The lights are on
Electronic Arts' management is being slammed after the company recently announced holiday sales which didn't meet expectations. "Management's credibility is nonexistent right now," says Patrick Becker Jr., whose Becker Capital Management holds about a million EA shares.
A Businessweek.com article charts current CEO John Riccitiello's failures and future challenges as the company tries to navigate out of 11 straight quarters of reported losses and a stock price that has declined 68 percent in the same time frame under Riccitiello's watch. According to the article, EA is having trouble as it moves into digital games distribution and other markets such as the free-to-play and social networking spaces. Riccitiello, of course, is more upbeat about the company and his future with it, noting that EA has already made progress on these fronts. "You see a six-foot hole we're in. I'm telling you that we were in a 20-foot hole and we've climbed 14 feet out of it."
According to the article, EA currently generates around 80 percent of its revenue from selling traditional boxed copies of its games at brick-and-mortar retail stores, but that the company faces a challenge in both combating secondhand sales and transitioning to the new frontier of digital gaming without abandoning what is already propping them up. To start the transition, EA purchased social networking games creator Playfish late last year, and it launched the browser-based, free-to-play Tiger Woods online game which makes its money on micro-transactions. A similar FIFA soccer title is also in the works.
EA's current situation isn't just about some of its games not doing as well as it hoped. How companies deal with digital distribution and people's ever-changing tastes in games (and how they experience them) is something that all publishers must figure out for themselves. It will be interesting to see if EA can navigate its way clear of this crisis and how others do or don't follow its lead.
[via gamesindustry.biz]
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Gotta spend money to make money
11 straight quarters of losses? Ouch. 68% stock price drop? Those aren't what I would call good numbers.
This is EA's comeback year with BBC2 and Medal of Honor and obviously Mass Effect 2
quick somebody call obama. lol
EA deserves better. Lets hope that all the amazing games their releasing this year help get them out of the hole in which they are currently stuck.
I know EA dropped the ball with there Mass Effect customers trying to get there armor downloads. Going though EA.com instead of xbox live. Which turned off alot there customers. I can't explain why EA is losing money, But someone isn't doing there job.
those social network and free-to-play games are stupid. they remind me of off-brand cereal. you could be playing something lame like harvest moon, but instead your playing retarded nock off.
I agree with Gamergirl, EA is bringing out the big boys early. By the end of the year EA will have buried it's problems, until next year win something else shows up.
kittenkilla: harvest moon is not lame :(
I don't know, Mass Effect 2 is a hit, and Battlefield Bad Company 2 is shaping up to be a hit, but 68% stock drop? 11 quarter losses? Basically three years straight this summer of losing money. They're not climbing out of this on one big hit, or even three as some people are saying. If they pull off these first three games they'll have regained some credibility, but they're gonna be on thin ice with investors until they get a streak of earning quarters. This next quarter will be in the black due to ME2 and BBC2 earnings, but they've gotta do that for at least another year or two to be back on steady ground. They've gambled in the wrong place on something, cuz that is a LOT of money to lose.
This is the year for EA to shine. They have great games like Dragon Age: Origins and Mass Effect. If those games can't get EA back up, then it's over.
What does this say about the videogame market? When a company makes a 360 from being terrible and some would argue immoral to assembling a great line-up of games and series yet they do worse.
well EA have sold pretty good on ME2 but I really think if they made ME2 for ps3 they would have made a lot more money.
No mention of the retarded DLC the have enjoyed forcing on us? The negative PR that generated couldn't have been particularly useful.
Hopefully the word 'CRISIS!' doesn't start flashing in red in front of their faces anytime soon.
This stock is a good buy for the next 3 years, maybe even more long term. If I didn't spend all my money and their games, as well as their competitors, I might just buy it myself!
Good. EA and Activision destroy games.
The bottom line is this....the secondhand market is exploding because games are too *** expensive. Plain and simple. The whole reason why EA and all the rest want digital distribution is so they can choke off the used game market and still charge $60 for a 10 hour game with no re-playability or re-sellability. They can take all the profits.
Makes sense.
@Paul Targon
Totally agree with you. However EA is a bit to blame when it comes to the time frame of those releases. I think we all would agree that DS and ME would of done better had they not been apart of the holiday release fiasco.
I'm very concerned for future new IP's.