That's what we're trying to figure out.  What revenue is EA getting from Sony in the "packaged goods and online content" that needs to be adjusted to non-GAAP results - while XBox doesn't have.

Both XBox and PS3 games have online/multiplayer - so what else could it be?  XBox and PS3 EA-games are the same for both platforms. 

So...

Again, my guess is some sort of fee that Sony pays or EA collects from Sony. OR it is revenue that EA cannot reasonably "estimate" over the products lifetime.

So you have to ask yourself, what type of revenue/products that a company CAN NOT estimate over the products lifetime?

For an actual game - $60 (just an example) to buy a copy of Battlefield from EA for Sony is easy. It is a one time transaction.

But IF IF IF  EA charges some sort of a fee / licensing, etc. for Sony to use it for online, then it makes some sense.  Because EA does not know HOW LONG Battlefield will be played ONLINE.

Hence, they CAN NOT estimate a reasonable market value anymore. But just from the LIMITED INFO available, this is kinda what my first instinct tells me.

I will try to find out like I mentioned before.

So basically you dont have a clue about why Non-Gaap stuff puts the PS3 so far ahead but as you see the Xbox doesnt have that non-Gaap stuff you want to put the shadow of a doubt in a otherwise clear thing.

Look ,even if we didnt count the Gaap and Non-Gaap thing the PS3 still sold nearly the same as the X360 ,and with a still higher userbase of the 360 and the EA games being best sold in US thats a big feat.Besides ,if you did follow the EA announcements each quarter you must have see what is the tide ....the PS3 skyrocketing its sales and the X360 slowing down.

I mean ,the topic is interesting ...I hope someone could put a candle on this.But the topic name is absolutely misleading.

Thanks for your post Malachi.

1. The GAAP, non-GAAP adjustments only exist for Wii, PS3, PS2 (consoles) and not XBox - so yes, it is strange.  If everybody does the same thing, then XBox should also have some sort of adjustment.

Is there any reason for you to think why XBox will be different from the other 2 consoles?

All consoles have games made by EA that have online components - PS3, XBox - Battlefield, sports games, etc; Wii - Medal of Honor (I'm not sure about other games).

So it may reasonable to assume that it is something about online hosting.  But I am not sure.  That's why I have to find out.

2. Why wouldn't PS3 be the biggest console software revenue contributor?  Because by all indications, including VGChartz, XBox sells more software than PS3.

EA Data - PS3 Revenue - GAAP:

Q1 08 - 13

Q2 08 - 17

Q3 08 - 102

Q4 08 - 152

Q1 09 - 139

EA Data - PS3 Revenue - Non-GAAP:

Q1 08 - 20

Q2 08 - 98

Q3 08 - 196

Q4 08 - 138

Q1 09 - 68

XBox - GAAP, non-GAAP = SAME

Q1 08 - 47

Q2 08 - 218

Q3 08 - 196

Q4 08 - 128

Q1 09 - 81

So you can definitely see that XBox Revenue is greater in general.

As well, those GAAP and non-GAAP numbers are fairly substantial swings - not just minor swings.  So definitely something to investigate.

Haha. Maybe. But I don't know what other title this thread could have gotten.

Also, what is misleading about it?  The Xbox did sell more software in Q1 09 Jun 08.

1. Yes, no clue. Just reasonable guess.  However, I dispute that it is a "CLEAR" thing.

Look at Q2 and Q3 08 for PS3 GAAP and Non GAAP revenue:

GAAP - 17 , 102

Non GAAP - 98, 196

Those are 80 and 90 million dollar differences.  They are VERY SIGNIFICANT.

MSFT for the same quarters:

218, 196

So if you are going by GAAP, the numbers are so different that data, eg. from vgchartz, do not support it.  That is did XBox sell 10x more software in Q2 than PS3?  Clearly not.

However, if you go by EA non-GAAP - then it is easier to compare.  Even EA uses the non-GAAP for comparison because it is more accurate - they said so in their reports.

You can check VGChartz data to see i

You can check VGChartz data to see if GAAP or non-GAAP numbers are more in line with the data.

Okay, so basically since right now GAAP is higher than non-GAAP, that means that EA received a lot of money this quarter that they are spreading out into future quarters.

Well, the hosting thing actually makes sense to me, in that case. We know that EA is providing their own servers for Wii games (Boom Blox, MoH:H2, etc), and I think I read that the host their own servers for PS3 games too (à la Warhawk, although that's not EA).

So, since they definitely do it for Wii, and (although I am not certain) probably do it for PS3, it could easily be spreading out the revenue to avoid violating Sarbanes-Oxley.

HOWEVER:
EA also has servers for their X360 games. So, I dunno.

@alpha_dk

I'm not sure about servers, but its a good guess.

If there are adjustments for all consoles, then it's "normal" business practice.
But for consoles, it is only PS3, PS2 and Wii, not XBox.

That's why it's strange.

But based on EA's own internal analysis, they do use their non-GAAP figures to do their evaluations.

Note: I didn't single out the Wii because the numbers are lower, and the differences are smaller.

If you go by the hosting theory, it may make some sense - IF, in general, Wii owners do not play online as much anyway.

I'm still awaiting EA Investor Relations to reply to my question about the deferred revenues and GAAP, non GAAP adjustments.

I hope they reply to my questions.