The EA Maths: $1bn Loss, PC Ascendent

By Jim Rossignol on May 6th, 2009 at 8:57 am.


The UK’s gaming newsdesk, VG247, has a comprehensive round-up of EA’s recent financials, including that $1.08 billion loss for past financial year. There’s a whole bunch of other information in there, going a long way into clarifying EA’s business practices over the past twelve months. Most relevantly to our deskbox platform, the majority of EA releases last year were on PC. More interesting still was the admission by EA CFO Eric Brown that digital downloads on PC would become the dominant force in gaming. “The PC is becoming the largest gaming platform in the world,” said Brown. “Just not in a packaged-good product.”

Also revealed in the figures was that Spore sold 2 million copies, and that Warhammer Online had 300,000 subs at the end of March.

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46 Comments »

  1. cliffski says:

    So Positech Games is more profitable than EA? Plus I’ve been doing digital distribution longer than them.
    They should totally hire me as CEO :D

  2. jon_hill987 says:

    Well, they could make a lot of money in a short space of time by releasing their games DRM free on Steam in the UK.

  3. bansama says:

    Well, they could make a lot of money in a short space of time by releasing their games DRM free on Steam in the UK.

    I’ll echo that and also suggest they do the same for Japan, while also making all language versions avaliable regardless of your geographical region. There really is no reason for them to restrict these options when they can easily use a service such as Steam to provide everything world wide.

  4. Stromko says:

    Clearly the answer is to keep crapping out yearly iterations of licensed sports games that nobody cares about. Who even plays those things? Now, soccer-management sims, THOSE are the shit.

    I’m not sure if I’m being sarcastic or not.

    I suspect the Sims 3 is going to continue their tactic of shipping a highly regarded, over-hyped tech demo that’s bereft of content, demanding multiple 20-30$ expansion packs that combine Voltron-style into something somehow less than the sum of its parts.

    Or maybe the next Spore expansion won’t suck too badly and I’ll have a change of heart about EA just in time to see the company go into bankruptcy and shut down all its studios. They’ve shut down or ruined most of the studios that I loved, it’d be perfectly cruel if they made me love their company and then shut themselves down.

  5. Risingson says:

    So PC gaming is not dead now in the mass media? Wasn’t PC gaming all that expensive and troublesome?

  6. Subject 706 says:

    Regional restrictions on game releases (especially digital ones) has to be one of the dumbest things to come out of publisher boardrooms ever. Can the almighty RPS answer us WHY they do it?

  7. nakke says:

    Cliffski: you lost only half a billion, eh?

  8. Stromko says:

    As far as I’m aware, regional restrictions have mainly been an attempt to restrict piracy. The same thing is done with music and film discs. It could also be a matter of publishers / distributors varying from territory to territory, and each company wanting the exclusive rights in the territories they paid for.

    I’m not defending the system, that’s just my take on why it’s like that. I’ve heard a few stories about local distributors screwing up the product with terrible support, disfunctional servers or broken DRM. It’s just par for the course for corporate strategy though, they love to spread the risk around. If they think a game might sell like a turd in Kurdistan (or the UK or Japan or whatever), they’ll either not release it there or find a separate company that will do it for them.

  9. Ian says:

    My coppers tin is more profitable than EA. Hooyah!

  10. Sinnerman says:

    EA are the new plucky underdogs. Does this mean that I have to pretend to like their terrible terrible games?

  11. subedii says:

    @jon_hill987: Steam is DRM.It’s just a bit more convenient and transparent than the utterly loopy stuff that EA have been trying to push (pay full price again if you download after a year? Really?). Although recent events suggest that they may be acknownledging that their previous methods haven’t been working.

    @Stromko: Regional restrictions are absolutely nothing to do with piracy, they’re partly to do with varying distribution as you said, but mainly an attempt to charge more depending on area. Basically you charge what the market will bear, and in a world where goods can currently be easily shipped internationally for a modest cost, they need to ensure that people don’t ship from one market to the other. Think about it, even completely digital products that are exactly the same are priced differently depending on region. That’s not a distribution issue, it’s an attempt to make more depending on where you sell.

