Something to make the SIGames guys smile...

[SirFozzie]

Eidos plunges into red
By Tony Smith (tony.smith at theregister.co.uk)
Published Wednesday 15th September 2004 13:31 GMT

UK games publisher Eidos saw fiscal 2003's £17.4m profit shrink to a £2m loss during fiscal 2004, which ended on 30 June.

However, the company was confident that takeover talks with unnamed third parties "are progressing well", despite the "disappointing: dip into the red.
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The loss comes in spite of a 3.8 percentage point rise in gross margins to 62.8 per cent. But that simply wasn't sufficient to counter an 11.6 per cent decline in turnover. Preliminary figures for FY 2004 saw sales total £133.9m, down on the previous year's figure, $151.5m.

Even ignoring exceptional items, the most recently complete fiscal year showed a loss: £2m in the red, compared to FY 2003's operating profit of £13.9m. On a per share basis, 2004's loss amounted to 2.1p, compared to 13.8p for 2003.

Eidos' bosses blamed the loss on the failure of a number of releases to "live up to management's sales targets", specifically Hitman: Contracts, Commandos 3, Whiplash, and Legacy of Kain: Defiance, and the decision to delay the release of ShellShock: Nam '67 until FY 2005, all as a result of "unexpected softness" in the market.

As evidence that they were not culpable, Eidos chiefs pointed to the raised gross margin - a result of better "cost and development control", they said.

"This year's results should not be viewed in isolation as they do not adequately reflect the significant achievements and improvements of the past 36 months in terms of increased gross margins, balance sheet strength, cash generation and the on-time release of games," said CEO Michael McGarvey in a statement.

Eidos now has to hope that the market picks up and its upcoming releases - a new Tomb Raider, another Hitman instalment and ShellShock - perform ahead of expectations.

Then there's the takeover, talks centring on which are taking place with a number of companies. As yet, however, no formal offer has been made for the company. ®

Maybe some time they'll figure out that rushed sequels with poor Quality Control pisses people off..

[rjolley]

Any guesses on the unnamed 3rd party? I'm betting EA or MS.

[Mac Howard]

The computer games industry went sadly wrong when they pushed prices up to the $50 level and beyond and have never recovered. They pissed gamers off with the price and produced the worst producer/user relationship of any consumer product, created an extremely critical approach to the quality of the product (can't shrug off a bad $50 purchase the way you can a bad $10 purchase), forced marketing costs sky high to get rid of the overpriced product and savaged the sales numbers.

They're just getting their comeuppance

[Marc Vaughan]

The computer games industry went sadly wrong when they pushed prices up to the $50 level and beyond and have never recovered. They pissed gamers off with the price and produced the worst producer/user relationship of any consumer product, created an extremely critical approach to the quality of the product (can't shrug off a bad $50 purchase the way you can a bad $10 purchase), forced marketing costs sky high to get rid of the overpriced product and savaged the sales numbers.

I realise this is a personal view and as such doesn't have to be founded entirely upon fact, being more personal opinion ... but ....

If this is the case then why is the computer games market also consistently one of the largest growth areas in consumer spending (at least in the UK) ?

I think most people accept a reasonable price for games understanding the costs involved in producing them (which can be huge, especially for action products or those relying upon licences etc).

After all (in the UK at least) the average price for a new PC game on the shelves is around £29.99, most people will get at least 10-20 hours of enjoyment from a decent PC titles - compare this to a DVD film which costs around £14.99 and will be watched maybe twice during its ownership (unless its a Disney DVD being owned by my kids ) and giving maybe 3-4 hours of entertainment.

I don't particularly think the games industry has a worst relationship or view from its consumers than any other industry.

I'm guessing this view is coming from the fact that there is widespread piracy ? - this isn't something that is particularly down to the price of games imho, its due largely to human nature, if this wasn't so then how do you explain the fact that despite fairly low Music CD prices these days you can walk into nearly any childs bedroom (and many adults) and find ripped MP's or CD's of music tracks .... the cost for many such 'pirateers' isn't prohibitive, its just the allure of getting something for free, they probably didn't particularly 'want' the item in question but it was there and they took it (please note this doesn't make it 'right' and is more a comment on human nature than an acceptance of piracy, buy my games please - I don't want to have to get a 'real' job ).

