Electronic Arts Inc. (ERTS) Message Board

You expect a game that is in development for
anywhere between 2-5 years to be completely in the black
in the initial quarter of not only its release, but
its consoles release. That isnt how it works. If a
game costs 3 million, and only makes 2 million in the
first quarter due to lack of supply, the stock market
will understand that the next quarter will not only
put it in the black, but that demand will keep
pricing at the highest margin. What i think will push the
stock is the very buzz about the game. When something
is red hot, price to earnings doesnt mean jack
squat, its future earnings that are important.

I
hope this answers the question.

I saw Madden at E3 and it looks great, should
play great too. GameDay was nowhere to be seen and as
the article suggests that's almost always because
it's not ready. And if it's not ready then it's
certainly not in any shape to beat Madden after just a few
months development. I heard informally at the show that
they weren't even showing GameDay behind closed doors
and that's an even worse sign. IMO, Madden will crush
Gameday on PS2 both in quality and sales. Also it's no
secret that SCEA has all sorts of development problems
with layoffs in LA and morale issues and departures
from the San Diego 989 studio.

>Remember that in Japan there's
an
>average of 2 games sold per owner,
>so if the same
average holds
>here...
That's a mighty big
assumption there Rab. First you note that there will be
around 59 games available at the U.S. launch, then you
use the Japanese "tie ratio" (2) to arrive at a
calculation for average units sold. One of the reasons the
tie ratio in Japan is so low is that so few good
games are available, that won't happen in the
U.S.

Also, I doubt that EA's titles are only going to be
selling 100k units each. I didn't buy EA stock because it
makes average games, most of EA's games are excellent
and they far exceed average sales.

Aren't you
also forgetting Europe, EA is very big over there. Do
you think Fifa 2001 on the PS2 will sell only
100k?

But of course you and I will never agree Rab, because
you are focused on the short term, and I am a long
term investor. In an earlier message you asked me why
I held on to my EA shares if I thought that EA was
probably overvalued for the short term. Obviously one
reason to hold is to avoid taxes, especially with the
high tax rate where I live (Canada). Also, the price
of a stock reflects not just the current reality,
but also future expectations, which I believe are
great for EA. If I sold shares (or even worst shorted
"overpriced" stock), I would have sold some my biggest winners
(Oracle, Cisco and Intel).

Has great potential, but not a sure thing. Could
help EA.com.

Did you see this from ign "Off The
Record":


"We don�t put too much credence in this floater, but
this one did catch out attention. Apparently, Sony�s
Gameday 2001 for the PlayStation 2 is an amazing
creature. It�s so damn good looking that it "blows away"
Madden.............
Supposedly, 989 Studios is rumored to be
perhaps permitting EA to release Madden NFL 2001 for PS2
first, before Gameday 2001 on PlayStation, because of
EA�s new love for PS2, all things Sony, and no things
Sega. Has 989 Studios bowed down to EA in the football
battle? Never. If anything, the competition has pushed EA
into making Madden better than ever. And unlike 989
Studios� basketball franchise, NBA FaceOff, which has been
shaky and even absent in recent years, Gameday has
always come through. Whatever the truth may be, we know
this for sure, Madden is definitely arriving at
launch. <<
http://ps2.ign.com/news/22505.html

"license to print your own
currency"?

Depends on the cost and duration of the deal, factors
neither of us know about. Bear in mind most cultural fads
are fading by year five (e.g. Pokemon, beany babies,
etc.) and Potter is already in year three. The earliest
EA could get a title out, _if_ they get the license,
will be close to year five. And if they have to sign a
multi-project and/or multi-year deal then EA could be left
holding an expensive property that's out of style.

>>Remember that in Japan there's an average
of 2 games sold per owner, so if the same average
holds here that's 6 million software sales divided by
roughly 60 games which is an average of 100,000 units
each.<<

Rab, since when have entertainment softare titles
divided up their sales equally across the spectrum? I
think few people will argue with the assertion that 90%
of the sales comes from 10% of the titles, and that
EA is confidently poised to be in the top 10% of the
PS2 sales for the next year.

>>Last
year's PS1 EA Sports titles sold up to 3 million units
each<<

I wouldn't be surprised if a lot of folks who goes
home empty-handed after trying to buy a PS2 this year
will still go on to purchase a PS1 version of EA's
Madden, NHL, NBA, or FIFA this holiday season. (If not
all of the above.)

You once again dodge the question. With 59 games out and 3 million PS2's, how is any profit made never mind a substantial one? Can you answer that?

First off, there you go again comparing the
japanese market to the us market to come up with the
buying pattern of the us market yet amazingly, you dont
include the millions of units that have sold in japan
when you talk about total units sold. How is that
possible? You can't be this blind on purpose. Stop trying
to make your argument, and just look at what is
happening.

If you are correct in all that you say,
it will not matter because if this product is
selling out in a day, wall street will understand and
erts will fly. I want companies that have problems
keeping up with demand which is exactly what erts is
going to be faced with.

That is exactly why people should not get too
excited abiut the US PS2 launch. Sure it is good long
term news but the earning for the likes of ERTS will
be bad until next summer. The hype still could push
ERTS higher.