This Can't Taste Like Chicken
That's a chart of the stock price of Electronic Arts over the last twelve months. Today, the stock closed at $17.00.I know, I said this was going to happen, but my timeframe was so far off that no credit is earned.
If you're wondering why the plunge in the last day, there's this (thanks Gamasutra):
Electronic Arts says holiday sales across North America and Europe have not met expectations, and thus neither will its 2009 financial results.
To compensate, EA says it'll cut titles from its slate for next year, reduce headcount and consolidate facilities, although it didn't further specify those cost reduction plans.
Certainly, they're in some trouble right now. And for a company that size (having worked in one, I know), it's incredibly difficult when things start to go bad. In a company of several hundred people, everyone has a personal relationship with the company. The owner, who probably knows your name, can come to you and make a personal appeal to work harder or be loyal or whatever. It's a big family.
In a huge company like EA, that's not really possible. It's business, and after the first round of layoffs, the number of people actively shopping their resumes exponentially increases. Productivity, invevitably, goes down. Innovation usually goes down, too, because it's risky, and risk is a stretch goal for most companies.
Plus, and this is a big deal, whenever the stock goes down 75% in a year, employee stock options become worthless. Almost every stock option EA has granted since 2001 is probably underwater right now (deep water, too), and that's also a motivation killer.
What is EA trying to do, exactly? Who do they want to be when they grow up? I think their product mix, at this point, is hopelessly confused. I don't think they really have an identity right now except as the Borg of gaming companies. Ironically, this is all happening during a year when they've actually introduced several new franchises (Dead Space, Mirror's Edge, and reviving Head Coach) that have significant potential. In terms of an identity, though, the company is so big that it's just a company now.
EA does have some tremendously strong franchises, but I think their expectations for those franchises are usually unreasonable. They don't seem to be looking for solid, popular franchises--they want the next Sims in terms of popularity and dominance. More to the point, they desperately need something that big to drive growth.
Good luck with that.
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