[Marc Vaughan]

PS. In the UK at least the reason for a £29.99 price is at least partially attributable to forceful retailers (who in theory at least must have a handle on the ideal price for products) - as they get a margin of around 50% on their sales of games.

[Coder]

Well from a Swedish point of view, the prices are a huge turnoff.. I've gone from buying on average one game a month to MAYBE one a year. The prices were jacked up to unbearable levels when EB moved in on the Swedish market, purchasing the Tradition-stores. For example, EHM costs about £10 more in Sweden than in England. This is the kind of price differences I can't see them justify. Surely, transporting the cds around Europe doesn't cost £10 extra per unit?

I simply can't afford to take shots in the dark anymore.. paying £40 for a game I might not enjoy for more than 10 minutes isn't worth it.. and then I haven't even mentioned console games either.. My x-box is just standing there collecting dust nowadays, I'm not buying games for £60 only to find out they're not my cup of tea.

Edit: I should point out that the price isn't the only reason I've gone from buying so many games to so few.. MMORPGs are one reason.. less time is another.. but I'd definately buy more games if they were down to around £25-30

[Marc Vaughan]

Well from a Swedish point of view, the prices are a huge turnoff.. I've gone from buying on average one game a month to MAYBE one a year. The prices were jacked up to unbearable levels when EB moved in on the Swedish market, purchasing the Tradition-stores. For example, EHM costs about £10 more in Sweden than in England. This is the kind of price differences I can't see them justify. Surely, transporting the cds around Europe doesn't cost £10 extra per unit?

The points I indicated were from a UK perspective as I don't have much information on other territories beyond sales figures and unit prices (which incidentally don't explain the increase in cost - I'd presume its at least partially down to retailers in that territory, in a similar manner to how in the UK the stores take a larger profit percentage than retailers in America do).

SI do our best to ensure that our games are sold at a competitive price as much as possible, to the extent that we drop the price for seasonal updates of our games from £29.99 to £19.99 in order to give as good value to the consumer as possible.

[Alf]

For exemple, Doom3 is €60 in France.... No way am I paying that price for a game. Even a brilliant one.

I am gladly buying Jim products as they are on what I feel a more reasonable price level.

By the way, what price is FM05 expected to cost ?

[Marc Vaughan]

Originally Posted by Alf

For exemple, Doom3 is €60 in France.... No way am I paying that price for a game. Even a brilliant one.

I am gladly buying Jim products as they are on what I feel a more reasonable price level.

By the way, what price is FM05 expected to cost ?

No idea to be honest (just a humble programmer me), in the UK I'd expect it to be £29.99 - elsewhere I'd guess it would be around the average cost of a normal PC game release.

I'd personally love for all prices to be the same everywhere, but as the standard of living and income differs wildly between countries I doubt this will ever happen (cue Mac to mention the wonders of selling via. the Internet - which would be great, but unfortunately (strictly speaking) you do have to do seperate SKU's and prices as tax etc. differs for areas etc. .... the wonders of politicians, they take a great concept and make it difficult ).

[Mac Howard]

>I think most people accept a reasonable price for games understanding the costs involved in producing them (which can be huge, especially for action products or those relying upon licences etc).

What is important is not production costs but the costs per item sold. There's a simple rule that sales are inversely proportional to the price - halve the price and you double the sales. The result is that the total cost of production is still covered but the cost per item halves. The current cost per item is large because the sales levels are low (because the price is high).

The only cost that doesn't behave this way are the costs of the item itself. In this case the cd etc which is a very minor proprtion of the cost.

>After all (in the UK at least) the average price for a new PC game on the shelves is around £29.99, most people will get at least 10-20 hours of enjoyment from a decent PC titles - compare this to a DVD film which costs around £14.99 and will be watched maybe twice during its ownership

People who buy a dvd to watch a program twice have more money than sense. A better comparison is a cd. This will cost you less than a third of your 30 pounds and will be played for up to 10 years or more (unlke a computer game). You can't compare items like this meaningfully.

But whether you think the price is justified, Marc, is unimportant. The customer certainly does and, when it comes to sales, that's what matters.

>I don't particularly think the games industry has a worst relationship or view from its consumers than any other industry.

You need not go any further than this forum. "I'll never buy from EA/Eidos". When did you ever hear someone say they won't a particular artist because of the music publisher, never see a film made by a particular studio, never buy a book from a particular publisher? The relationship between game publishers and the ganme playing public is often very antagonistic.

