When EA announced disappointing earnings late last week, the company was quick to offer up
plausible excuses for their failure to make their financial goals. Chief among culprits is the basic fact that there
simply weren't enough Xbox 360s in consumer homes, resulting in shortfalls in the sales of EA's next-generation titles.
In the words of EA CEO Larry Probst (pictured at right) during a conference call with analysts: "Our expectation was that more units of XBox 360 hardware would have been delivered to the market in that time frame both in North America and Europe.... I think we really underestimated the impact of consumers sitting on the sidelines and not spending dollars in anticipation of getting their hands on the next-generation console."
If the biggest (and arguably savviest) publisher in the games industry can err so badly, chances are good that other companies also misforecast this transition period as well.
EA's blunder therefore foreshadows pain that other game companies might be feeling right now. The companies that we'd expect to be hardest hit by similar underestimation are those that might have been relying most heavily on the ongoing stream of revenues from current-generation consoles (particularly the PlayStation 2). How bad will it get before the installed base of next-generation platforms is sufficient to sustain cash-starved game developers and publishers?



















(Page 1) Reader Comments
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They kill whatever good title they may have by shoveling it out the door and rushing production schedules.
We saw this with BF2. Something that many people who bought it, anticipate the next patch for months on end after release since it was shovelled out, now, many of the people who bought it can't use it.
Sim City was good, but Sim City 4 was very unstable and whored out all your system resources, making it very laggy.
It's funny, cause all those god damned reviewers still continue to claim how mother fucking great EA's games are!!! It's fucking outrageous, you have take EA very very very cautiously since more than 90% of their games are pure, rock hard, columbian shovel-ware and will cease to work and crash all too often.
Even worse, is that their customer service will not work with teenagers (Under 18).
I hope this is one of the reasons that they're going down.
My lord, how I hope.
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I am happy for Sony that they still made a nice fat profit Xmas 2005, but they, and their game publishers stood to make a lot more money if they had dropped the price of the PS2.
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And in the Joystiq article below this, Sony will ruin its PS3 by mistaking they are in the technology market instead of the entertainment market. As the gamer market shrinks and shrinks, the more 'multimedia features' are converged into the consoles and handhelds (yes, you PSP). It is also no surprise that the attachment unvieled for the Xbox 360 was the HD-DVD player, something that will do absolutely nothing for gaming.
If you think EA is having problems, think of the retailers that stock Xbox 360 games and peripherals. I see shelves full of product but no Xbox 360s available!
Majesco has exited the console games market. Take Two looks like its on the road to bankruptcy. Law firms and gay activists are set to sue and alter Blizzard. Even Nintendo has given up on the traditional market it had always competed for.
While the middle publishers have vanished, the big publishers (like EA) have proven not to be immune. Games stores are going out of business. Game magazines and even blogs/message boards have become shills for game advertising.
Anyone see any 'bright lights' for the Game Industry in the next few years? $400 consoles with $60 games? And who knows how much the PS3 will cost... $600? And all this to get the same boring sequels?
At its current rate, the Xbox 360 will not sell as many units as the first Xbox. The way how Sony is focusing on multimedia instead of games with the PSP shows that it intends to do the same with the PS3. "The PS3 is not a game machine," Sony tells us. (Great...) So Microsoft and Sony are simply using gamers (the early technology adopters) to trojan horse in a 'top box' to control our living room?
With the total number of active gamers shrinking day by day, the skyrocketing cost of development and cost of consoles, only one thing can save the inevitable.
We NEED a gaming revolution. At this current course, all we can do is watch the industry slowly shrink and die.
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There are two new systems entering the market this year. It will be likely that game publishers like EA will continue to lose revenue because gamers will be saving money for these new consoles. What these companies will need to do is develop quality titles that will compete against what others will be delivering during launch, rather than continue rehashing older titles with minor upgrades. What gamers want to see are games that are pushing the next generation of consoles to the limit; something that we haven’t been able to see or get before. It would seem also that the “attach rate” will be a big factor this year, as many gamers will save up to buy new systems with launch title games and accessories. It will be survival of the fittest for game companies and many companies who don’t take this into account will get hurt.
These companies will need to learn that gamers will not be purchasing as many games this year as they have in the past. Although the sales of next generation console will hurt their sales, they should look to the future as these consoles are, and will be, an outlet for potential revenue. Eventually, after everyone has chosen their system of preference, game sales will rise again and people will stop blaming each other.
