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Next-gen demand can't replace current-gen shortfall for EA
Next-gen demand can't replace current-gen shortfall for EA
January 28, 2014 | By Christian Nutt




Today EA announced its third quarter 2013 financial results, which ended December 31 and thus includes the launches of the PlayStation 4 and Xbox One. So how'd that go?

The good news for EA is that it carved out a huge percentage of the software market share for those devices. EA says it was the number one next-gen publisher in the Western market, capturing 35 percent of software sales for PlayStation 4 and Xbox One. The bad news, however, is that sales of next-gen titles can't make up for the drop-off in demand for current-gen titles.

Year-on-year, the company's Q3 revenues for Xbox 360 and PlayStation 3 games dropped from $566 million to $425 million -- 25 percent -- yet next-gen games generated only $24 million for the company. Revenue for PC games was slightly up (13 percent) and overall console game revenues were down 22 percent overall, year-on-year.

This jibes with data out of GameStop, which said that sales of new software took a hit during the same period, as sales of next-gen titles were unable to offset the downward trend in current-gen game sales.

Mobile revenues went up 13 percent, however; The Simpsons Tapped Out has generated over $130 million in revenue since its launch, the company revealed. That didn't make for a big change in its handheld/mobile numbers, which were largely flat when decreases in handheld console games are taken into account.

The silver lining: Overall digital revenues were up 27 percent year-over-year, to $517 million.

For the quarter, the company saw a net loss of $308 million. This bad news is offset, it says, by increased operating efficiencies leading to better profit potential, and its digital and next-gen initiatives. All the same, the company is lowering its full-year revenue guidance to $3.91 billion thanks to that weakness in demand for current-generation software.

Shares in EA took a slight tumble in aftermarket trading but quickly rebounded to $24.25 -- still a 2.49 percent drop -- at time of posting.


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Comments


Merc Hoffner
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Wishing you had some 3DS revenue?

Jonathan Murphy
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Takes a deep breath... Ouya, Nvidia Shield, PS Vita, 3DS, 2DS, Wii, Wii U, PS3, PS4, 360, Xbone and coming soon 12 different Steam Boxes. There's your problem! Do something about that!

Kujel s
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Then cut the vita, ps3, ps4, and those 12 differnet steamboxes and the problem is solved.

Jonathan Murphy
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I like your thinking! I'm promoting you to CEO of EA. Screw the new guy.

Matthew Mouras
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"The silver lining: Overall digital revenues were up 27 percent year-over-year, to $517 million."

That sounds like a pretty large silver lining.

Kujel s
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The end of AAA scale games is coming whether anyone likes it or not. This unending push for more graphics is coming to a head and this will be the last generation of macro-consoles.

John Flush
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AAA will always exist. There will just happen to be one of each genre left that becomes the definitive game. It happened with sports games (mostly due to licensing), but the same will happen in shooters (Arcade'y shooter (CoD), Sci Fi shooter, realistic shooter) all the others will be done. It has happened with racing games - One defacto simulation (per hardware), a burnout like game, and the rest can't hit budget.

AAA will exist - there just won't be much in it anymore. And no one will really care until they finish stagnating.

Merc Hoffner
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That may very well happen, but what happens when those handful of genre stalwarts are no longer able to sustain their parent publishers? The logical answer is they'll shrink to fit, but the illogical answer is they'll die between the iterations - look at take two - they're pretty close now. What happens when the handful of monster titles no longer push the net business to sustain the platforms? People have been vocal about the death of consoles at least as long as the iPhone exploded. But some of us have been independently projecting the death of regular consoles circa 8th-9th gen since the 5th for the reasons Kujel was describing - when more power doesn't deliver new kinds of games, and imagery has approached photo-reality, and asset generation costs have outpaced revenues past equilibrium, there would be a collapse in the urge and business case to keep making and buying new machines and iterated games. There could be a third way, but it's certainly not the focus of AAA publishers.

Eric Harris
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You know this site attracts many game developers and we rarely hear them chime in on these blog subjects. I think the reason why sales are off, is because of disappointed gamers. Over the past years there have been huge disappointments in gaming. Mass Effect, Madden, NBA 2k, Max Payne, etc have been failures that have offended gamers. EA had to change CEO after the last guy made some real enemies. So if EA sales are down I would call it a market reaction to poor consumer relations.

The other point that Merc Hoffner is making, cant be made enough. The cost of production has gone through the roof, and photo realism is causing some strains, but my personal hope is that it will drive demand for better tools in the development process. Just look at Ryse: Son of Rome. Beautiful, but it is hardly a game.


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