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Electronic Arts Inc. (ERTS) Message Board

  • benz02us benz02us Jun 6, 2003 10:05 AM Flag

    what is the deal?????

    Why is erts screaming up.

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    • "True, there were 35m N64's out there, but ERTS was making maybe 1 or 2 or 3 games a year for them circa 1998 and 1999 and 200. This time around ERTS is supporting all 3 consoles more or less equally and therefore will have 120m units to derive revenue and income from versus 65m + a couple N64 titles :) See what I mean?"

      This stuff is interesting.

      I see the argument but I think the numbers are actually comparable in both periods. Looking at FY00 and FY02 10K's, and assuming a greater % of revs from affiliated labels on the PS platforms (due to Square) than the ratio of PS to total consoles of the EA studios, we get the following:

      FY00: ~90% of revs from PS1 which had around 70% of the market.

      FY02: ~82% of next-gen revs from PS2, which has around 76% of the next-gen market.

      So currently they're taking a fractionally lower % of revenue from the lead platform, which also has a fractionally higher market share than it had in the last cycle. So the two cancel each other out IMO.

    • Rab, I don't see any reason why EA needs to be exposed to GBA. The handheld market is on the decline. All publishers are trying to reduce their exposure there.

      Even if the online stuff bombs, I still don't think that it would reflect too badly on the bottom line. I think growth in the installed base of home consoles is a much greater driver than the weak PC game market.

    • If they can start charging subscriber fees to EA Sports PS2 online players, it would be nice, but doesn't really add up to much money. IF they were able to generate $40 a year to everyone with a PS2 network adapter, it still only ends up being $24 million, which will hardly impact earnings.

      Changing the subject, does anyone think that Sega will still be around for the next console cycle?

    • "I myself still view online as only being a cost of doing business and most likely wont be income generating, . . ."

      The point is that at least, they won't be losing $1m a quarter with online like before. And the markets generally look 6 months to a year ahead.

      ". . .it was a bit hard to convey this morning as i've got a lot on my mind ;) "

      It must be hard being a turtle but you know, in the end the hare will lose to you. ;-)

    • "I think I see your point, but isn't it the case that in FY00 there were 100M+ consoles out there with PS1+N64, and maybe in FY05 there will be 120M+ consoles out there with PS2+XBX+GCN?"

      ----That's pretty close to the mark. But just take a glance at ERTS filings during those couple years and you'll see what I mean. True, there were 35m N64's out there, but ERTS was making maybe 1 or 2 or 3 games a year for them circa 1998 and 1999 and 200. This time around ERTS is supporting all 3 consoles more or less equally and therefore will have 120m units to derive revenue and income from versus 65m + a couple N64 titles :) See what I mean?

      Then add in the long lag from PS2 launch to GC and Xbox, which this time wont be as long for PS3 etc. and you have a recipe for the loss in revenue to be significantly less, and the intervening period between end of this gen. and all next next gens. being out to be perhaps as short as 3 months, etc.

    • I myself still view online as only being a cost of doing business and most likely wont be income generating, but rather any sub. fees, adverstising revs., or direct sales being gained in order to "lower" the cost of doing online. Etc. So i'd disagree that online will be profitable, but it certainly will be at its least expensive point for ERTS as the model is made more efficient, more ads put up and paid for, etc.....we'll see.

      Glad you understood what I was saying lol, it was a bit hard to convey this morning as i've got a lot on my mind ;)

    • I think I see your point, but isn't it the case that in FY00 there were 100M+ consoles out there with PS1+N64, and maybe in FY05 there will be 120M+ consoles out there with PS2+XBX+GCN? Rough figures, I don't claim them to be 100% correct, but you get the idea. I mean it's not like in FY05 their install base is going to be double or triple what it was in FY00, right? Also re PS2 launching a year ahead, ERTS bet the farm on PS2 so if anything that was a benefit to them that the other systems were delayed, allowing them to focus on only one platform which to this day is still the huge bulk of their sales. Basically 3 consoles split a market which is only slightly larger than the market which was split by 2 consoles before, so that's still a similar number of consumers to sell to.

    • That's an interesting point as well that I hadn't considered. Also, consider this....

      "Margins will surely tighten, but perhaps not as much as the previous transition."

      ---As time goes on the cost of developing games for a given console drops, for obvious reasons. So in point of fact margins should be at their highest for PS2, Xbox, and GC in 2005 for ERTS. Something to think about.

    • It makes a lot of sense to me, Turtle. Plus, this time around, online will start to generate earnings instead of losing. The hope is that late 2004 to mid-2005 is projected to be when broadband may be realized and more widely accepted by mainstream.

    • It will probably be different this next console cycle, but I think it will be more because the transition will be much slower to the next generation of console gaming. By late '05, there will be a huge installed base of PS2 and XBox. Both serve as DVD players as well, so there will be less additional utility in buying the following generation. This will allow publishers to continue to sell a high number games on the current generation system, and reduces the need for publishers to spend too much on developing software for PS3 and XBox 2. Margins will surely tighten, but perhaps not as much as the previous transition. Furthermore, if Sony PSP takes off, EA will have no problem converting its old PS games to the Sony platform, thus providing another opportunity to raise margins.

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