EA Lost More Money In Three Months Than You'll Ever Make

[Greg Tito]

EA Lost More Money In Three Months Than You'll Ever Make

You might think Electronic Arts is made of money, but it's got a lot less after the end of 2010.

The big videogame conglomerate published a lot of great games last year, from sci-fi favorite Mass Effect 2 to stalwart franchise offerings like Need for Speed: Hot Pursuit and Medal of Honor. EA Sports' annual rehashes like FIFA 11 and Madden NFL 11 also sold like hotcakes. All of those games sold fairly well, over 5 million copies each, but somehow Electronic Arts still wasn't able to turn a profit. In fact, according to earnings reports announced today, EA lost $322 million from October to December 2010.

Let that sink in. Despite selling tons of copies of popular games, EA lost more money in three months than the mind can comfortably fathom. Three hundred and twenty two million dollars.

The only good news from this report is that digital distribution for the company grew in revenue to $211 million from $152 million in '09. That tiny growth is small consolation seeing as total sales dropped from $1.243 billion last year to $1.053 billion in 2010.

I just, I can't even find the words. How can this happen to a company that big and that still produces games that make so many people happy?

Source: GamesIndustry.biz [http://www.gamesindustry.biz/articles/2011-02-01-ea-losses-widen-to-USD322m]

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[cerebus23]

hmm 300 mil is that not what they spent on star wars the old republic sofar .

 

[ultimateownage]

It just saddens me that Activision is rolling in money while EA is in danger of running out, and is constantly losing more.

 

[vrbtny]

Piracy's fault.....

Hey, it's what they'll blame...

 

[McNinja]

I think it has something to do with The Old Republic. Didn't the game cost around $300 Million to make?

Also, once they get a well-made MMO out there, with the subscription, they will turn a profit.

 

[Clubsol360]

This is why the games biz sucks right now. It costs way too much to produce these games, so if anything flops, then its hard to make a profit. There is just too much being released these days by too many publishers.

 

[Canid117]

How did they lose money?




People are buying less games?

 

[Wolfram23]

Bloatware.

Or whatever the coporate version of that is.

But seriously, this is why games are $60 here. They need to cut back a lot.

 

[darkknight9]

322 mil in three months is one hell of a coke and hooker habit...

 

[Kaze103]

And now for a little more from that article

The publisher's board has also announced the authorisation of a stock repurchase program of up to $600 million of Electronic Arts stock over the next eighteen months - a move that CEO John Riccitiello said "demonstrates our confidence in EA's digital strategy."

In answer to your doom and gloom post of how this is the worst thing to ever happen, you ask, how could this happen?

Simply, they didn't make a huge loss the 9 months prior.

The loss they made doesn't matter, it is not the end of the world.

 

[gmaverick019_v1legacy]

I think it has something to do with The Old Republic. Didn't the game cost around $300 Million to make?

Also, once they get a well-made MMO out there, with the subscription, they will turn a profit.

hopefully this is true. by the looks of it they have at least a game purchase plus a month or two minimum from me.

I hope this doesnt allow apple to buy them out, that would be devistating the gaming industry

i might die if this happened

 

[Frosty676]

322 mil in three months is one hell of a coke and hooker habit...

Or someones personal tricked out sea Yacht.

 

[Saviordd1]

Well hopefully when Old republic gets released they will make up for it ASSUMING BIOWARE RELEASES IT IN THE NEXT DECADE

 

[The Diabolical Biz]

322 mil in three months is one hell of a coke and hooker habit...

And the hotels. Don't forget the hotels.

Seriously those places corrupt people. All these stories of depravity with hookers and shit are never anywhere else!

OT: It may look like it stings, but in my educated opinion (READ: man on the street), they'll turn it around before too long

 

[Zing]

This article seems like an overreaction. I mean really, you "just, just can't find the words"?

 

[A Distant Star]

EA just isn't very well managed a company.

 

[Zero_ctrl]

I have a feeling The Old Republic is probably the biggest culprit in this.
It's a huge budget of a game, and if it fails, EA could be done.

 

[mad825]

hm. This is also why no less DRM on games can be profitable as you don't need to spend much on the servers or third-party companies like Sony (DADC) to create it for you.