    Using regional restrictions actually tends to increase piracy, at least when coupled with non-simultaneous release dates. When product releases are simultaneous piracy tends to decrease.

  12. Ginger Yellow says:

    “As far as I’m aware, regional restrictions have mainly been an attempt to restrict piracy. The same thing is done with music and film discs. “”

    It makes infinitely more sense for films though, because prints are expensive and limited in number so they like to stagger international releases. If you had US DVDs being released before the Chinese theatrical screening, say, then obviously the box office will suffer. The argument doesn’t make sense for games when they are released simultaneously in many markets (acknowledging that many, especially Japanese games are not simultaneously released), yet barred from others. And even worse when, like many US baseball games, they aren’t released in the UK at all, yet we’re not allowed to import or download them. That’s just throwing money away and encouraging piracy/chipping.

  13. Jim says:

    They’ve shut down or ruined most of the studios that I loved, it’d be perfectly cruel if they made me love their company and then shut themselves down.

    So true, I miss you Westwood. If EA dies, will the ex-employees break off and make their own little studios? Free to make good games without EA breathing down their neck forcing terrible console ports and releasing unfinished games.

    I think then we’d see some really decent games emerging.

  14. Deadjim says:

    More interesting still was the admission by EA CFO Eric Brown that digital downloads on PC would become the dominant force in gaming. “The PC is becoming the largest gaming platform in the world,” said Brown. “Just not in a packaged-good product.”

    Cliffy B suck my balls

  15. subedii says:

    Whilst Digital Distribution is the likely route for the industry, I’m not sure that necessarily means the PC becomes dominant.

    It’s almost guaranteed that the next generation of consoles are going to be heavily based around DD as well. Yes, even the Nintendo ones.

  16. jalf says:

    So true, I miss you Westwood. If EA dies, will the ex-employees break off and make their own little studios? Free to make good games without EA breathing down their neck forcing terrible console ports and releasing unfinished games.

    Most of them will most certainly stay in the games industry, yes. But they’ll also lose their source of funding.

    By the way, I can’t help feeling a bit sorry for EA. Until before last year, thye churned out a load of crap I generally wasn’t interested in. Endless Sims expansions and annual sports games. Result: I bought very few of their games.

    Then in the last year or two, they did two noteworthy things: Release a ton of games that actually seemed interesting (Mirror’s Edge, Mass Effect, Spore, for example, or Red Alert 3 perhaps) – and crippled it with DRM. Result: I bought very few of their games.

    And this year: They’re getting rid of the DRM, but seem to have run out of interesting games. I’m not really that interested in Dragon Age. I’m looking forward to Mass Effect 2, but apart from that? I don’t really see many upcoming games that appeal to me.
    Result: I’m likely to buy very few of their games.

    Gotta suck, no matter which strategy they try, there’s always *something* preventing me from buying their games… And now that they finally treat *both* their employees and their customers reasonably, I actually *want* to support them a bit.

  17. jon_hill987 says:

    @subedii: I know Steam is DRM, what I meant was no, third party DRM as well as Steam, and definitely no limited activations. Sadly you can’t edit posts…

  18. cliffski says:

    nobody is commenting on spores sales? I think thats quite good considering that the game seemed a horrible fudge that didn’t know what it wanted to be (casual / sim).
    Does this mean there will be a spore 2?

  19. clovus says:

    Risingson:

    Wasn’t PC gaming all that expensive and troublesome?

    Ya, I know. I had to drop like $2K to build a machine just so I could play the latest games like Plants vs Zombies and Braid. Seriously though, when I hear PC I think desktop, but I bet there is a ton of money flowing from laptops now.

    @Cliffski: We, the Spore buyers, had great faith in Will Wright and we bought Spore after checking that the major reviews were not terrible. That was, BY FAR, the worst $50 I ever spent. I would have been ok spending maybe $20.

