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

[Delusibeta]

Hmmm... [http://www.gamasutra.com/view/news/32778/EA_Holiday_Revenues_Profits_Down_As_Digital_Continues_Rise.php]

If my interpretation of that article is correct, the "$322 million loss" figure is only really relevant to accountants. For everyone else, EA made a $196 million profit.

 

[Baresark]

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

It's interesting you should find this devastating. I felt the exact same way when EA bought out some of my favorite companies, such as Origins. I will shed no tear.

 

[Baresark]

It's really misleading to say they lost money in this column but more than made up for it in another column.

When game companies talk about losing money, I guess we should just figure they are lying.

This is all about perception. In the eyes of corporate setups such as EA, each division has to be profitable. It's not acceptable that one division doesn't do well, and all the others more than make up for it. They will cry and then blame it on software piracy and the need for more draconian security measures.

I would be interested to see in what area they lost this money.

 

[Baresark]

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

It's interesting you should find this devastating. I felt the exact same way when EA bought out some of my favorite companies, such as Origins. I will shed no tear.

If EA was bought out before ME3 got released i would cry like a baby.

Haha, no worries. Usually what happens during the buyout of a game company is they clean house. They decide what properties are worth keeping, what properties are worth keeping as is, and what ones aren't worth it, then they either decide to trash them or try to renew them. Since Mass Effect 2 was an unmitigated success, it's safe to assume it would definitely be coming out, and as it's intended now as well.

Edit: The main thing is this. Just because they posted a single quarter of losses doesn't mean they are on the verge of getting bought out or sold. They stock is still quite valuable. Today it ended at 15.62, not bad at all, even if it is down.

 

[Atmos Duality]

An Activision buyout seems likely within 3 years if they continue this downward spiral.
Never thought I'd live to see the day EA gets bought out, but I did know that it would be by an even bigger douche of a company than EA.

Call me callous, but to me, this is poetic justice for EA fucking over Westwood.

 

[Vaer]

Now mind you I'm no math genius but if all the game they mentioned alone sold over 5 mil copies each (as it is mentioned in the article )without even considering all the other titles they released that is much more then $1.053 billion, at least about 50% more and that's without even considering the other games they published so ... tax evasion much ?

 

[Sniper Team 4]

Hm...more proof that tech is getting a little too expensive to work with perhaps? Too bad they could 'lose' 1 million dollars into my bank account. It is rather odd though, seeing as they did have some pretty decent selling games. Wonder what happened.

 

[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

It's interesting you should find this devastating. I felt the exact same way when EA bought out some of my favorite companies, such as Origins. I will shed no tear.

EA is not an angel, but they are grey hearted hero when compared to apple in terms of how i feel about them.

Spoiler: fuck him

 

[Weaver]

Oh no we ONLY made $1.053 billion instead of $1.243 billion! It must be those damn pirates! How can a company humbly survive of a measly billion dollars of revenue???

EA is huge, but a $332,000,000 loss is massive, no matter who you are. They lost nearly 25% of their revenue, which means they'll be unable to take as many risks in the near future.

Right, but they lost revenue. It's not like they're operating in the red, they still MADE a billion dollars.

I never got why business assume they can just infinitely grow and their profits will always "gain". If you think of the world on a macro level, there is only so much money and so many people willing to spend it. Sometimes you're up some times your down, so long as it's a positive revenue stream after operational costs I fail to see what the deal is.

You're actually mistaken. There isn't only "so much money", nor are there really only "so many people". You can perhaps make the "so much money" argument on the basis of physical goods (it's a perilous argument there too), but anything non-physical (services, digital goods, etc.) breaks the argument immediately. Even if you want to talk about physical goods exclusively, there're a lot of resources still untapped. Similarly, the "so many people" issue has problems when you consider rising populations and the fact that your product generally doesn't reach every possible consumer in the world.

As for why it matters, companies invest the money they make and use profit to attract investors. Any money a company doesn't make means less investment in developing new products and any money a company doesn't make that it expected to make means fewer investors. Both of these are especially damning when the company makes creative products: a lumber mill can continue milling lumber without investing in more high-efficiency machines, but you can't just keep developing the same game over and over (though, apparently, you can come awfully close if EA is any indication).

