Electronic Arts Up For Sale? 196
John Wagger writes "One of the world's largest gaming publishers and developers Electronic Arts has quietly put itself up for sale. While there have already been talks with private equity companies, the talks have not resulted in anything concrete. One of the sources is saying that EA would do the deal for $20 per share (currently at $14.02). Over the past year, EA's stock price has fallen 37 percent. Like other major game publishers, EA has been struggling against growing trend of social and mobile gaming."
Stuggling versus mediocrity actually (Score:5, Insightful)
EA has a long history of pressuring developers to rush out projects before they are ready. If they claim they are struggling to compete with social gaming, it has way more to do with people not having to download 3 additional patches a game to get a finished product than social gaming being more popular.
Oh, totally. (Score:5, Insightful)
Yep, it's totally the market and not the universal hatred that EA has garnered from the gaming community.
Meanwhile: http://www.gamesradar.com/valve-reports-seventh-year-100-sales-growth-steam/
Social and mobile gaming trend? (Score:5, Insightful)
Re:Social and mobile gaming trend? (Score:2, Insightful)
Or developers.
Dear Gaben (Score:5, Insightful)
Re:EA has been struggling (Score:5, Insightful)
by putting out the same shitty content for 60$+DLC over and over and reducing the player base as they escape to social gaming to find what they want.
Is still upset about Mass Effect 3.
Somewhere along the last decade EA (among others) forgot who its customers were, and even what the term customer means. Put the customer at the center of your business strategy and suprise surprise. Treat them like shit, and they will give you the finger.
What would you be buying? (Score:5, Insightful)
EA certainly has a lousy reputation; but it strikes me that video game publishers in general would be a very odd thing to purchase whole if they are selling because of hard times...
Presumably there is the back catalog; but most games don't hold their value that well over time(not necessarily a serious issue if the game still runs on current versions of Windows and you can just shove it out as a download at impulse-purchase prices; but if the game is bitrotten or encumbered in some contractual issue, you probably aren't going to be able to charge enough to make it worth fixing...).
There are also likely some developers/artists/etc. but the demographics of game industry workers seem to skew toward young and mobile. Especially if the ship is sinking you can probably hire them piecemeal, and you can't necessarily retain them if you buy the whole thing.
Would you be paying for the various franchises? How much is it worth to legally sell "Command and Conquer: Kane Cashes It In" vs. selling an otherwise equivalent grim-near-future-warfare-and-alien-minerals RTS?
Surely "Origin" can't be worth much more than the precious metals in the servers it runs on, minus the cost of extracting them.
Again, EA seems like a particularly unpalatable purchase; but I'm a bit confused about the idea of buying any down-at-heel publisher. It seems like being down-at-heel suggests that the whole is not greater than the sum of the parts, and that most of the parts are either optional, not very valuable, or available for purchase either by offering them a bigger paycheck, or by bidding on a chunk of the publisher's corpse...
Re:Reasons for trouble (Score:5, Insightful)
I would like to imagine that any financial problems EA is seeing are also a result of their shockingly poor handling of developers, unethical treatment of customers, misguided use of DRM, and famously incompetent management.
Famously incompetent you say? We should probably award them a lucrative retention bonus immediately, lest they abandon ship to mismanage somebody else.
Re:the revenge of DRM (Score:4, Insightful)
The state of computer games - inability to own and resell, the whole DRM diarrhea including "always connected" - is a shame, but clearly the customers are so addicted that even as they complain, they continue to fork over dump-truck loads of cash. There is *NO* incentive for game companies to behave any other way.
Re:EA has been struggling (Score:5, Insightful)
It's not social and mobile gaming... (Score:5, Insightful)
WRONG (Score:5, Insightful)
"EA has been struggling against growing trend of social and mobile gaming."
wrong, they have been struggling with overpriced shitware
Re:Stuggling versus mediocrity actually (Score:5, Insightful)
EA has a long history of pressuring developers to rush out projects before they are ready. If they claim they are struggling to compete with social gaming, it has way more to do with people not having to download 3 additional patches a game to get a finished product than social gaming being more popular.
With EA, the customer pays for patches and a finished game through DLC.
Releasing unfinished products and then using DLC to extract even more money from customers who have already started hating you isn't exactly a recipe for continued success.