    It will be interesting to see how well the expansion packs do, since people won’t be buying those so blindly.

  20. mandrill says:

    in terms of installed hardware, the PC is the bigget games market on the planet and has been for ages. EA has only just figured this out?

  21. jalf says:

    @cliffski: I don’t know, the spore sales aren’t that surprising to me. I personally bought it simply because it was different. Not because I was expecting an amazing game, but because it was a bit once-in-a-lifetime. You don’t see projects like Spore every year, so I bought it solely for that. I’d imagine a lot of PC gamers bought it for similar reasons. It’s Will Wright, it’s been hyped to hell for the last 5 years, and it does have some interesting features regardless of the quality of the actual *game* parts. That makes it noteworthy enough to warrant a buy.

    (add to this that a lot of the Sims crowd probably bought it, and a lot of kids, because the creatures looked all fluffy and cute and kiddy. )

    But by the same token, I have zero interest in the expansions. Spore is represented in my game collection now. I don’t care about extra tentacles or new beaks for my creatures. So I don’t expect the expansions to sell as well. Spore probably won’t become the long-lived phenomenon that the Sims is.

  22. autogunner says:

    spore was just too alien for the intended market to get big sales…

  23. kadayi says:

    I love it when people anthropomorphise entire companies in threads.

    Seriously though, I hope the poor sales don’t impact upon more innovative game development projects, and hopefully EA will dump their lousy digital store and either side with Steam, or at least adopt a similar approach in future.

    Personally looking forward to Sims 3 myself (fuck the haters)

  24. Gap Gen says:

    What’s considered a good sales figure for a game with a lot of marketing like Spore?

  25. Bhazor says:

    I’d feel more sorry for EA if it wasn’t for their terrible attempts at new IPs. I mean Army of Two and Dead Space thats the best worlds they can come up with? Dead Space was a good game but I’m damned if I can remember anything about story, characters or setting. At a push I could maybe say it’s about a space ship with cancer and something about a woman.

    Also it would be interesting to see how much they spent on worthless bits like getting licenses for every single sports team or their scatter shot advertising. My guess is they’ll be the first to go, but given their track record they’ll probably just sack everyone not making fifa 2010 and then pay to write its name on the frickin’ moon with a picture of Wayne Rooney giving it a thumbs up.

  26. Tei says:

    S****POILERS

    Dead Space is about a necromorph alien, something like a hivemind colonys that use use the dead carcas of other lifeforms to build a army of drones to protect the “queen”.
    The monolith thingie was something like a inhibitor created by superior behing aliens to “control” that hivemind, so killing it (or she) whas unnedded. The humans wanted to steal these monolith and use his powers for religious stuff..
    The planetcracker is a space machine with a system to break a tiny part of a planet and move it to space for mining, so entering the gravity pool of the planet is not needed. And for some reason, the ship whas full of terminals to “savegame” your life every two rooms.

    S****POILERS

  27. sinister agent says:

    EA’s recent financials, including that $1.08 billion loss for past financial year.

    Hooray! Die now please EA.

    Seriously, 2 million sales doesn’t sound half bad. If they were counting their chickens before they hatched, well, more fool them.

  28. Misnomer says:

    Everyone has taken losses in the recession guys and if you go to business and not just gaming sites you will find out that this is actually a good press release for EA. From gameindustry.biz.

    “reporting a diminished quarterly revenue, dramatically reduced quarterly loss, and a yearly revenue increase of 15 per cent. ”

    “Revenue for the entire fiscal year 2009 was reported at USD 4.2 billion, up 15 per cent from the 3.7 billion reported in the previous year. ”

    “Additionally, EA’s digital services revenue – which includes direct to consumer downloads and subscription-based services – was reported at USD 429 million, up 27 per cent. ”

    ” the fiscal year, 31 titles sold over one million copies, compared to 27 in the previous year”

    Though the revenue drop over the year was huge, they made investments in 2008 that did not pay off. Remember, the Harry Potter game had to be delayed to this year. They still made quite a bit of money.

