Wednesday, May 12, 2010

Electronics Arts: The WTFening

Electronic Arts announced its fiscal year 2010 earnings yesterday. Let's take a look:
GAAP net revenue for the fiscal year ended March 31, 2010 was $3.654 billion as compared with $4.212 billion for the prior year...GAAP net loss for the year was $677 million as compared with a net loss of $1.088 billion for the prior year.

In other words, revenue down 13.2% for the fiscal year, but losses cut by 37.7%.

2008? $3.66 billion in revenue with losses of $454 million.

2007? $3.09 billion in revenue with profits of $76 million.

One more. In 2006, $2.95 billion in revenue with profits of $236 million.

Oh, what the hell--in 2005, $3.12 billion in revenue with profits of $504 million.

In 2004, $2.95 billion in revenue with profits of $577 million.

Here's a handy chart (amounts in billions):

In the last three years, EA has lost over $2 billion. If that graph were a short story, it would be Stephen King's "Survivor Type".

EA did make $30 million in the last quarter, but their projections for fiscal year 2011 seem relatively dismal: beween $3.35-$3.60 billion in revenue, with losses of $279-$378 million.

So after cutting staff by 26% in the last year, and cutting the number of titles 50% over a two-year period (see previous post here), they're still projecting a loss in the $300 million plus range?

I don't know what's going to happen to Electronic Arts, but more to the point, anyone who says they do know is lying. There are too many variables, and too many different ways this could play out.

Here's something that probably isn't an unknown variable, though. My #1 suspicion for the upcoming fiscal year? More employee cuts, and not just a few.

In the conference call, John Riccitiello had this gem:
...CEO John Riccitiello stressed the company's objective to publish the number one shooter.

"We're not going to be happy until we've taken the leadership back in the first person shooter category," said Riccitiello.

This is known as the Their Game Sold A Shitload Of Copies, So Let's Make The Same Game But Better strategy.

This strategy is frequently unsuccessful.

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