Analyst Calls EA Situation "Troubling"
A Electronic Arts' [http://www.db.com/] dominance in the industry is coming under siege, leading to a "troubling" situation at the publishing giant.
In a report posted on NCAA March Madness 2008 [http://www.gamedaily.com/games/madden-nfl-08/wii/game-news/analyst-underperformance-of-ea-sports-titles-a-major-concern/5989/19133]. That title, which EA elected to ship in December rather than in January as it had done the previous year, added $7.5 million to the company's December sales.
He also pointed out that two popular EA Sports franchises were also experiencing sales declines, with NCAA Football 2008 [http://www.easports.com/madden08/] selling 352,000 units compared to 423,000 sold in December 2006, a 17 percent decline. The slide comes despite a reduction in the average selling price of the games, which saw Madden 08 down nine percent to $40.34 and NCAA Football 2008 cut by 12 percent to $36.39.
"We think the relative underperformance of Electronic Arts' two well-established titles represent a major concern for two reasons. First, if the company's proven and well-known franchises (with exclusivity on its side) are struggling to grow YoY [year over year], it does beg the question whether the company's newer titles will be successful during a very competitive retail environment (with blockbuster titles from the likes of Nintendo [http://www.activision.com]). Second, should these weak sell-through trends continue, we think that EA may look to reduce software pricing on these titles to stimulate sales volumes," Patel said.
"With market share losses and several of the company's dominant franchises also shrinking, we think investors are clearly giving EA far too much credit to its scale and product quality when its industry leadership position may be under attack."
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A Electronic Arts' [http://www.db.com/] dominance in the industry is coming under siege, leading to a "troubling" situation at the publishing giant.
In a report posted on NCAA March Madness 2008 [http://www.gamedaily.com/games/madden-nfl-08/wii/game-news/analyst-underperformance-of-ea-sports-titles-a-major-concern/5989/19133]. That title, which EA elected to ship in December rather than in January as it had done the previous year, added $7.5 million to the company's December sales.
He also pointed out that two popular EA Sports franchises were also experiencing sales declines, with NCAA Football 2008 [http://www.easports.com/madden08/] selling 352,000 units compared to 423,000 sold in December 2006, a 17 percent decline. The slide comes despite a reduction in the average selling price of the games, which saw Madden 08 down nine percent to $40.34 and NCAA Football 2008 cut by 12 percent to $36.39.
"We think the relative underperformance of Electronic Arts' two well-established titles represent a major concern for two reasons. First, if the company's proven and well-known franchises (with exclusivity on its side) are struggling to grow YoY [year over year], it does beg the question whether the company's newer titles will be successful during a very competitive retail environment (with blockbuster titles from the likes of Nintendo [http://www.activision.com]). Second, should these weak sell-through trends continue, we think that EA may look to reduce software pricing on these titles to stimulate sales volumes," Patel said.
"With market share losses and several of the company's dominant franchises also shrinking, we think investors are clearly giving EA far too much credit to its scale and product quality when its industry leadership position may be under attack."
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