year. Regardless of what you think of them now, they got their shit together and made it work. I dont think Blizzard would have joined up with them if they hadn't.

2cents.

 

[Parham]

hoping for another one then. please EA, I want Freedom Fighters 2

was the first one a success?

Sadly, I don't think the game sold as well as EA originally hoped.

 

[szaromir]

Seems like EA is only #2 after all - Activision managed a whopping number of $1,04B in revenues last quarter, as compared to EA's $816M. But EA has so many AAA releases by March 31st that I think they might get a shot at beating Activision in the financial year.

 

[gamergirly]

Go Sims 3