    Plus, as much as we hate EA for ruining MOH and possibly Battlefield (I still contend BF 2142 was a good game, but not fully developed for what it needed to be). We should realize that EA has turned more corners than you would think.

    No DRM will be on Dragon Age, the Bioware RPG coming out. They have already expanded the Battlefield series into the Battlefield Heroes, 1943, and BF:BC2. Possibly stretching the community into different groups with games targeted to different players.

    They have embraced Steam for releases and don’t have nearly as many games trapped in the GFWL death spiral. They have realized the importance of the Wii to gaming and have tried to readjust their sports titles to make better use of that tech.

    Yes EA is still a big evil company, but to me they are no longer the makers of the worst supported games on the planet. That belongs to Ubisoft. The company that milks players like they are the only cow left in the yard, well it is up to you if you want to say Activision or Blizzard on that….but they are part of the same evil company now.

    EA hate used to be trendy. Get over it.

  29. Tei says:

    EA is too big to my tastes. Feel like another mergacorporation that only care about the next quarter results, fiscal years, *and that all crap*. I like more the small people that is here to make games, not to sell participations and benefict from bonuses.

    To sumarize: EA can eat my first born, but I will buy his next game, If his any good and don’t have DRM.

  30. DK says:

    “So true, I miss you Westwood. If EA dies, will the ex-employees break off and make their own little studios? Free to make good games without EA breathing down their neck forcing terrible console ports and releasing unfinished games.

    I think then we’d see some really decent games emerging.”
    Not going to happen – every single ex-Westwood offshoot developer has produced outdated crap, including those not published by EA. They are all stuck in the 20th century, thinking that CnC was the be-all-end-all of RTS design.

  31. EBass says:

    Westwood, Origin, Bullfrog. The list is endless.

    Still I’ll probably hit on Mass Effect and Dragon Age, Bioware are still masters of the RPG, although their games have become a litttttle formulaic.

  32. Geoff says:

    I’m surprised nobody else has spoken up on this – region restriction stuff is about much more than just piracy.

    In the olden days (you know, 15 years ago or so) companies knew which countries they were doing business in. If you were an English company, and you wanted to sell your widgets in America and Japan, you had a lot of work to do first. Your legal teams had to comb over all the laws involved with importing and exporting and usually you’d pick a distributor. You’d then grant the Japanese distributor the rights to distribute in Japan only. If they wanted to start selling and shipping your products from Japan to Thailand, well, that’s more legal agreements and details to be worked out, and you have to make sure Japan and Thailand’s laws are both okay with it.

    Now these days, it still works that way for physical goods, but us Internety folks like to think we’re above that or beyond that. We’re not, actually. There’s still laws in all these different countries that cover product imports and exports, the various taxes and restrictions involved. The story about how Fallout had to change “Morphine” to “Med-X” because of Australian laws is just one example; the bottom line is that whenever a company wants to sell a product in an additional country, it has to do additional work to validate and comply with the local policies.

    Also, if they’ve produced something of value, and are selling the rights to distribute it, they want the option to sell those rights to different companies in different countries. So in theory I could let Steam do it in the US, GOG do it in the UK, and some other Japanese-only distribution site do it in Japan.

    I’m not saying it doesn’t suck, or that improvements can’t be made, but it’s certainly a larger issue than “don’t let those UK guys download the game, they’re piratez!!!”

  33. Dreamhacker says:

    I think everyone is neglecting this one little fact:

    If EA dies, Acti-Blizzard will become UNBEARABLE!

  34. Ronald Reagan says:

    @Dreamhacker

    Uh oh, Dreamhacker don’t you know? Blizzard is the sacred cow of the PC gaming cult. How dare you say anything negative about them.