And it comes often from buying a game the gamer sees as poor value for his money. As I said - pay $50 for something poor and you can't shrug it off. Pay $15 and it's a temporary annoyance.

You kid yourself if you really think that it is a healthy relationship

Don't get me on to Internet distribution - but your 50% for the retailer would be a good starting point

[Marc Vaughan]

What is important is not production costs but the costs per item sold. There's a simple rule that sales are inversely proportional to the price - halve the price and you double the sales. The result is that the total cost of production is still covered but the cost per item halves. The current cost per item is large because the sales levels are low (because the price is high).

This is an arguement which has been made frequently, but has proven incorrect in the past.

The games industry tried this approach in the days of the ZX Spectrum you might remember and expected sales to rise dramatically. What happened was a smaller than expected rise and a huge loss of revenue which simply devalued the industry and lead to many many developers going broke.

You need not go any further than this forum. "I'll never buy from EA/Eidos". When did you ever hear someone say they won't a particular artist because of the music publisher, never see a film made by a particular studio, never buy a book from a particular publisher? The relationship between game publishers and the ganme playing public is often very antagonistic.

I'd personally point to the fact that despite people indicating that they would never buy a game from a particular publisher these statements are normally made in haste and if a good game comes up on that particular publishers books it rarely prevents someone from purchasing it (at least for the vast majority of people) ...

PS. Not expecting you to agree with me on this Mac any more than I expect you to start putting visible attributes into SAAP

[Mac Howard]

Originally Posted by Marc Vaughan

This is an arguement which has been made frequently, but has proven incorrect in the past.

>The games industry tried this approach in the days of the ZX Spectrum you might remember and expected sales to rise dramatically. What happened was a smaller than expected rise and a huge loss of revenue which simply devalued the industry and lead to many many developers going broke.

No. I was there. They sold games for 10 pounds and the only price drop they tried was to bring back old games at a 2 and 3 pound price point. Some other companies jumped on this bandwagon with some very poor copycat games. They quickly got a reputation for being almost worthless. Because of their extremely low price the retailers gave them no shelf space. They were sold as often as not in places like newsagents and petrol stations.

The whole image of them was "cheap and nasty".

Nevertheless, the lead publisher Codemasters did very well out of it. in fact I'm not sure they aren't still around in some form or other - unlike most of the full price companies.

By contrast, in 1992 I sent out a mailshot split into two with the original Supremo. One mailshot was 19.95 and one 9.95. I sold exactly twice as many of the second.

The reason it struggles at the moment is that the publishers put so much effort into justifying their high prices with "it's the developments costs" that dropping the price now is immediately seen as indicating low quality. They really made a back for themselves with that and find it difficult to get out ot it.

Originally Posted by Marc Vaughan

I'd personally point to the fact that despite people indicating that they would never buy a game from a particular publisher these statements are normally made in haste and if a good game comes up on that particular publishers books it rarely prevents someone from purchasing it (at least for the vast majority of people) ...

That may well be so but look at the task it has set the publisher. He has to overcome a shocking antagonism towards his company and anyone with any marketing nouse knows that that is not what you want. How much time and money do companies spend trying to produce a good image? But the game publishers have to begin by overcoming a "I'm never buying from them" mentality.

That's enough to make any marketing man weep (not that that's always a bad thing )

But it's overcoming this mentality and the opposition to high prices that drives the marketing costs so high. Publishers are trying to sell something perceived as overpriced to customers who don't like them.

Hey guys, does that last sentence remind you of EA?

Originally Posted by Marc Vaughan

PS. Not expecting you to agree with me on this Mac any more than I expect you to start putting visible attributes into SAAP

I think Mandy Rice Davis had a comment on this opinion of yours

[SirFozzie]

Geez.. Foz makes a snarky comment, and what do I get, a thoughtful, well-reasoned discussion from two of the more interesting personalities on the board.

(pause)

Obviously I wasn't snarky enough


(Kidding)


(pause)

(I Hope)

[PsychoCop]

Go to the Philippines, buy games for $1.00

Unless you're against piracy and all that hubub.

Disclaimer: I, in no way condone piracy

[Mac Howard]

Does anyone remember the Infocom games? In arouund 1989 they were 30 pounds on the Atari ST. I bought just a couple (loved Bureaucracy). I didn't buy any more because I didn't want to waste the money when I didn't have the time to play them.