As for "social gaming" (which really means casual gaming, because there's not much social about playing Angry Birds), that isn't a competitor. It's not like people buy a simple game instead of good games - it's an addition, played under different circumstances and times.
I'm not going to play Flight Simulator X, L4D2 or Borderlands during my lunch break. (Those are social games, by the way.) But I may play a game on my phone/tablet/PSP.
Re:Don't go it alone... (Score:0, Insightful)
but why would they? Origin users are most probably "worthless" as in, they probably already got a steam account as well. and spending 20$ per share only to be able to offer a couple of old games on steam.. not worth it.
Re:Social and mobile gaming trend? (Score:5, Insightful)
I still miss Westwood Studios... Once EA got their hooks into the Command & Conquer series, it all went down hill.
Comment removed (Score:5, Insightful)
Re:Stuggling versus mediocrity actually (Score:5, Insightful)
Re:Dear Gaben (Score:3, Insightful)
And I think I can live in a world where I don't technically own a game when I paid $20 for all GTA games (1-4, San Andres, Vice City, and Episodes from Liberty City), or pay 75% off on some AAA title a month or two after it comes out in a steam sale.
Annual Report says it all (Score:3, Insightful)
EA has a rich 30 year history behind it. In the past 5-10 years, more power has been put into the consumers hands and has negatively affected their revenues. This is a general trend for the entertainment industry, where a movie/game/etc. can be killed within a day or two of being released. Not defending EA here, instead I'm saying they haven't responded well to this change in the industry.
Annual report is an interesting read:
1) High costs
- $4.1B revenue, $76M profit. Marketing was 21% of net revenue, General/Administrative was 9%, R&D was 29%. When the cost to sell the product exceeds the cost to develop it, there's a major problem.
- There's also a "cost or revenue" which ate into another 39% of the revenue. Other than third-party royalties which can't be avoided, this item looks really suspicious to eat up that big of a chunk.
2) Digital and mobile
- The report admits the current models of AAA console games needs to shift. The risk+cost is too high. Digital and mobile games at a lower overall cost and via direct sales to consumers works better. The acquisition of PopCap will hopefully gain them a strong brand to start in the mobile space. The Sims will continue to dominate the social space.
- I personally think Origin has a chance with PC gamers. However, it has started out really really poorly. You don't take a AAA title and throw a half-baked Beta digital distribution platform against it. For console games, I think digital distribution COULD work if done right. I'm not confident in EA's management to pull it off though given how poorly Origin started out on PC.
3) Work with your Customer ... focus on the customer. I see absolutely nothing listed for how they plan to incorporate their customers into their business model. You can't go into the digital or mobile space and expect to succeed without this incorporated into your strategy. Steam, Facebook and Apple all have gotten a LOT of things right in this regard, like them or hate them, they've gotten it right. ... after the end of EAs fiscal year (March 31st). This would have resulted in a huge loss for the year rather than a small profit.
- Of all the things the annual report is missing
- EA needs to work with their customers, not against them. Do not pull another Command and Conquer 4 and introduce radical change in gameplay to completely destroy one of the best and longest running game series. Do not announce / force a specific release date for a game ahead of time if it needs more polish ala Mass Effect 3.
- Do not focus so much on the short-term, you are destroying your brand equity longer-term by doing so. The tinfoil hat part of me suggests the Extended Cut for Mass Effect 3 was planned all along, but would have taken too long to release
A private purchase may return EA to profitability. It needs some significant changes and this may be the ticket to do so. Really feel sorry for the employees of the company ... they were already putting up with 60-100 hour work weeks ... this will just make things a lot worse. Probably better than the company folding, but not by much.
Re:Stuggling versus mediocrity actually (Score:5, Insightful)
What frustrates me is this: the specific people who are responsible for these bad decisions will all ride out on golden parachutes. The punishment for their failures, and the near-universal hatred they earned, will be a life of wealth and luxury and (probably) another chance to pull the same crap again at a different company for even more wealth and luxury.
One thing is clear: humans are not very good at justice.
Re:Stuggling versus mediocrity actually (Score:5, Insightful)
I love the CEO's bio:
I guess he decided to apply at EA after he made his mark on the ice cream, bleach, sugar water, and coffee cake industries.
Sounds like a real gamer's gamer. I wonder where he'll end up next? Monsanto? Amway? JC Penney? General Motors?