The Horrible Things That Could Happen To EA

A recent Gamasutra story noted something interesting in Electronic Arts' financials filing. The company is extremely reliant on brick and mortar retailers like Wal-mart (which made up 12% of its net revenue) and Gamestop (about 15%). Simon Carless, writing at the GameSetWatch blog, takes that analysis one step further and postulates some of the horrible things that could happen to the software giant if the conditions were right. It's all meant tongue-in-cheek, of course, but it's an interesting discussion of how even large companies can be vulnerable to simple issues: "5. Wrong System, Wrong Time! 'Our business is highly dependent on the success and availability of video game hardware systems manufactured by third parties, as well as our ability to develop commercially successful products for these systems.' More specifically, as EA explains, this is the Wii/DS effect in action: 'A platform for which we are developing products may not succeed or may have a shorter life cycle than anticipated.'"

Actual bad things that could happen to EA

[Anonymous Coward]

other companies producing NFL games!?

oh the humanity!

Re:

[renegadesx]

People realizing that the games they buy are exactly the same as the ones they bought last year?

They Could. . .

[Apple Acolyte]

start pumping out repetitive franchise sports titles and make tons of money off of gullible people who blindly buy brand names. Oh, wait. . .

Re:They Could. . .

[MaineCoon]

If it funds games like Spore, are you still going to complain about it?

A more precise example

[WillAffleckUW]

Releasing GTA: Emerald City and including the Emerald City Sonics basketball team in the city maps at Key Arena when everyone knows Seattle is renaming the team OK Go! and shipping them to Oklahoma.

Now that could be bad.

Re:

[Targon]

The problem with comments like this are that we do not know how well Spore will do, both in terms of initial sales, as well as sustained sales over time. You and others expect that Spore will be a huge title, but it is not guaranteed.

Re:

[MaineCoon]

You are putting words into my mouth. I have made no statement of expectations regarding Spore.

I am pointing out that it as a new brand it has significant risk associated with it, and that is obviously expensive to develop (given how long it has gone).

The guaranteed sellers like Madden and other sports titles bring in guaranteed profits. It makes taking risks with other games - which EA has been doing more of lately - easier to justify, and keeps the risks from folding the company. I've known a few develo

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[account_deleted]

Comment removed based on user account deletion

EA isn't being nice...

[PhoenixOne]

EA is funding Spore because they think it has a good chance of becoming the next "The Sims".

If Spore doesn't sell huge numbers, they *may* give the group another chance (good PR to have at least one "artistic" group), but they are not going to fund any group that doesn't benefit them.

Re:They Could. . .

[arth1]

Absolutely. Remember that the EA way would be for spore critters to wear T-shirts with ads for Pepsi and Burger King.

I just participated in a survey (paid for by guess who) about in-game advertising. One of the questions was how much cheaper a $40 game would have to be for in-game advertising to be acceptable. My answer: $80. Yes, if I am to watch ads, I want to get paid. With twenty hours play time, $40 is only $2 per hour, and they surely get more than that from the advertisers.

In my opinion, EA no longer serves a useful purpose, and should go beer-belly up. Redoing the same game every year, with a darker and darker environment (so there will be less visible textures, and the crappier code won't be too slow on a graphics card that's merely twice as fast as last year's) isn't innovative. Especially not when it fetches ads over MY internet connection in the background, and sends personal and marketing information back to them, at my cost.

Regards,
--
*Art

Re:

[freezingweasel]

In game advertising COULD work out well. Make it OPTIONAL to watch the Super Bowl commercials in high quality on the following year's release and watch the sales. Sure some parents might complain about Budweiser... but it's not like they sent the kids out of the room when the same commercial came on TV. Also, anything that spreads the cat herders and other valid arguments FOR commercials that are entertaining enough to have you WANT to watch them over the standard, change-the-channel-NOW! is a plus.

The c

Hardly a problem limited to EA

[onion2k]

5. Wrong System, Wrong Time! 'Our business is highly dependent on the success and availability of video game hardware systems manufactured by third parties, as well as our ability to develop commercially successful products for these systems.

