New consoles take a while to pan out. This is where EA should be making the big money, when the consumer market is saturated with the current gen of console owners.
I agree with you that digital is where its at. Margins are better, distribution is better. Also, sad to say, but I think the console market is fading away. (For the time being at least).
Come on Iraj!
"Also, sad to say, but I think the console market is fading away"
You mean that you think the market might be saturated after a console cycle of 9 bloody years?! Wow, that's a shocker. And you are saying this 5 months before the demonstration and announcement of the next generation of consoles? You don't think that Madden and Fifa are being developed for XBox720 and PS4? Do you think that moneymakers are going to wait until everyone has bought one and there are tons of titles available to then invest in EA? Pretty sure that they can think more than 12 months down the road. Why else do you think that EA moves $75million in shares a day, every day? At this point EA could have been doing everything wrong for the last two years, who cares? The new console cycle is finally upon us and EA has a MASSIVELY diverse product portfolio and now has their own digital distribution platform. At $14 a share, anyone betting against EA for 2013 is not going to win.
I'm not sure what the argument is. Consoles ARE becoming less relevant but I don't disagree that EA has potential and I didn't say I am betting against them.
I make console games for a living. I think I know a thing or two about the industry that I get my bread and butter from. I'm not sure what is wrong with what I said. EA is a software company, not a hardware one. It is pretty obvious that its games can reach more people when the platform has a lot of penetration. The best console games are written before the transition because at that point, all of the engineers know the best tricks to maximize user experience on that machine (as opposed to the beginning when nobody knows what they are doing).
It will take many years before PS4 or XBox 720 console numbers can be compared with the millions of current gen consoles that exist today. During the last console switch, the PS2 had a lot of legs left over ... much to the surprise of both the hardware and software developers. Plus most of the PS4 and XBox 720 owners in the first few years will be hard core game players who are most likely upgrading from the current generation. Madden 13 sold about 2 million on PS3, meaning less than 3% of the 70 million ps3s out there. So if Sony sells 4 million PS4s the first year (super generous estimate), and we map to the PS4 we get 120,000 games sold for that console ... and the majority will be people who upgraded from ps3, so we can subtract that number from the PS3 count meaning the benefit is negligible.
The other thing is that consoles are becoming less relevant every day. I doubt the total number of consoles the next generation will sell would be close to what the last one did. True, everyone could still make money from them, but people have more options now. The big one being the mobile/digital market. (cheaper prices, free to play models, in app purchases, etc ...) Its this model that is currently shaping the future of gaming.
That said, I agree that EA has a lot of potential in the years ahead. I don't think this is due to the new consoles, but rather due to the growth of mobile and digital downloads. It is so much more convenient purchasing and playing a game in the mobile market. The margins are bigger as well (due to no packaging) ... and it is easier to reach customers. EA has potential because it is working really hard to become a force in this emerging market and further leverage all of the ip and licenses it has.
In other words:
a. EA has potential to grow and get out of this funk.
b. Consoles are dinosaurs ... but this is more of a problem for Sony, Microsoft and Nintendo.
c. b being true does not contradict a since EA is doing the right things and adapting.
The other issue which I forgot about is that there is a big R&D expense that comes with new consoles, which takes a while to recoup. Essentially the dev tools are buggy and underdeveloped in the beginning and the engineers need to port their software to these new machines that they have no experience with. I mention this because we are all waiting for EA to make ever increasing profits, so a console switch could delay that for a short while at least.