  35. frymaster says:

    @geoff: yeah, it’s almost definately some kind of uk-online-exclusivity deal getting in the way here :(

    edit: also, woot! when did editing come back? :D

  36. jalf says:

    @frymaster: The moment you signed into the RPS forum. ;)
    Editing has been here for a long time, it’s just only enabled if you’re logged into the forum. A bit awkward and surprising, but hey, it works. :)

  37. Dozer says:

    eh, I’m not registered on the forum (didn’t know there was one), but I can edit – I think it’s because I registered with that global blog avatar site.

    edit: isn’t it wonderful?

  38. Rich_P says:

    So Age of Conan brings in about $63 million/year (350,000*15*12) from subscriptions alone. No wonder why companies are all over the MMO bandwagon.

    Spore’s development costs were supposedly so high that even 2 million sales is not enough for EA to break even, but that’s according to one analyst.

  39. heartless_ says:

    Rich_P, Age of Conan probably cost 100 million to make I’d guess. Now, lets figure out how much 350,000 users costs to support every month and it won’t take long to realize how big AAA MMOGs need to be in order to make it through the monthly bills and chip away at the debt pile.

    Oh, and I doubt 350k are still playing AoC at this point. More like 100,000.

  40. jalf says:

    @heartless_: 100 million? Where do you get that figure? That seems far above what I’d expect. (Assuming we’re talking about dollars)

    As for how big MMO’s have to be to survive, keep in mind that Eve has survived (and been profitable) with a far smaller userbase (they’ve grown from what, 50 to 200k over the last couple of years? And throughout, they’ve been making enough money to keep CCP running)

    Support costs aren’t *that* big (at least if you have a functioning game. Obviously the more issues customers run into, and the more complaints they have, the more your support is going to cost ;))

    I see no reason why AoC shouldn’t be able to cover its development costs, even if it is down to 100k players.

  41. Ginger Yellow says:

    I’m sure our gracious hosts will have a better handle on the figures, but last I heard, $30m or so was about the budget for a big triple-A game like COD 4. Now an MMO is going to have higher post-release costs for obvious reasons, and presumably higher QA and certain other production costs, but it will also have lower art asset/engine costs, for example. So I’d be absolutely astonished if the budget, traditionally defined, was anything above $50m. And I suspect it was considerably lower than that, although they may have spent that much now.

  42. Gorgeras says:

    Sega have started seeing sense in the recession. The price of Empire: TW on Steam has now been reduced to £30, the same as my local GAME but far from the cheapest.

    I’d buy it for that if I didn’t keep hearing about the bugs, so I’ll wait for more patching. Still have so much left to do in Medieval 2, haven’t seen the New World, haven’t completed it on long campaign, haven’t completed it with any Muslim faction or southern-European; just short campaigns as England, Scotland and Russia(in medieval Russia, spear militia queue up YOU).

  43. catska says:

    It looks like EA’s renewed interest in the PC comes along with their newfound knowledge that the asia-mmo-micropayment-model is the only viable tactic to making money in PC Gaming: http://www.vg247.com/2009/04/30/ea-sports-to-abandon-physical-media-in-pc-space-says-moore/

    ‘The exec added that announcements regarding EA Sports future policies on PC gaming would be made in the “next few months,” but outlined that his PC games going forward would likely follow a micro-payment model.

    “You’re going to see us take a lot of our learnings from what we’re doing with our games in Asia, where I’ll give you the game for free, or a certain level for free,” he said.’

    They’ve already announced the Sims 3 will be microtransaction based. Piracy and the constant fall of sales (retail and digital) for full products has turned the PC space worldwide into what has been going on in Asia for years.

  44. LukasPukas says:

    Sims 3 to the revenue rescue then. If EA created their own version of Steam, I’d probably use it.

  45. The_B says:

    If EA created their own version of Steam, I’d probably use it.

    They already have. Not many people do, who know better.

  46. Subject 706 says:

    Don’t you ever get tired of trolling, troll?