Thursday, October 19, 2006

EA and Sony: the Perfect Merger

Both of these companies seem hell-bent on destroying themselves: Sony, with incredibly bad strategy and tactics, and EA, with poor quality and absolutely terrible consumer relations.

So I saw both of these pieces of information today and thought they belonged together.

The first piece was an e-mail I received today from Gamefly, telling me I could keep NBA Live '07 (the 360 version) for $26.19. This is a game that's what--three weeks old--and Gamefly wants to sell it to me for less than HALF the original price?

Gamefly sends out e-mails occasionally with deals like this, but I've never seen that kind of deep discount on a game that just came out. That can only mean that they have zero demand for the title and they're trying to get rid of their inventory as quickly as possible.

And zero demand is not surprising, given that all of the versions of the game received average ratings in the 60's at The 360 version is chugging along at 63%, and without an inexplicable 91% review from PGNxMedia, the average would be even worse.

Again, as I mentioned when I originally wrote up impressions, this game was so poorly made in terms of quality that it's almost funny. Unless you bought it, that is.

Add the BF2142 issue, which is quickly degenerating into a public relations disaster for EA, and you've got a mess. There is no PR spin on Earth that can make telling customers to uninstall an operating system security update to play a game anything but a huge embarrassment.

[NOTE: a DQ reader sent me a link to a Microsoft hot fix that indicates the Security Update in question could crash programs that limited the size of the application stack below a certain value. For more information, see this post]

Second, Geoff Engelstein sent me a link to an earnings pre-announcement by Sony. Here's an excerpt from the full story:
In a statement today, Sony said losses from its PS3 operation will be higher than expected, partly due to the price-cut in Japan, and partly due to shortages and the European delay. The firm has also cut forecasts for PSP shipments by 3 million to 9 million.

Net income for the year ending March 31, 2007 will drop 35 percent from last year to 80 billion yen ($675 million). That’s a 50 billion yen drop from July’s forecast, since which the firm was hit by laptop recalls due to faulty batteries and various PS3 problems. Sony reported a second-quarter operating loss of 21 billion yen, compared with a 66 billion profit a year ago.

To me, the big news in that announcement is not the reduction in profits due to the PS3--that was already obvious--but the gigantic reduction in forecast for PSP shipments. A twenty-five percent reduction? Has demand dropped that significantly?

And just remember, those estimates are with the PS3 still costing $499 and $599 in the U.S. They'll sell out at launch, because they're shipping so few units, but the PS3 is going to be a boat anchor at $499/$599 compared to the 360 and the Wii.

Sony already realized they were committing pricing suicide in Japan, but somehow they're still managing to delude themselves about the U.S. market.

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