RSSEA does Apple folk a Sim-ple kindness
By Angela Gunn | Published May 5, 2009, 8:11 PM
Electronic Arts reported the results of its recently concluded fourth quarter on Tuesday as rumors fluttered concerning a possible buyout by Apple. EA also discussed the progress of its digital-delivery efforts, which company executives say are entering a new phase.
The Apple-buy rumor was going around this morning about Twitter as well, and didn't merit discussion on the hour-long earnings call. But there is good news for Mac and iPhone users, who for the first time will have versions of the newest edition of The Sims available to them on the first day of sale for the hotly anticipated title: The Sims 3 will launch on June 3, and the "Let There Be Sims" ad campaign should start flooding your consciousness in the next few days.
The company posted a GAAP net loss of $42 million, working out to 13 cents a share, for the quarter ending in March. That compares favorably to the $94 million loss (30 cents/share) a year ago, and was less than expected by Wall Street. Non-GAAP net losses for the quarter were $120 million, compared to income of $30 million million last year, working out to 37 cents per share.
The difference between GAAP and non-GAAP numbers will be quite the gap starting in the fiscal year that's just begun, thanks to some long-term rethinking about how online titles fit into the bigger EA picture. The company announced today that it's deferring revenue on a GAAP-online basis for all online-enabled games. That will shift about $500 million in revenues out of fiscal year 2010 and into FY 2011 for GAAP accounting purposes.
It's accounting, sure, but there's a message here for tech folk too: Online is a bigger deal than ever for gaming. This is the year, say EA executives, in which the company's multi-year efforts to build both content and distribution for digital-direct services ($150 million in FY 2009 alone) start to really bear fruit. CFO Eric Brown said on the call that EA's digital business made over $110 million last quarter, up 16% year-over-year, and CEO John Riccitiello said that revenue for full-game downloads and micro-transactions was up twice over from 2008 and will roughly double in the new FY '10, during which two new online subscription services will be introduced.
EA's big games during the last quarter were Skate 2 and Lord of the Rings Conquest, both of which sold over a million copies, and SimAnimals and MySims Party, which each sold over 500,000. EA had three titles that sold over 5 million copies in 2009 (FIFA '09, Madden NFL '09, and Need for Speed Undercover).
The market greeted the news with, essentially, a shrug, sending stocks down about $0.70 in after-hours trading.
I remember the day when EA used to make decent games worth buying. Their problem is they don't take the time required to engineer a decent game. I agree that any of their past victories in the game market over 3 years have been because of someone elses idea and EA comes along and swallows up whole the company that created it. Their problems isnt that they dont have the manpower its the people in charge don't have a clue on what makes a game tick.
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|EA loses money because a good chunk of what they release is sh*t (to hardcore PC gamers, at least). Their successes seem to always be franchises they bought out, going back to Westwood.
I'm at a loss on how the hell The Sims warranted a third installment. I mean, it has its following... did they ever clear up the whole "peeing your pants because someone walked into the bathroom takes 4 hours" thing?
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|And you know, Zagadka, an analyst raised more or less your point re franchises on the call -- EA has a disturbing percentage of big franchises where they don't really own the intellectual property (eg., Harry Potter). The execs on the call disagreed with the statement to some extent and said that in some cases they've licensed individual characters but still own the IP. Still, give me a creativity-driven Take-Two any old day. (Better yet, roll back the clock and give me another Grim Fandango. I'll wait, dammit.)
But the Sims -- oh no. Those numbers are astounding. The Sims 2 sold 3 million copies or more in each of its first four years of availability, and heaven only knows how many expansion packs. It's not the hardcore gamers that buy it, for the most part, but the more casual / nontraditional sort -- a group every games company wants to own simply 'cause it's huge. So, yeah, there was definitely going to be a third version. The early snippets and screen grabs and whatnot look pretty nice, and I'm curious to see if the claims of unprecedentedly open-ended play are for real.
(As for the camel-bladder thing -- oof, had forgotten that! I sort of resigned my Sims career when my evil clone beat me up, threw me of of my own house, and had me arrested for trespassing. I don't like to talk about that day.)
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|Sad to see EA losing money, but awesome to see these figures on the microtransaction front. For those of us that have been preaching the world of microtransactions for years, it's a reward who's time has come.
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