That's true of all 3rd party software developers on all games consoles. And all operating systems in fact. And all products in fact, it's not limited to IT. A company that makes after-market parts for a Ford is relying on Ford not releasing a model that's a dismal failure.

Too many people think there's some mysterious difference between computers and everything else. There isn't.

Re:

[Alexpkeaton1010]

That is why it would not surprise me if EA decided to jump into the console hardware space.

Re:

[Brian Gordon]

What? What a ridiculous idea- microsoft can do it because they have hundreds of billions to throw at it, but EA is a software developer and they have nowhere near the infrastructure for actual hardware development. Plus, who would buy it with only EA games available for it :)

Re:

[aichpvee]

They'd just buy whatever else they needed to fill out the lineup. They could probably sell several million a year just by making Madden and FIFA exclusives for a few months before hitting other consoles. It's not all that likely, but once microsoft drops out of the game there's going to be room for a new third place finisher and it's way more likely than a return to home console hardware for Sega.

Re:

[Brian Gordon]

The current state of 3 competitors isn't stable- there's only room for 2, and once microsoft pulls out (though I think it's more likely that Sony will drop out) there's not going to be a power vacuum.

Re:

[aichpvee]

Actually, some configuration of 2+1 seems to be the "stable" form for the industry. Sometimes it's two fairly equal competitors with someone trying to break in, SNES vs Genesis + PC Engine and then Jaguar. Other times it's one super power vs two competitors fighting over the scraps as we saw last generation with PS2 vs GameCube & xbox. The only real constant in the industry, and who's to say how long this will last, is that Nintendo will always be around. They've got the ability, due to a rabid fanb

Re:

[Alzheimers]

It wouldn't be the first time. [wikipedia.org]

Re:

[ceoyoyo]

Sure there is. At the end of the day if a console fails EA is left with a bunch of code they have to port over to another platform. If the car fails the after-market parts guy is left with a lot of expensive parts taking up space in expensive warehouses and probably some expensive manufacturing agreements to boot.

EA is LESS vulnerable to something like a console failure than third party manufacturers in other markets.

Bad things that could happen?

[faloi]

They sink a lot of time and effort into developing games for the Phantom platform.
They get purchase by SOE, and then have to try to sell games with both SOE and EA on the box.
The best and brightest decide to take their chances, jump ship and start their own company.
John Madden cancels the licensing agreement, and we have to have Marv Albert NFL.

Re:

[InterruptDescriptorT]

... and we have to have Marv Albert NFL.

Cool! I can't wait to unlock back-biting [wikipedia.org] mode!

Re:

[jalefkowit]

John Madden cancels the licensing agreement, and we have to have Marv Albert NFL.

Boy, that would bite! [nytimes.com]

Is that a threat?

[moderatorrater]

Are they trying extortion now to get some originality in the sports titles?

"Sure is a nice game company you got there. It's be a shame if something happened to Gamestop, or WalMart. People forget, shipments don't get ordered, all sorts of things happen..."

The Horrible Things That Could Happen To EA

[ByOhTek]

The stay in business?

It has been a long time since I've seen anything very good from them, and even longer since I've seen anything creative/original. They seem to base their business around the sequil market.

Re:

[Huntr]

Horrible for EA
Good For gamers

PoTAYto
PoTAHto

Re:

[miyako]

While I'm not a big fan of EA, they do come out with something decent on occasion. Skate was pretty good, and was quite different than the Tony Hawk series. I'm also looking forward to Spore.

horrible things happening to EA?

[phorm]

How about their customers quitting because of the poor games quality. When I got C&C3, I was very impressed. It ran great and rather bug-free (there was one mission that would lock up on completion, even after patching, but a reinstall fixed that so it could have been corrupt data on my network install).

Lately, however, I have been trying out online play. Bugs everywhere. If an opponent lags out, you can kick them, but then the whole game is frozen without resuming. It's so bad that while you can chat with other players still, you can't move units, and even the quit buttons etc cease to function (CTRL+ALT+DEL is needed). Numerous other netplay bugs have abounded, and overall the experience is tainted by nasty lag and general flakiness. Many people on there are extremely ticked with EA, and have stated that unless fixes are found soon they're not going to be buying any future products.