But then a company reissued them at 10 pounds each. I went straight out and bought five new titles. I'm not even sure I ever loaded up 2 of them. But I felt I had a bargain and hadn't wasted my money (even though I had).

We take a completely different purchasing attitide at say $15 than we do at $50. At $50 we think hard about it. There's lots of things we can do with that and often do precisely that and leave the game alone. But at $15 then we have a much more casual approach. It's by someone we've liked previously. It looks interesting. I need something to pass the time this weekend. Lot's of rationalisations.

At $15 we look for reasons to buy, at $50 we look for reasons not to.

You move into a completely different sales environment, a much more casual world. You forgive, or at least forget, if it proves not to be worth the price. I'll get something else next week. But if a $50 item proves to be a waste of money you don't forget.

But it'll happen. The Internet will bring it about as surely as it's transforming the music industry.

[riz]

An angle to this discussion that just crossed my mind. Back in the days when I was mainly just playing games instead of making them, I remember reading from a finnish games magazine how one particular developer wanted to sell their game at a lower price by including the manual on the CD instead of a printed one (or something along these lines), hoping that the lower price would get them more customers. Well, that plan backfired because the retailers then went on to sell the game at the same price as all the other games and kept the excess profit themselves....

Not sure how all these things work in the industry nowadays. Have managed to (luckily) keep myself out of the mysteries of that side of the business so far.

[druez]

Marc > Mac

[DanGarion]

I'd love to see the numbers on the ESPN Football game. Because I'm sure they brought in a lot more business with their $20.00 price point then they did the previous version.

[Mac Howard]

Originally Posted by druez

Marc > Mac

I think most unbiased observers would see that Mac has an affinity with users while Marc's merely giving you company line

[DeToxRox]

i'd love for someone to use dollars and cents

[druez]

Mac the difference is Mark can charge 40 to 50 bucks for his game. Its a fully fleshed out state of the art computer product.

Your game is on the level of a commodore 64 program. While both might be fun to play one drives a higher ticket price while the other does not.

So I agree people should pay 10 to 15 bucks for your game and 30 to 50 for state of the art products.

[SirFozzie]

and Jason comes in with the incinidary flame attack.

Maybe that's because Marc (get the name right, btw ) has the resources of a multi-million dollar company behind him, and Mac is... a solo programmer, hmmm?

[Mac Howard]

Didn't take long did it druez? Have you no respect at all for your credibility?

If you have hair then I reckon Marc is suffering from irritable bowel syndrome

[druez]

Originally Posted by SirFozzie

and Jason comes in with the incinidary flame attack.

Maybe that's because Marc (get the name right, btw ) has the resources of a multi-million dollar company behind him, and Mac is... a solo programmer, hmmm?

No, don't think so. Mac does things his way by choice. Go read his webpage then come see me. He deliberately disables the ability to alt-tab out of his program, his interface is not good. His ideas are though. But, just ask MAC he has been doing this for over 20 years and has the longest running soccer program ever. So by far, he is the expert in the field.

[KWhit]

Originally Posted by SirFozzie

and Jason comes in with the incinidary flame attack.

Maybe that's because Marc (get the name right, btw ) has the resources of a multi-million dollar company behind him, and Mac is... a solo programmer, hmmm?

Or maybe Joe Stallings told him to say that.

[druez]

Originally Posted by KWhit

Or maybe Joe Stallings told him to say that.

LOL you are whitty!

[KWhit]

[Mac Howard]

You asked for it, druez. This was a reasonable discussion about the price of games stemming from Eidos's financial problems. Marc and I differ because he's the representitive of a large commercial operation with no influence over pricing and probably limited in what he's allowed to say (particularly about Eidos). I'm an individual publisher with far greater freedom to express my mind. To start throwing insults around and turn it into another SaaP-CM flamewar was silly and merely turns everyone off the discussion.

Let's get back on track.

[Crapshoot]

Originally Posted by KWhit

Or maybe Joe Stallings told him to say that.

gold.

[Crapshoot]

Originally Posted by Mac Howard

You asked for it, druez. This was a reasonable discussion about the price of games stemming from Eidos's financial problems. Marc and I differ because he's the representitive of a large commercial operation with no influence over pricing and probably limited in what he's allowed to say (particularly about Eidos). I'm an individual publisher with far greater freedom to express my mind. To start throwing insults around and turn it into another SaaP-CM flamewar was silly and merely turns everyone off the discussion.