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Well, that's not entirely true. One thing you learn when listening to conference calls with investors is that most CEOs are quick to take credit and even quicker to place blame externally. Sure, the 360 didn't sell gangbusters, but then again, there are a lot of reasons their weak earnings could be their own fault. As others here have mentioned, unimaginative titles as well as weak customer relations have created quite the cesspool. This is all happening while the gaming industry as a whole is growing in terms of gross profits -- incredible!
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Riiigghhtt...EA's numbers don't add up if you ask me.
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Maybe you should actually have developed for a good console while you had the chance, I dunno, like the DREAMCAST.
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EA could have sold many more copies on Playstation 2’s 100 million user install base with titles such as Madden, SSX, NCAA Football, and NBA Street. At $50 a game, they would only have only needed to sell 1 copy out of every 50 users to have met their goal.
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1) Price drops on 'old gen' games hit revenues. Go look at how prices have dropped lately on Xbox only titles
2) People buying new consoles spend so much money on the consoles there is less money for games. Wallets are depleted.
3) People wait. Rather than making investments into old gen games, people save up and wait for the consoles to come out so they can figure out which one they want.
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http://ps2.ign.com/articles/684/684395p1.html
If you ask me, it doesn't look like they did so bad there.
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At the local Gamestop, there was a LONG reserve list. They had to turn down requests for more reserves because they couldn't expect more units. And then Microsoft added on another screw by not even sending as many units as promised, and it wasn't until this month that JUST enough units arrived to give to the last few unlucky reserve-holders.
It's not that the system wouldn't have sold well(America loves its xboxes, and parents will buy their whiney children ANYTHING for Christmas), it's that Microsoft decided to screw over the American market in favor of flooding Japan with consoles(Who don't want them), giving the rest of the people in the states enough time to see that the release of the 360 was accompanied with very few releases(a number that doesn't look like it'll change anytime soon), none of which warrant buying the system. Especially AFTER Christmas. ("Happy Valentines Day! Here's an overpriced system with a crappy lineup!")
Of course, I also hate EA's games, but that's just me. The average gamer in the States seems to love them, if one is to judge by the sheer number of sports games that end up in the USED bin.
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A lot of features were missing and the way it was set up online was just not there. I played a few games online, played a few games offline and basically it just sat there while I played Zuma and Geo Wars.
I've since picked up Condemned and this game is amazing. If you've got a 360, you NEED to get this game. Scares the crap outta me. I have never been more scared of mannequins in my LIFE!
Anyway, I blame EA's problems with the 360 on poor port and effort. If the game were half as good as that video they showed, it may have been better. I think they lied to consumers and that's what's hurting them.
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Hardly. Even if they would have given the US those consoles, the reserve filling problem would not have been much better off. You make it sounds like they sent a million units over to Japan or something. Just because the 360 didn't get sold out in Japan doesn't mean they have hundreds of thousands of them sitting around.
Anyway, if this problem bleeds over to the PS3 and the Revolution, let's hope this doesn't mean a next-gen drought for software.
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http://news.teamxbox.com/xbox/10185/Activision-Reports-Financial-Results/
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http://www.gamespot.com/news/6141064.html
http://www.gamesindustry.biz/content_page.php?aid=13575
http://www.cdrinfo.com/Sections/News/Details.aspx?NewsId=15808
http://www.extremetech.com/article2/0,1697,1916090,00.asp
http://www.kotaku.com/gaming/xbox-360-japan-launch-guide/index.php
"Microsoft has confirmed selling 900,000 Xbox 360s in North America, 500,000 in Europe and something between 0 and 100,000 in Japan. Either way, it adds up to 1.5 million." I'm going to assume that in those numbers for North America and Europe they're also counting Core systems.
Given the lackluster sales of the xbox 360 in Japan, there are indeed hundreds of thousands of units (Premium, Japan didn't have to deal with the Core nonsense) still sitting on store shelves to this very day. Heck, you could probably pick up a nice used version cheap. Less than a Core unit in the States. Heck, the Premium only cost a little more than the Core version in the states.
Granted, if those hundreds of thousands of units were in the States, there'd still be a shortage problem. But not as bad a one. Certainly a lot more people who wanted premium versions would be happier.
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I don't blame the sales of hardware because there is a hell of a lot more PS2's, cube and Xbox's now than there was in 2002. EA shouldn't be relying on more hadware sold, EA should be selling to the same audience from previous years. The reason why that's not happening is because the same audience have seen it, played it before. Look at Tiger Woods games, FIFA games just to name a few. It the same bloody game with very little updates in gameplay, and EA try to convince you otherwise, that they change a lot in terms of gameplay, but they're just trying to sell you thier products. EA's best games are from the 3rd party developers, like Critereon who make Burnout and EA get the praise for it.
I've had enough, EA are doing my head in just writting about them.
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