AfterDawn: News

Next generation game development costs bite EA

Electronic Arts, the world's largest video game maker, has reported a drop in profits as the company feels the pressure of next generation game development costs. The company reported a 31% drop in profits with net income in the three months to December falling to $259 million from $375 million over the same period in 2004. EA warned that 2006 will remain a challenging year for the firm. The video game industry is currently at the start of a transition to the next generation of gaming and console technology.

Microsoft was the first to launch it's next generation console, the Xbox 360, last November. Sony Corp. is expected to roll out the PlayStation 3 (PS3) console "sometime" this year, while Nintendo has indicated that the Revolution console will be released late in 2006. Electronic Arts, whose past gaming hits include The Sims, said total sales dropped by 11% to $1.27bn in the third quarter, from $1.43bn in the previous year.



The company said it will continue to invest in next generation games development but expects software sales across the industry to be flat over the coming year.

Source:
BBC News

Written by: James Delahunty @ 5 Feb 2006 17:42

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• 22 comments

• evilh0ly

  it's the starforce that's killing them cuz no body buying it

  5.2.2006 17:50 #1

• Dela

  lmao :-) excellent point evilh0ly, i never even thought of that

  5.2.2006 18:16 #2

• iccee

  =D point taken and noted

  5.2.2006 18:40 #3

• OzMick

  That, and their EA Sports games are just the same every year with a different number on the end...

  5.2.2006 20:13 #4

• Zippy84

  ummm no... starforce isnt on xbox 360 games.... so yeah keep blaming it in that if you are desperate for a reason.... how about the truth that next gen games are more expensive to develop???

  5.2.2006 21:25 #5

• oappi

  There is many reasons why EA isnt doing so good. As zippy84 said, games are very expensive to develope now a days. Also there are lot of people like OzMick and me who think that EA s games are the same garbage every year. Only numbers and eye candy has changed. Who wants to play nearly same thing over and over again.
  
  Since EA started to buy out companies for somereason they started to make ruine every game serie they got their hands to. Like C&C ra2 and ea versio was generals. I have bought every C&C game before generals (even sole surviovor) but i never bought zero hour and probalby never will.
  
  Also i dont remember who made first nfs. I still think nfs road challenge/high stake is the best NFS. If they remake that one. i would for sure buy it =). im sick of having voodoo 4 in my second computer. New NfS:s suck.
  
  It´t sad to see that all that ea:s eye candy is going to waste. I think that there would be good game nearly every ea s lauch. It is only their idea´s that are eighter retaired or there aint enought of them.

  6.2.2006 00:17 #6

• Dela

  Quote:ummm no... starforce isnt on xbox 360 games.... so yeah keep blaming it in that if you are desperate for a reason.... how about the truth that next gen games are more expensive to develop???Well no-one said starforce is on xbox 360 games and yes the article is about the cost of developing new games. the point was made by evilh0ly about starforce as EA also makes quite a selection of PC games - many of which have been condemned for their inclusion of starforce for several reasons (comp crashing etc.). So their PC Games do make up some part of their profits. I think it was a bit more of a joke on evilh0ly's behalf - i dont think he was trying to blame starforce for a 31% drop in profits.

  6.2.2006 04:00 #7

• deadlois

  Even though they may have the same old rehashed gameevery year, their games, particularly madden, outsell everything else on the consoles at least. I am not saying they should keep doing it, but if the people buy it, why not?

  6.2.2006 10:53 #8

• Zippy84

  OK... point taken... fair enough. But honestly I don't think we can blame one specific aspect of why EA's profits are down. I dont think that even 1% of that 31% is to be blamed on starforce. Think about it.... you're spending millions to develop a single title nowadays. compare that to maybe a few thousand people boycotting a companys PC titles (not to mention the millions of games that they sell on consoles). And to say that all their sports games may be the same year in and year out might be true. But, how much can you really change a sports game and still have its properties that appealed to people in the begining? Plus, how can staying the same be bad If you are selling the best selling NFL game ever (not to mention loads of other top 10 sports games)....? Thats all I really have to say about this....I'm not disrespecting anyone for their views I just wanted to voice mine...

  6.2.2006 10:54 #9

• deadlois

  oh yeah, and zero hour wasnt really that bad, I actually liked it.

