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Games Entertainment

More On SEC Probe Into Game Publishers 19

Thanks to Reuters for a follow-up article discussing the SEC investigation into videogame publishers, in which Acclaim, Activision and THQ are already a part. Analysts elaborated on the probe: "..the investigation was probably considering two key questions: at what point in a game's release did the publisher recognize revenue from its sale, and whether reserves taken as insurance against weak sales were being used to smooth out revenues." This may mean the rush to get product out at the end of the financial year, as recently occurred with Tomb Raider, may be changed somewhat: "For example, some video game publishers book software revenue on the day the product is shipped. A more conservative approach could be to book revenue the day a retailer takes possession of the goods." Update: 07/21 22:14 GMT by S : There's also a good CNN Money article discussing the implications of this probe.
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More On SEC Probe Into Game Publishers

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  • I dont understand exactly what Acclaim did illegal (other than make a bunch of shitty games). And it's not like they have a "We are the only game publishers" Patent.

    So, why is the SEC doing this?
    • SEC is involved, so the reason is because the information available to investors is either not complete or misrepresented. This is important, because if companys do not fully disclose all important details, CEOs (and other owners of big bunchs of stock who know more details about the company) can artificially manipulate the stock for their own personal gains.

      Now, the current issue is that game companies record a 'sale' when the recieve an order from the store. The article mentions that a better measure mig
      • Ok, I understand about the "fraudness" possibly made by the CEO. But if the stockholders think that, cant there be a stockholder CEO-Eject vote and find somebody better?

        I'm pretty sure I understand, but I'm not well versed with upper-management in large corporations. Still learning though ;-)

        • by Anonymous Coward
          Acclaim ALWAYS did this. We would get to the end of a financial quarter and there would ALWAYS be a mad scramble so that it would fit within the current financial quarter. Cooked books. Before Turok first came out, a *LOT* of pre-orders were taken before the end of the financial quarter (some vendors were even persuaded to pay ahead of time - so acclaim could have enough cash to duplicate the game). I never understood the logic behind this, now I see the light. It's dishonest and illegal. Fancy Greg Fisch
      • by jwilloug ( 6402 ) on Monday July 21, 2003 @05:31PM (#6494252)
        Most of the article wasn't devoted to outright insider trading like you're describing, but the shady but very common industry practice of not recognizing revenue as soon as it comes in.

        Let's say you're Acclaim. You've just put out Turok, and times are good. Wall Street was predicting you'd make $0.10 per share, and instead you made $0.12. So do you announce that you've beat by two cents? Of course not, you can the same amount of good press with $0.11, and the rest goes in the CEO's mattress for a rainy day.

        It's two years later, you've just put out Turok 7 and the kids who loved Turok are starting to get old enough to tell quality games from the crap you're putting out, and now you're about to miss expectations by a penny. The rainy day is here, time to dip into the savings and bump up earning a bit. Yeah, it's a bit artificial, but who's it hurting...
  • by missing000 ( 602285 ) on Monday July 21, 2003 @04:27PM (#6493724)
    Why would the SEC bother with video game publishers when the Enron crooks are still running around?

    I can't understand why they continue to waste time with the little fish when the Enron and Global Crossing executives are all running around spending money they stole from employees and retired people.
    • by Anonymous Coward
      Simple, the Enron and Global Crossing execs are friends with our President.

      If the SEC bothers itself with other scandals that don't really matter (Such as the well publicized but not very signifigant Martha Stewart scandal), then maybe people will forget about Enron, Global Crossing, Florida Elections, the California Energy Scandal, etc.
    • Why would the Police bother with red light runners when the murderers are still running around?

      I can't understand why they continue to waste time with the little fish when the old guy down the street and the man who lives in a tool shed 3 blocks away are all running around killing people.
    • Why would the SEC bother with video game publishers when the Enron crooks are still running around?

      Fewer political contributions to the Republican party, perhaps?

  • by Anonymous Coward on Monday July 21, 2003 @04:42PM (#6493853)
    The SEC is doing what avid videogame players have wanted to do for years.
  • Maybe a rethink? (Score:4, Insightful)

    by spumoni_fettuccini ( 668603 ) on Monday July 21, 2003 @04:56PM (#6493967) Journal
    I think their revenue models are screwy anyway. Take into consideration the people that reserve [deposit] or preorder the games [full price], doesn't that count? Would they also benefit from introducing the title a little cheaper? I wait for a PC or console [PS2] game to drop from $50-$60 USD range down in the ballpark of $20. Many of my friends just rent their console game, about $5, finish it and never wind up buying the title.
  • Question (Score:1, Troll)

    by Danse ( 1026 )

    This sounds exactly like what Microsoft was accused of doing a year or two ago. Did anything ever come of that?

    • Re:Question (Score:1, Offtopic)

      by Danse ( 1026 )

      Troll?! Methinks we have trolling moderators. If they would bother to pull their heads out of their asses they would know that my post was entirely serious and quite related to the topic at hand.

  • EA is the biggest publisher so they make the largest political contributions and are therefore so far exempt from the probe. Check.

    All other publishers are named or have already been named for this investigation into their accounting practices, even though the practice is standard throughout the industry. Check.

    The watchdogs state in the article that they understand the current practice and don't see much wrong with it but they suspect the SEC will require a change. Check.

    The new rules are likely

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