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Forums - Sales - EA Revenue - Q1 Jun 2008 - XBox Sells More than PS3 - Of Course

bumidan on 06 August 2008

No, I'm still trying to figure out WHY PS3, Wii, PS2 have these GAAP, non-GAAP differences, whereas XBox revenue doesn't.

I will try to do some further digging.

But to give you a possible example, I'll just use "Sony" as a general example

Q1 09 - Sony pays $40 "hosting" fee - EA recognized $10 non-GAAP revenue
Q2 09 - $10 non-GAAP revenue
Q3 09 - $10 non-GAAP revenue
Q4 09 - $10 non-GAAP revenue
However, in terms of GAAP - EA has to recognize $40 in GAAP revenue in Q1
Hence, they have to report:
Sony - GAAP - $40
Sony - non-GAAP - $10

continued..



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bumidan on 06 August 2008

On the flip side, which is what happened in Q1 to Q3 FY 08
(Which they probably had to adjust from FY07)

Q1 08 - EA recognized $10 non-GAAP, but deduct $8 for GAAP = $2 GAAP revenue
Q2 08 - EA recognized $10 non-GAAP, but deduct $8 for GAAP = $2 GAAP revenue
Q3 08 - EA recognized $10 non-GAAP, but deduct $8 for GAAP = $2 GAAP revenue

So you can see in their actual reports that:

PS3 non-GAAP revenue - HIGHER - than GAAP revenue in Q1 to Q3 08 - because they probably had to adjust the "fees" or "revenue" they received in the previous FY.

Q4 08, Q1 09 - they probably received the "fees" or "revenue" up front, and had to "deduct" it, so that they can make a more accurate comparison in the previous years.
So PS3 non-GAAP revenue - LOWER - than GAAP revenue



NJ5 on 06 August 2008

I remember seeing a post someone pasted over from neogaf which had a similar interpretation to yours I believe. There was something about future estimated revenue being included in the GAAP figures, and some supposed difference in methodology between PS3 and 360 figures.



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bumidan on 06 August 2008
Uraeus said:

You are probably looking in the wrong area for the difference. Remember that the PS3 is probably earning EA the most income in Europe, while the Xbox is earning them the income in USD. With the current weak dollar it means EA is probably earning as much as 10-15 USD more per copy of a game sold in Europe compared to each game sold in the US. That quickly adds up.

Also in terms of bookkeeping I would assume the Xbox is treated differently because the business between EA and Microsoft is between two US companies, so they do not need to do any special bookkeeping to keep tabs of fluctuations in currency value. Sony and Nintendo however, being Japanese companies probably means EA gets a lot of their payments in Yen, and since SCEE is basically a independent company the way Sony is organized it is likely that SCEE payments to EA comes in the form of Euros.

Thank you for your post Uraeus.

Unfortunately, your post is mistaken.  Foreign exchange is treated under foreign exchange gain/loss on financial statements.

This line item of "Change in Deferred Net Revenue (Packaged Goods & Digital Content)" is totally different and is explained by EA in their reports.

 



Pristine20 on 06 August 2008

I'm lost. Whats all this GAAP, Non-GAAP stuff?



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dbot on 06 August 2008

@bumidan - What would EA be hosting for Sony? Sony uses their own servers for gaming and distribution.

@Uraeus - I think you hit it on the head with the exchange differences for deferred revenue. I hope the rest of your posts are as good as your fourth post.

By the way, this is my 500th post. I guess I am legit.



Thanks for the input, Jeff.

 

 

akuma587 on 06 August 2008

Do people really care about this that much? Seriously, you guys just need to sit back and tell yourselves, "This affects my life in no way whatsoever, and no one outside of people on internet communities could actually give a shit about this."



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bumidan on 06 August 2008
akuma587 said:
Do people really care about this that much? Seriously, you guys just need to sit back and tell yourselves, "This affects my life in no way whatsoever, and no one outside of people on internet communities could actually give a shit about this."

Ironic, from a guy who has more than 3,000 posts in a videogame website forum.

I'm not sure what your point is or if you have anything to contribute to this post.

So, please, if you have nothing to say, please don't say anything.  Thank you.



bumidan on 06 August 2008

In Q108, EA did mention "hosting" services for the deferred net revenue.

However, in Q1 09 - it used similar wording, but the word "hosting" is eliminated.



Malachi on 06 August 2008

Do Nintendo and Sony take the whole of the logistic of only gaming instead of EA like Xbox Live or is there some cost EA assume for these online game which is then pay back to them by these company? That's the real question it seem, because a paying service is the only meaningful difference(in term of revenue) between all of the three company. Not sure, even if that was the case, that it would account for such a difference though.

That say your promise is flawed, why wouldn't the PS3 the biggest contributor to EA revenue? You only say it "doesn't make sense", which as justifcation go, is pretty low on the standard meter. Why wouldn't it be indeed? You dont start a analysis to prove something, you do one and then present the resultat, whatever you like them or not.



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