Re:

[analog_line]

Did you ever play C&C Generals or BFME1-2? If so, I find it hard to believe that you wouldn't expect much of the same from C&C3. Online play in Generals was afflicted with appalling bugs, which successive patches always seemed to make worse. Eventually me and my RTS-playing group had to toss generals since after a period of time games would mismatch within the first few minutes without fail. BFME1 suffered the same problems, especially toward the end. BFME2 was a bit better, but I didn't play t

Re:

[phorm]

Nah. I hadn't really played since Red Alert, and back in those days it was LAN games (sometimes there were issues, but not *that* often). I think I played Tiberium Dawn in the single-player for awhile too, but no multiplayer.

If I had known what dogmeat C&C3 would be, I wouldn't have bought it (or I would have waiting a year or two until network is fixed up and it's on the bargain-bin shelf where it belongs).

The sad part is that the gameplay would be great if not for the bugginess in multiplayer... w

Re:

[analog_line]

Tiberium Wars uses the same basic engine (upgraded of course) as General, and the Battle For Middle Earth games. That includes the multiplayer, which is run by Gamespy, which is pretty much half the reason problems happen. In Generals you used to be able to do direct connect, but I think it's all Gamespy's crap now. It's not likely to get fixed up any time soon. Luckily for me, in all of these games (C&C3 included) I have plenty of fun playing single-player against the computer on skirmish maps and

Misleading

[huckamania]

"More specifically, as EA explains, this is the Wii/DS effect in action: "A platform for which we are developing products may not succeed or may have a shorter life cycle than anticipated. If consumer demand for the systems for which we are developing products are lower than our expectations, our revenue will suffer, we may be unable to fully recover the investments we have made in developing our products, and our financial performance will be harmed. Alternatively, a system for which we have not devoted significant resources could be more successful than we had initially anticipated, causing us to miss out on meaningful revenue opportunities.""

Clearly the Wii/DS effect refers to the last part that was left out of the summary. If they were talking about products that may not succeed, that would be the Dreamcast effect.

Re:

[huckamania]

The neo-geo? I don't know, but highlighting the Wii and DS as an example of failed platforms is stretching it.

Not Dreamcast

[Myria]

If they were talking about products that may not succeed, that would be the Dreamcast effect.

Don't you mean the PS3 effect?

Re:

[account_deleted]

Comment removed based on user account deletion

I like the idea

[eRAZOR2007]

I dunno why but somehow I like the idea of EA getting in trouble :P

Brick & Mortar in control?

[Aladrin]

If B&M are so in control of EA's sales, why do they constantly bitch about how little they make on new games? The truth is that Brick & Mortar is just the prefered route for many customers... If they couldn't drive to the store and get it, most of those customers would just order online somehow.

But even if GameSpot and Walmart suddenly stopped carrying ALL EA games, someone else would just pick them up and make a ton of money instead. Because even that little bit they complain about is still profit, and there's someone that will make sure they get that money. Best Buy and Circuit City would love it, for example. CC constantly runs amazing specials on new games (10-20% below retail AT LAUNCH) and Best Buy matches those specials. I can't believe they do that out of the goodness of their hearts, so I'm thinking they must be trying to attract game-buyers.

Nothing in this list is even remotely likely to happen to EA, or any other major game company. -yawn-

Re:

[MaineCoon]

They may complain about it, but if I recall correctly the profit margin on video games is 40%-50%, which is comparable to a lot of other products. I think the issue comes when they have a lot of product that ends up not selling for whatever reason, and eats into the massive profits they can make on hot sellers. They don't like that part, and will whine about it, but thats just part of doing business.

Re:

[Anonymous Coward]

The truth is that Brick & Mortar is just the prefered route for many customers... If they couldn't drive to the store and get it, most of those customers would just order online somehow.

