EA CEO: We should have bet on the Wii

[Ail]

HappySqurriel said:

Ail said:

HappySqurriel said:

On a side note, my questions weren't there to imply "HD console's can not be profitable" but were serious questions that someone should ask the CEO of a major corporation ...

The fact is he is legally obligated to maximize the profits of his company and that means (regardless of whether you like it or not) if it would be more profitable for EA to make 4 small games for the Wii than to produce Madden for the HD Consoles he is supposed to make the 4 small Wii games. There is a certain ammount of freedom he is given to focus on long term profits over shorter term profits, but he should be able to explain his motivations in an intelligent manner.

 

While small profitable games are good for revenue and profit and the short term bottom line they are not what impact significantly the stock price of a company.

Successfull franchises with successfull iterations ( ie IP) is what make or break a company stock price.

For how much did the success of Carnival games count into the EA offer to purchase Take Two ? very little I would expect...

The issue with profitable/small costs games that don't develop into huge franchises is that every year you have to repeat the success story. Whereas future revenue is easier to predict with huge successfull franchises and this is what stockholders are looking for.............

You need a mix of both to successfully run a game development company ( unless you are Blizzard) but in the end the sucessfull IP is what will most affect how the company is valued..

 

 

You're making an amazingly foolish assumption that a smaller game can not be a full fledged game in a major franchise ... Dragon Quest IX and Grand Theft Auto: Chinatown Wars will both be a tiny fraction of the cost (probably 5% to 10%) of what a similar game would cost to develop on the HD consoles and yet they will have a massive impact on the value of a company.

Carnivale Games doesn't factor that heavily into Take-Two's stock value at the moment because it hasn't sold that much on the grand scale of things and people are uncertain whether their success is repeatable; if Carnivale Games Minigolf exceeds the sales of Carnivale Games this IP will become far more valueable to their portfolio.

The other foolish assumption you're making is that you believe that known franchises are much more predictable revenue and profit streams than (current) unknown franchises. This industry has seen countless franchises rise to amazing heights only to fall to mediocre lows; consider Sonic the Hedgehog, Tomb Raider, Tony Hawk and several of previous generations' biggest selling games. Grand Theft Auto 4 and Bioshock are only one mistake away from being dramatically less popular games than they currently are; the mistake doesn't even have to be a bad or average game, several series saw massive reductions in popularity based on a bad movie.

 

I never said known franchises coudn't fail.

But known franchises are typically more predictable in generating steady future revenue that unknown IP ( check the list of bestselling games all time, franchises massively dominate it). Especially franchises that have yet to deliver a weak showing...

If there was no uncertaintity at all there woudn't be a stock market at all because we would know in advance exactly how much each company would do as future revenue...

 

A company valuation is based on what is known.

Typically a steady franchise that has been doing well so far will have more impact on said valuation that an unknown never heard of future new IP...