  6.2.2006 10:54 #10

• jwwolf

  maybe if microsoft didnt fuck up and only let a limited amount of 360's to the world
  
  they might make more money

  6.2.2006 11:03 #11

• DarkJello

  EA makes the highest selling NFL game because they're the only ones allowed to make NFL games...

  6.2.2006 11:48 #12

• Zippy84

  LOOK! WE HAVE A GENIUS HERE! Yes... lets blame M$ for the fact that EA is losing money. i just don't get some people and their factless, completely unreasonable and stupid thoughts and statements.
  Quote:maybe if microsoft didnt fuck up and only let a limited amount of 360's to the world they might make more money
  

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  6.2.2006 11:54 #13

• weazel200

  bring on nex gen

  6.2.2006 12:49 #14

• leg3nd

  Quit making titles that are just rehashed licences the same game year after year and you might see sales go up.
  
  Not a difficult concept.

  6.2.2006 14:42 #15

• whoozhe

  There is only so much money to be spent and each generation spend any spare money on different luxuries.
  Games fall into that catagory and so does the likes of iPods, mp3 player and the new generation of mobile (Cell) phones, all of which are experiencing sales increases.
  There are probably other factors such as lack of real originality in new released games, cost and that many people are using their games machines for other purposes. Maybe the new generation of buyers are just not as interested in gaming as the previous one.
  

  6.2.2006 14:51 #16

• DarkJello

  Hence the downfall of Nintendo who has stayed true to gaming all these years. The fall in Nintendo's sales would certainly reflect that opinion. I personally think EA is really just losing money in that quarter of the year because new systems are being released and not everyone wants to jump on the new system, and not to many people want to pay for something they feel is outdated. I'm sure EA will recover just fine, especially after the remaining two systems are released and the Xbox makes the possible drive upgrade [to Blu-ray or HD DVD] that I think many people are waiting for.

  6.2.2006 14:57 #17

• jwwolf

  to the assclown above:
  So there games that are for the 360 arent veing sold why, because the 360 is in short supply high demand
  that is why
  
  and to you im not taking the standard blame bill gates
  but not putting out enough is bullshit

  6.2.2006 16:08 #18

• Rikoshay

  In the beginning, EA was a very good company that had great titles like Desert Strike, uhh... Jungle Strike... :D
  
  If they just stick with the way they used to be, they wouldn't have this problem. Bring on the next Strike game like you've been promising since the end of Nuclear Strike, which was over 10 years ago! Give us a Need For Speed that doesn't have spinners or bad acting! Remove Starforce from your PCCD's! Stop killing good games! Make some next-gen games!!! STOP SUCKING SO BAD!!!!!
  
  That's all. Hehe

  6.2.2006 22:04 #19

• akkuma

  good for EA they release a lot of titles that are basically the same as the previous version that came out 9 months prior!

  7.2.2006 06:44 #20

• zap91284

  Meh. This just means it's time for the retail sale of games to be balanced more between the developer and publisher. I remember reading somewhere that I think the money breakup for a $50 game was something like $10 to the retailer, $15 max to the developer (sometimes cloer to $10), and $25 to the publisher. I've never seen why that has been so much of a difference. Yes, it costs money to publish and advertize a game, but if it costs more to advertize the product then make it (especially w/ how many bulk resources most publishers have), something is wrong. Having done a lot of programming myself, I've always been kind of let down by the limited pay to some game developers with how much dedication it requires (I've stayed away from game development for that reason). And I have no doubt their salaries may be pinched even more as game development prices get higher if something isn't done. I think Valve did it best with Steam. The Deveoper-Publisher-Retailer model needs to change, or games are going to be more expensive, or developers aren't going to want to work anymore if their pay is cut. Maybe once Broadband reaches reasonable speeds, we will see the console manufacturer giving you as large a hardrive as you need for games (upgrading it as needed for free as you buy more games, giving them money indirectly to pay for the upgrade)), and selling them online. But that is still a while off.

  7.2.2006 08:39 #21

• agould

  Remember, they are in the black, not the red. Losing profits does not mean they are practically filing for bankruptcy.

  7.2.2006 13:17 #22