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EA struggles to keep up with declining console game sales
EA struggles to keep up with declining console game sales
January 30, 2013 | By Frank Cifaldi

January 30, 2013 | By Frank Cifaldi
More: Console/PC, Smartphone/Tablet, Business/Marketing

A sharp spike in EA's digital sales was not enough to offset retail game decline during its last crucial December quarter.

Packaged games generated $568 million during the quarter ending December 31, a 23 percent drop from the $738 million they brought in during the same period in 2011.

CEO John Riccitiello says the decline was due to consumer spending reflecting the console generation change, as Sony and Microsoft prepare to unveil their new systems.

While EA's hits continue to do well for the company, "the losers are getting hit hard," CEO John Riccitiello said.

Packaged game sales across the board were lower than the company anticipated, but shooter sequel Medal of Honor Warfighter was blamed specifically in a conference call with EA's investors. The franchise is now essentially dead, and is no longer a part of EA's stable of IPs going forward.

"Metal of Honor didn't deliver, and we underestimated the overall softness of the console goods sector," said Riccitiello.

The hit was so bad, EA's recently-hired CFO Blake Jorgensen said, that the company went into a sort of emergency mode to turn things around, reducing headcount and spending on external expenses such as marketing while focusing on generating revenue for its proven hits (FIFA, Battlefield 3, Need for Speed Most Wanted).

Despite this, and despite a 17 percent growth in the digital sector, the result was a quarter that missed company guidance and analyst estimates. Adjusted revenue clocked in at $1.18 billion, versus analyst projections of around $1.29 billion. Losses were reported at $45 million.

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Johnathon Swift
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Just fire Ricitielo already. "Oh shit, we're doing awful, uhmmm, stop spending money on marketing? And... hope to god our continuous pumping of sequels doesn't go the way of Call of Duty, Guitar Hero, Tony Hawk, and every other non Nintendo franchise out there. Yeah!"

Is there some sort of Vegas betting thing I can get in on for when he gets fired, or do I just have to buy stock at the right time?

Yannick Boucher
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Why bet on it in Vegas when you can bet on the exact same thing on Wall Street? :)

Andrew Chen
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Because The Street can stay illogical longer than many can stay solvent ;)

Ramin Shokrizade
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I believe what you are looking for is called a "short sell" :)

Joshua Griffiths
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Handheld and indie gaming are on the rise. Meanwhile AAA console game sales are declining. What are indie games and handheld Iphone games known for? Fun, fast, simple, and above all innovative games.

Publishers like Activision and EA just keep pumping out the same first person shooters changing almost nothing, throwing their hands in the air unable to figure out why sales are declining. When Call of Duty, Madden, and Halo top the sales chart literally every year you know there's a big problem.

Kevin Alexander
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That's cause no one is buying anything else on consoles right now. If you want innovative, unique, simple fun, and anything with potentially different/offbeat mechanics, at low risk everybody knows to look at the Indy scene for it.

No one is buying a 60 dollar console game and hoping theirs a gem tucked away inside anymore. They just want their big IP games, and thats it at that price point. Its too risky otherwise.

..just like, my opinion man.

Merc Hoffner
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EA have made the strongest moves in the whole giant publisher sector to try to get in on mobile and social. It hasn't helped them much. And it's no use suggesting where they should be headed when their revenue dwarfs all mobile combined on roughly 1/10th the number of people working in the sector, even with Popcap and Playfish weighing the ratio down.

Why are sales dying? Maybe because the 360 came out, you know, over seven years ago. And their games have been offensive or crap or both.

NB, It would be a matter of opinion, but I'd argue about innovation. Appropriately, (and hilariously) EA are currently filing a landmark suit against Zenga for their systematic human-mangling rip-off SOP.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

John Flush
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When I see the EA logo on it I don't even bother to look into what it is. They make "M" games, kid games, and sport games. None of those really appeal to me because I'm looking for a game for mature audiences that I can play in front of my kids. Besides the occasional sports game I only need to buy once every 4 years (because they never change it) what do they have that fits into my family while still entertaining me?

and don't get me started on the push to force everything to online and connect to their servers, project $15 and the desire to never sell a complete game near release, and the absence of collectors editions for those that waited for the whole package. Fine I won't buy their games. Doesn't hurt me, there are a bazzilion indies and small studios making stuff I actually want to play (though the press won't give them any buzz).

Bob Johnson
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EA hasn't made money in eons. Amazing considering they have a handful or two of very popular franchises

Samuel Batista
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"Adjusted revenue clocked in at $1.18 billion"

That's some serious money man :P

Michael Joseph
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Bob Johnson said "hasn't MADE money..." despite all the revenue they still incurred a LOSS.

For the three months ended December 31, the company posted net revenue of $922 million, compared with $1.06 billion a year ago. It reported a NET LOSS of $45 million, or 15 cents per share, compared with $205 million, or 62 cents per share a year ago.

Adjusted revenue fell 28.5 percent to $1.18 billion from a year ago, short of analyst estimates of $1.29 billion, according to Thomson-Reuters I/B/E/S. Adjusted earnings per share of 57 cents was slightly above Wall Street's expectation of 56 cents per share.

Shares of Electronic Arts were down 1.8 percent at $14.80 in after-hours trading, after closing at $15.08 on Wednesday.

It's like... Notch makes more money than Electronic Arts.

Andrew Chen
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Heck, I guess you could say i made more money than EA this quarter.
(Full Disclosure: I released nothing this quarter)

steve roger
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Face it EA the game was a disappointment. I have it and it just ain't worth a buy at full price during the winter quarter. It came off as dull, rushed and pretty much a wasted effort. Stop blaming console sales for your crappy development decisions.

Eric Geer
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I tried playing the demo of MoH Warfighter a couple of weeks ago and was just disappointed. The thing that really got me was the lack of fun there was to be had with it. They went for ultrarealistic--and IMHO ultrarealistic is rarely fun.

When I got 20 min into the game--I was just floored with all the bad design and story decisions--it was just bad. Don't blame losses on the market, when the blame should be on a shitty game.

Matt Cratty
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So let me get this straight.

You released a rotten game, and you blame the franchise and drop it?

I just picture their board room as a bunch of old men in badly tailored suits asking each other "do you know what to do?"

Ramin Shokrizade
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EA has done almost exactly the opposite of what I've recommended for the industry in my last 30+ articles. The results are predictable (and were, in fact, predicted). I find it a bit disappointing when management blames the market for their performance when they can't be bothered to study up on what is going on in that market.

On a side note, I don't know how many at EA are old enough to remember this, but before there was MoM (Masters of Magic) there was a game called MOM (Mail Order Monsters). It was one of the first great EA titles imo. A multiplayer remake of something like that could do very well in the spaces EA is trying to expand into now. If they really want to beat some old franchises, I think they could do better to apply modern technology to some really great classics that would appeal to relatively new gamers. These new gamers make up most of the market right now.

Bob Johnson
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Back in early 2006 EA had ~$3 billion in cash and equivalents and zero debt.

Now they have ~$1.4 billion in cash and debt of $550 million.

This was a lost generation for EA. They essentially lost $2 billion dollars. And who knows how many shares of stock they issued as compensation instead of cash bonuses. I didn't count.

Erin OConnor
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If only there was a way for EA to reach more customers.

Thats right.

Just a thought here (and I know thinking is a stretch for you EA executives) but maybe removing your EA catalog from Steam was a BAD idea.