Let's get back on track.

mac, ignore the troll - this is a fairly interesting discussion.

[druez]

I disaree. If you look at the simple math involved you will see that computer games are a solid investment in terms of your entertainment value dollar.

i.e. 100 hours for a 50 dollar game is .50 dollars per hour of entertainment.

Compare that to going out to dinner and a movie. 50 dollars for 5 hours. 10 bucks an hour of entertainment.

So that is why I have no problem shelling out 15 to 75 dollars on a game. It depends on the quality of the product.

Your game is a 15 dollar game. CM series is a 40 to 50 dollar game. Someone above said Marc had a million dollar company behind him and his game shows it.

I'm sure you could take your ideas "sell out" to the man and have a product as good as Marc's but done your way. I would love to play that version of your game, but we both know that won't happen.

[druez]

Originally Posted by Aadik

mac, ignore the troll - this is a fairly interesting discussion.

Seriously, you guys are really too whitty.

[CraigSca]

Druez,

That argument still has a ceiling. For instance, using that reasoning I could run out tomorrow to buy a new $10k plasma HDTV and try to explain to my wife that it will only cost pennies on the hour. Ultimately, however, there has to be a cap.

What Mac is explaining is that you barely think about $15. Very true. However, I will think twice about shelling out $50 for a game when I cannot be assured of the 100 hours of payback.

[duckman]

Originally Posted by druez

i.e. 100 hours for a 50 dollar game is 2 dollars per hour of entertainment.

That's $0.50 per hour. Someone needs remedial math.

[druez]

Originally Posted by CraigSca

Druez,

That argument still has a ceiling. For instance, using that reasoning I could run out tomorrow to buy a new $10k plasma HDTV and try to explain to my wife that it will only cost pennies on the hour. Ultimately, however, there has to be a cap.

What Mac is explaining is that you barely think about $15. Very true. However, I will think twice about shelling out $50 for a game when I cannot be assured of the 100 hours of payback.

Agreed, but you must look at the cost of the products when they are designed. The man hours of design and work on a CM product has to be at least 10 times the amount of one of the smaller development houses.

With that being said, I expect perfection or close to that when its produced by a large development house. I have less tollerence for bugs especially game stopping ones.

[druez]

Originally Posted by duckman

That's $0.50 per hour. Someone needs remedial math.

Good point

[SirFozzie]

You know I'm half tempted to delete this thread, just to make DRUEZ LOSE POSTS... but there's a good discussion between the Limey Marc and the Pom Mac

[finkenst]

Originally Posted by druez

i.e. 100 hours for a 50 dollar game is 2 dollars per hour of entertainment.

By math here in the heartland of the U.S., that's 50 cents/hour...

an outstanding ROI..

Not that $2/hour isn't either, given a $7-10 movei price for a 2 hour movie.

[finkenst]

Originally Posted by SirFozzie

You know I'm half tempted to delete this thread, just to make DRUEZ LOSE POSTS... but there's a good discussion between the Limey Marc and the Pom Mac

PEOPLE LOST POSTS!

[duckman]

Originally Posted by finkenst

By math here in the heartland of the U.S., that's 50 cents/hour...

Beat you to it.

[Danny]

Originally Posted by finkenst

By math here in the heartland of the U.S., that's 50 cents/hour...

an outstanding ROI..

Not that $2/hour isn't either, given a $7-10 movei price for a 2 hour movie.

Has any rich person set up to play something like doom 3 and a stadium theatre sized screen?

[finkenst]

Originally Posted by duckman

Beat you to it.

yeah, but i had to read the entire thread and your reply wasn't there.

I almost deleted the post, but then I would HAVE LOST POSTS!

Like i giev a crap about it, but hey.

[druez]

Originally Posted by SirFozzie

You know I'm half tempted to delete this thread, just to make DRUEZ LOSE POSTS... but there's a good discussion between the Limey Marc and the Pom Mac

Who cares if you lose posts? I never did get that whole thing. 1 post or 50 posts whats the difference? Is it a dorky version of being l33t?

[Axxon]

Originally Posted by druez

Seriously, you guys are really too whitty.

For the second time the poster Druez throws out the same line hoping yet again to get a for something marginally humorous.