I know I'm probably mistaken, and you clearly have a way better grasp of business and economics than I do, but I refuse to believe that there is an infinite amount of money in the world, and I sure as hell know that there are only about 6.5 billion people.

There IS a limit to profit. That limit might be all the money in existence, but that's a limit, no?

 

[Baresark]

Oh no we ONLY made $1.053 billion instead of $1.243 billion! It must be those damn pirates! How can a company humbly survive of a measly billion dollars of revenue???

EA is huge, but a $332,000,000 loss is massive, no matter who you are. They lost nearly 25% of their revenue, which means they'll be unable to take as many risks in the near future.

Right, but they lost revenue. It's not like they're operating in the red, they still MADE a billion dollars.

I never got why business assume they can just infinitely grow and their profits will always "gain". If you think of the world on a macro level, there is only so much money and so many people willing to spend it. Sometimes you're up some times your down, so long as it's a positive revenue stream after operational costs I fail to see what the deal is.

You're actually mistaken. There isn't only "so much money", nor are there really only "so many people". You can perhaps make the "so much money" argument on the basis of physical goods (it's a perilous argument there too), but anything non-physical (services, digital goods, etc.) breaks the argument immediately. Even if you want to talk about physical goods exclusively, there're a lot of resources still untapped. Similarly, the "so many people" issue has problems when you consider rising populations and the fact that your product generally doesn't reach every possible consumer in the world.

As for why it matters, companies invest the money they make and use profit to attract investors. Any money a company doesn't make means less investment in developing new products and any money a company doesn't make that it expected to make means fewer investors. Both of these are especially damning when the company makes creative products: a lumber mill can continue milling lumber without investing in more high-efficiency machines, but you can't just keep developing the same game over and over (though, apparently, you can come awfully close if EA is any indication).

I know I'm probably mistaken, and you clearly have a way better grasp of business and economics than I do, but I refuse to believe that there is an infinite amount of money in the world, and I sure as hell know that there are only about 6.5 billion people.

There IS a limit to profit. That limit might be all the money in existence, but that's a limit, no?

You are quite right about that. This is not the first time I have seen someone throw around the idea of an infinite good or resource, but this is quite false. There are a lot of limiting factors. The last poster just simply spat out the business sense that really took hold in the 80's. People said the same thing about a bunch of sectors of the market and lead idiots into believing that things would continue to climb forever. There is of course a limit to how things can grow. People of course look at this all wrong though. People are making the argument that they lost revenue and surely with less revenue there is less money to invest back into the company and less money to take risks with. This ensures is that the growth someone lead them to believe would be there, won't be there, and will instead they will be forced to invest the money more wisely. Companies should be less frivolous with the money, and this could lead to a lot better software development. Any company that can't change to meet the needs of the consumers should fail.

 

[spartan231490]

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]

Permalink

I don't think that they came out with any games during that three month span, but I don't know when the various games are released, so maybe I'm wrong. if so, than a loss would be understandable, they are making games, but not releasing any in that time. Even if they did release one or two, the logic is still sound.

 

[theriddlen]

Well, there's Portal 2 in April, so they can expect better revenue next quarter.

 

[godofallu]

Lets face it, EA is poorly run.

They need to stop investing in every game they see, and focus on quality control.

I can picture their marketing team now talking about market share for AAA multiplayer FPS titles, and their pitch for MoH being a big success. Idiots, do some product research. MoH has never been anything more than a wanabe CoD, and budget size was never the reason. Not to mention the timing of the MoH's release combined with the entire Taliban scandal and the way they treated it.

 

[Jumplion]

Really? Nobody's posted this yet?

*sigh* fine, here you go. [http://www.penny-arcade.com/comic/2008/11/5/]

Seriously, that strip goes with a lot of things with EA.

 

[sargeant15]

Idiots, do some product research. MoH has never been anything more than a wanabe CoD

Umm, are you serious? Medal of Honor has always tried to be a Call of Duty? You're kidding, right?