EA Lost More Money In Three Months Than You'll Ever Make
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Greg Tito
1 POSTED: 1 Feb 2011 17:59
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
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...
ForgottenPr0digy
Activision has Call of duty,WOW and starcraft the 3 most popular franchises in human history that every year breaks new records.
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.
Blackdawn451
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?
psrdirector
I hope this doesnt allow apple to buy them out, that would be devistating the gaming industry
Wolfram23
10 POSTED: 1 Feb 2011 18:19
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
McNinja:
hopefully this is true. by the looks of it they have at least a game purchase plus a month or two minimum from me.
psrdirector:
i might die if this happened
Frosty676
darkknight9:
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
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
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.
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.
ZombieGenesis
I'm not even going to pretend to understand how someone can publish as much crap (MASSIVELY popular, well selling crap mind) as EA does and still make a three-hundred million loss.
mad825:
I don't think DRM has anything to do with the situation...
Zero_ctrl:
Let's not over-exaggerate, EA might stop releasing new IP's [See Mirrors Edge, Dead Space, Dante's Inferno] but their sports games alone are selling in extremely high numbers, with little changes, year in, year out.
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???
gmaverick019:
I might as well.
As for SW:TOR in terms of making money: just roll with this for a bit: 1 million people buy the game. That's $60,000,000. Then add in the subscription for three months. Tis makes it $120,000,000. The game will have to run with at least one million players for more than one full year to make up for the money it took to create it.
I'm sure there will be more than 1,000,000 people who buy the game and subscribe on launch, so I'll do more numbers then.
D_987:
Let's not over-exaggerate, EA might stop releasing new IP's [See Mirrors Edge, Dead Space, Dante's Inferno] but their sports games alone as selling in extremely high numbers, with little changes, year in, year out.
I worded that incorrectly.
But yeah, that's basically what I was going for.
They'll have to stop taking as big of risks.
Alade
So apparently the escapist claims I won't earn 332 million dollars in my whole life, easy challenge accepted.
SovietSecrets
Medal of Honor is probably what killed them. Though NFS was pretty awesome, so they are forgiven for MoH.
RollForInitiative
Alex Pecha Vas Normandy:
Oh, we will. I wouldn't worry about that.
Daemascus
ZombieGenesis:
Popular, well selling. Words not usualy associated with crap...
JeanLuc761
AC10:
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.
So Dead Space, Crysis, Need for Speed, Burnout, Battlefield, Dragon Age, Mass Effect and all their sports games are all crap?
Hosker
Now I am going to make it a priority to earn $322 million dollars just to prove this thread wrong.
EA are a big company; that amount is probably pocket change to them ... probably.
Archangel357
Greg Tito:
The Old Republic is burning through money like it was going out of style, Medal of Honor was an expensive flop, and last but not least, NBA Elite 2011 cost millions to make and got cancelled. Major EA Sports franchise shitting the bed = bad news for EA. And the latter two happened in the second half of 2010; that should account for a large part of that money.
And the thing with games like Mass Effect 2 is that while it was a huge critical success, a 20-hour RPG with tonnes of dialogue, content, side quests etc costs stupid amounts of money to make, yet will never sell like, say, Call of Duty. Five hour campaign made only out of set pieces, no hours and hours of expensive voice work, a few multi-player maps, and boom, money. ME2 sold what, 3.5 million copies? I don't know whether that's even enough to cover its production costs. Meanwhile every CoD game out there hits 11 mill, easy.
Does that answer your question?
vrbtny:
Can you blame them for blaming it?
But yeah, seriously. Comparing EA to Activision is like comparing Scrooge McDuck to plain ol' Ebenezer Scrooge. They're both money-hoarding entrepreneurs, but at least McDuck's a decent guy. Scrooge was pretty much the devil as a businessman before his little trip with the ghosts.
JeanLuc761:
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.