Hey guys,

I just asked myself, why EA is losing money. In 2008 EA lost 454 million USD, in 2007 they made a small 72 million USD profit, in 2006 a 242 million USD  profit.

So I asked myself, what did EA wrong. Their results decreased for 3 years in a row and I doubt 2009 will look any better. EA owns some of the best selling IPs in this industry and they manage to sell them every year. Here are some cash cows owned by EA:

• Madden NFL 09
  • Xbox360: 2.32 million copies sold
  • PS3: 1.61 million copies sold
  • Wii: 0.85 million copies sold
  • --> 4.9 million copies sold combined
• Fifa Soccer 09
  • Xbox360: 1.94 million copies sold
  • PS3: 2.27 million copies sold
  • Wii: 0.68 million copies sold
  • PSP: 0.85 million copies sold
  • DS: 0,38 million copies sold
  • --> 6 million copies sold combined
• Tiger Woods PGA Tour 09
  • Xbox360: 0.58 million copies sold
  • PS3: 0.5 million copies sold
  • Wii: 1.17 million copies sold
  • PS2: 0,28 million copies sold
  • --> 2.53 million copies combined

Those games see yearly releases and 2010 will probably be bigger than 2009 or at least get the same sales. So EA has three yearly cash cows. But that is not all. They published "The Sims" on PC and it sold like 10 million units. They also have other franchises like "Command & Conquer", "Dead Space", "Medal of Honor" or "Spore" in their library.

And they got this EA Partner-thing going on. So they were involved in the great success called "Left 4 Dead". "Mass Effect 2" will be published by EA as well, same for "Left 4 Dead 2".

Now EA finally made its way to the casual market with "EA Sports Active" on the Wii. This game already crossed the million mark and it shows no signs to slow down. 3 million might be very possible for this one.

So, why is EA losing money? They have tons of great selling games, lots of games they can milk every single year. I just don't get it.

Thanks for your input.

They killed westwood. Now they are victims to the curse of westwood that will make them lose money until they go bankrupt.

I loved Westwood and Bullfrog as well, but a serious answer would be nice.

I don't get it either.

They are losing investors

Maybe Mass Effect 2 cost a LOT to make.
Along with...
Dragon Age: Origins
and
The Old Republic
More unannounced projects?

Look at page 6 of this financial report:

http://files.shareholder.com/downloads/ERTS/691140953x0x292575/ab168313-7e7c-4738-a2bc-045cc3074d16/EAQ409Supplemental5509FINAL.pdf

Their gross profit (revenue minus cost of goods sold) was around $2 billion in the last fiscal year.

Their expenses are:

R&D - $1.36 billion
Marketing and sales - $691 million

Those two alone already equal their gross profit. Then there other expenses like Administrative ($332 million) etc.

If we go back to a profitable fiscal year (2007) it looked like this:

Gross profit - $1.88 billion

Expenses:

R&D - $1.04 billion
Marketing and sales - $466 million
(this time, add the two and you're not year near the gross profit)

As you can see, their R&D and marketing expenses are increasing faster than gross profit (i.e. game sales), even if gross profit is increasing.

Basically they're spending a lot more money on game development and marketing than before... I blame the high cost of PS360 development for the former, the latter I don't know... More competition maybe?

it's because they are buying up more studios than they can afford (i.e. bioware cost them a billion dollars right there.)

I think they are on the right track, they are increasing quality of their games, but the economy isn't helping their results either.

a split install base and constantly removing features from games hurts. without real competition they have not needed to try as hard to make the games better.

not knowing where the generation is heading VS where it was hurts too. they need to raise the profile of releases on the wii and negotiate better online system.

for the other two the need to pile on the removed features

part of it is also price, the price curve says 59.99 will sell less then 49.99. one fallacy seems significantly more costly then the other thats why 99.99 and say 119.99 feel so different.


also i gotta say install bases just arnt there from the top of last gen yet give it one more year.



im curious to see if the wii can outsell the PS3 in madden this year, i still say it wont, and ive been right the last two years a third would be great

I can't stand EA.