Many in the stands however wonder if this was an intentional play on words or simply typical Druez spelling.

[Mac Howard]

The argument about the cost/hour of entertainment does have merit. But consumers don't always (often?) buy items based on that sort of thinking. The movies are one of the most expensive on cost/hour (apprximately 4$) but no one ever gets that angry if they don't like the film.

It's the handing out of the $50 that hurts. There's only a certain number of things you can do with $15 but there's many more that you can do with $50. So if you waste $50 then you're very much aware of what else you could have done.

All other forms of software entertainment products are priced so that you can make repeated purchases and build a collection. Books, CDs, videos/dvds - they're all in the casual purchase league. If you're into that then it's not unusual to buy something every couple of weeks. But the average gamer, on the last figure I read, buys just two games a year.

I'm not in any way saying that Marc and his group don't deserve the returns they get for their products but that these returns would not diminish if the general market pricing were significantly cheaper because quantities would be so much higher.

That's why DVDs have succeeded where the video disks failed. They're at a repeatable purchase price whereas the video disks were at premium prices (I speak for the UK and Australia, I know nothing of the US situation).

Between 1986 and 1990 games went from 10 pounds up to 40 pounds and the quantities sunk by a factor of 4 (the same overall sales values were maintained). But simultaneously the pre-recorded videos went from 30/40 pounds down to 10/12 pounds and there was a ten fold increase in sales.

During that time the music/video industry wanted to move into the games field (the games companies were dropping like flies on the low sales numbers) and tried to persuade the games companies to use a more acceptable price point. They warned the games industry (relatively small and inexperienced) that at the price levels games were costing they would create severe problems with users. That users, no matter how you showed the cost/hour of entertainment to be low, would perceive games as a ripoff.

And they were right. We might not think too much about the music publishers but until now, and the Internet download problems, they have stayed reasonably well on the right side of the consuming public. At least no one goes around insisting they will never buy from a music publisher again.

Not so the game industry.

[druez]

Originally Posted by Axxon

For the second time the poster Druez throws out the same line hoping yet again to get a for something marginally humorous.

Many in the stands however wonder if this was an intentional play on words or simply typical Druez spelling.

All I'm simply saying here is, come up with some new material. It's quite a let down when you guys come at me with the same comments, same jibes with nothing new or origonal. It's weak.

[Axxon]

Originally Posted by druez

All I'm simply saying here is, come up with some new material. It's quite a let down when you guys come at me with the same comments, same jibes with nothing new or origonal. It's weak.

You tried to turn a legitimate debate about the gaming industry in general into yet another "druez flames SAAP" thread and you complain about others not coming up with new material?

[Hurst2112]

What the hell is l33t? Looks like 2 sets of boobs from above.

[druez]

Originally Posted by Mac Howard

I think most unbiased observers would see that Mac has an affinity with users while Marc's merely giving you company line

How is that a debate? Mac's basic premise is that Marc doesn't have any opinion then the companies. Mac is supposed to be the Man who is in touch with his users. That is a BS argument and in my mind brings the discussion to a different level.

Originally Posted by Axxon

You tried to turn a legitimate debate about the gaming industry in general into yet another "druez flames SAAP" thread and you complain about others not coming up with new material?

Originally Posted by Druez

Mac the difference is Mark can charge 40 to 50 bucks for his game. Its a fully fleshed out state of the art computer product.

Your game is on the level of a commodore 64 program. While both might be fun to play one drives a higher ticket price while the other does not.

So I agree people should pay 10 to 15 bucks for your game and 30 to 50 for state of the art products.

You can say this is a flame, but I say its stating fact.
Did you see the graphics of the gameplay engine in SAAP? They are on the level of a C64. It is worth 15 dollars I agree,

I would sign up for his game in a heartbeat and even do the yearly subscription thing if Mac gave a rats ass that the "people" who happen to like windows want him to give us the ability to alt-tab out of his program.

Marc/SI or EA Sports produce a product that is indeed state of the art and deserve for their effors a bigger return from us the consumer.

[SirFozzie]

l33t= elite talk, popularized by crackers and script kiddies.. it made them sound cool. Basically, you crap up the way you talk like.

D00D! D!d j00 s33 th@t guy? H3 was s0 l33t, i g@ve h!m @ll my W@r3z! |
(yes, my IQ just dropped 5 points from that.)

The l33t encyclopedia