Electronic Arts reports loss in earnings

[MVICK]

http://xbox360.ign.com/articles/705/705028p1.html

Click the link above. According to the article they attribute teh 16 million loss in earnings to the console transition but is that the truth? To my knowledge their is wide spread dissatisfaction to their main money maker Madden on next gen. Could this be hitting their pocket books? Are years of complacency finally hitting them in the pockets? If so this is good for the gaming community as this will encourage them to make a better product. Read the artlcle and let me know what you think.

[bkrich83]

Quote: Originally Posted by MVICK

http://xbox360.ign.com/articles/705/705028p1.html Click the link above. According to the article they attribute teh 16 million loss in earnings to the console transition but is that the truth? To my knowledge their is wide spread dissatisfaction to their main money maker Madden on next gen. Could this be hitting their pocket books? Are years of complacency finally hitting them in the pockets? If so this is good for the gaming community as this will encourage them to make a better product. Read the artlcle and let me know what you think.

Easy enough to figure out.

Compare Madden sales this year to last year. Did they sell less? I somehow doubt it.

[p_rushing]

I didn't read it, but I'm sure they are claiming a bunch of expenses because of the switching to the new console, NFL Deal, hardware. There are rules about how much they can claim for the NFL Deal as an expense, they are probably taking a big hit this year to bring their taxes down.

[adembroski]

Selling more copies of Madden does not mean they made more money. Most gaming companies are losing money at the moment because of the console transition... EA's probably not particularly concerned about it, it's the investment you make to make more money down the road.

They also payed 680 million for Jamdat, which cut deeply into profits. I'm not surprised at all, and in fact expected it.

[FilthyRich]

are they talking about per console? because i doubt seriously they lost money from 06 on current gen and everything else it dropped for. but if we're talking about 360 than quite possibly, but that's just the breaks of releasing an average game.

[tpaterniti]

I think the switch to the 360 hurts them in more ways than one. Because of the initial problems of the 360 and the outrageous price (IMO) of both the system itself (upwards of $400) and the games ($60) many gamers are either unwilling or unable to switch. Say you wanted a game system and about 5 games. With an regular XBox or PS2 you could probably accomplish this for about $200-250. On a 360 this would cost about $700!!! I don't know about you, but I don't know many gamers who have $700 at all, much less to spend on video games. And EAs graphics models for human characters are fundamentally flawed, but I'll leave it at that.

[mercalnd]

Quote: Originally Posted by adembroski

Selling more copies of Madden does not mean they made more money. Most gaming companies are losing money at the moment because of the console transition... EA's probably not particularly concerned about it, it's the investment you make to make more money down the road. They also payed 680 million for Jamdat, which cut deeply into profits. I'm not surprised at all, and in fact expected it.

He didn't say they sold more to refute the fact that they suffered losses but rather to point out that if they sold more, then customer dissatisfaction is not the reason for the losses. It's most likely the added investments for the extra development for the 360 versions of all their games and the purchase of exclusive licenses. Thus, the loss would come from added expenses rather than customer dissatisfaction. As long as people buy the games, their satisfaction or dissatisfaction does not reflect on the finances of the company.

Also they are reporting a loss in earnings, meaning they are earning less than before. Unless I'm mistaken, it's not an actual loss, ie being in the red.

[bkrich83]

Quote: Originally Posted by spectralfan

He didn't say they sold more to refute the fact that they suffered losses but rather to point out that if they sold more, then customer dissatisfaction is not the reason for the losses. It's most likely the added investments for the extra development for the 360 versions of all their games and the purchase of exclusive licenses. Thus, the loss would come from added expenses rather than customer dissatisfaction. As long as people buy the games, their satisfaction or dissatisfaction does not reflect on the finances of the company. Also they are reporting a loss in earnings, meaning they are earning less than before. Unless I'm mistaken, it's not an actual loss, ie being in the red.

Exactly.