At one time I did prefer brick and mortar myself for games. Now though, if I can get it online almost immediately with just a download or delivery in a reasonable amount of time I often will do that instead.

Of course if I want it immediately then running out to the store to get it is almost always the best way.

I had to

More likely to be something else

[WillAffleckUW]

Like only shipping games for WinVista when most consumers are switching to Mac or Linux or BSD.

Or shipping games only for PS3 when most consumers are buying only PS2 versions or Wii or xBox360 and won't go near PS3.

I wouldn't worry about the retail outlets - there are a number to choose from and turnover is fairly fast.

Re:

[neminem]

Yeah. Really, it's more like only shipping games for Vista, when pretty much everyone is actually just sticking with XP (and will, therefore, soon have easy access to DX10 emulation).

OH MY GOD!!!

[bigfox]

A game companies financial success is dependent on selling GAMES in STORES!

This isn't newsworthy

[pixel_bc]

This is kind of moronic... these caveats are in just about all public game companies SEC filings.

3. We'll be sued out of existance

[Dutch Gun]

"If patent claims continue to be asserted against us, we may be unable to sustain our current business models or profits, or we may be precluded from pursuing new business opportunities in the future."

Honestly, I find option #3 the most likely as well as the most potentially damaging. This form of corporate predation/extortion is likely to prevent the release of old source code, as well as stifling innovation among games. A disturbing trend of patents that cover not just specific technical processes, but

The problem EA needs to deal with is....

[Targon]

EA is riding that fine line between stagnation and paranoia, and if things do not change, they will be killed by the realities of human interest.

How long can they sell the same sports titles before people get bored with them? There WILL come a point when those tired games will run out of steam.

The Sims and The Sims 2 have been doing very well because they do NOT focus on the 13-23 year old male obsession with violence in games. EA does not learn why things work and do not work, so we see less innovation as they lean more and more on sequels that are "more of the same".

EA just bought Bioware, probably in the hopes that Bioware will be able to break them free of the looming stagnation, but their bad habit of buying a company because "it is different" and then screwing it up and turning the newly purchased company into an extension of what is wrong with EA may kill the value.

The game industry needs to learn from the movie industry, where art and special effects need to be combined to produce a real hit. Games that are only about violence, or sex, or horror by themselves may cater to a niche market, but true blockbusters come from a combination of different elements. The industry in general does NOT use a combination of these elements, so does not cater to a broader audience.

There is also a basic concept that seems to have escaped most game developers, and that is the majority of game players are over the age of 18, yet most games target teenagers. This means that most games do not appeal to the older players, and over time sales will decline.

Re:

[brkello]

I'm sorry, but what you write and what is reality aren't even close. In a magazine I read, it shows top selling games for the past month. Madden showed up at least 6 times in the top 20 (and they held the #1 and #3 spot) from the different platforms it releases on. Slashdotters might not like EA or Madden, but the rest of the people out there could care less what you think and continue to validate EA's model every year.

Re:

[freezingweasel]

> The game industry needs to learn from the movie industry, where art and special effects need to be combined to produce a real hit. Games that are only about violence, or sex, or horror by themselves may cater to a niche market, but true blockbusters come from a combination of different elements.

And thus did a romance get added to Transformers. It'll sell, but it'll be broken, like Mission Impossible, or Garfield. (Didn't see the 2nd, the 1st seemed to be more an attempt to make "Odie" a star than any

How is this news?

[seebs]

These are the same things that are always in SEC filings for game companies, no? ... Oh. I see the word that explains the posting: Zonk.

EA's policy

[ipooptoomuch]

If the gameplay isn't broke, don't fix it. Run with it, even if it's not orignal. This mentality was applied to the Halo series as well. It's hard to turn over a profit with games these days, and you can't blame them for not taking chances (who wants their company to go under).

Their last good game

[cttforsale]

was Archon.

The thing I hate about EA

[Drfruitloop]

Is that there is no originality. All but a few of the games they make are either badly made and rushed licensed titles (Goldeneye Rogue Agent, Harry Potter etc.), or a copy of a copy of a copy (Fifa, NFL etc.)