Entertainment, Software Programs

EA has a tough quarter – but finally praises the PC platform

Electronic Arts [NASDAQ: ERTS] announced its fourth quarter financial results, and well, they were in-line with the recession and all the doom and gloom that still is surrounding the world. However, unlike AMD, Intel, nVidia in the world of PC hardware and Activision Blizzard [NASDAQ: ATVI], Take Two [NASDAQ: TTWO] and others in the world of software – EA didn’t post an increase of sales plus losses, but rather a 24% decrease in revenues and a 7% loss.

If we look at the results, EA managed to achieve $1.65 billion in revenue and a massive $0.64 billion loss. Looking at the whole of 2008, EA achieved $3.67 billion sales and a 454 million dollar loss, while EA achieved 3.09 billion sales and a 76 million dollar profit back in 2007. Interestingly though, EA’s largest competitor had almost identical revenue: Activision Blizzard had $1.64B revenue, but managed to lose just $71M.

If you wonder how large the Blizzard is, here’s the kicker: in 2007, Activision had $1.35B revenue and 227M profit. After the merger with Blizzard Entertainment, revenue went to $3.03B. Thus, Blizzard is roughly a 1.7B company with around $1.65B coming from World of Warcraft [game + all the merchandise].

Coming back to EA, the company decided to focus its efforts on increasing quality, and after seeing that their digital distribution branch [mostly through Steam, EA’s own solution is PITA like Games For Windows are] scored a 60% revenue increase. Now, EA’s CEO is praising PC as a "gaming platform for the future", while the company’s CFO is talking about "The way we look at a lot what’s happening in the future is, we’ve got probably a billion PCs out there in the world. Very rapidly the PC is becoming the largest gaming platform in the world, just not in a packaged-good product."

Mr. John Riccitello and Mr. Eric Brown – good morning to you two. You both finally woke up and "smelled the coffee". After publishers such as EA took a dump on the PC gaming market for so long with ludacris statements, mentioning the fall of PC as a gaming platform, now the PC market should be the one that should save EA and bring it into profitability. We won’t go into the whole DRM-debacle with Spore and the subsequent removal of online activation on April 1st, 2009. Yeah, Fools’ Day was quite an appropriate day for those utilities.

But the positive note is that heads of EA are now stating that the company will pay more attention to creation of higher-quality games, rather than selling one game on one engine for four years and just raising the poly count and stamping the actual year next to the title.