Will the Wii destroy EA?
“We didn’t anticipate the popularity of the Wii…” admits a spokesman for Electronic Arts.
A Silicon Valley newspaper created a buzz when its Sunday edition reported on the sagging fortunes of the game developer — and attributed them to the surprise popularity of Nintendo’s Wii.
One theme keeps coming up: EA was caught offguard by the breakout popularity of Nintendo’s Wii. EA wasn’t ready to develop for the new platform, and released just six Wii games last year.
Now they’re playing catch-up, and next year plan to release as many as 13. “[W]e moved very quickly to get into position…” EA’s spokesperson told the San Jose Mercury News. But the damage is already evident. In fact, over the last three years the company’s profits show a drop of over 50%, according to the newspaper, with twice the spending on development and research — and a sales growth of just 1.5%. And looking to the future, the company’s chief financial officer predicts still more bad sales and disappointing profitability — and still more big expenditures on R&D.
In some ways EA is the victim of a Catch 22. They invested substantially in developing games for the PS3 platform. But PS3 consoles won’t sell without more games. And developers like EA can’t sell enough games to cover their costs without…more consoles!
A company spokesman noted that all their money isn’t invested in PS3 development; EA is actually developing for eleven different platforms. In fact, last month EA was the #2 vendor of Wii games, behind only Nintendo. One fund manager was encouraged, and told the newspaper that they saw great potential at EA — in the long term.
Rushing to re-assure the press, EA’s spokesperson added that their management team “is discussing organizational changes.” That sounds as ominous as it does inevitable, and it leads to only one possible conclusion.
Underestimate the Wii at your peril.
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5 Responses to “Will the Wii destroy EA?”
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May 30th, 2007
I think a better question is “Will the PS3 destroy EA?” I think it’s not so much that they underestimated the Wii (though they did), but that they overestimated the PS3, which a lot of people did. And I’m sure all company’s R&D costs have been up lately, with next gen consoles coming out. Since EA pushes out so many games, theirs are bound to go up substantially.
Reguardless of who is being accused of destroying, it won’t happen. EA is too big to be destroyed. This will hurt them, and they MIGHT even slip to #2 for a while, but they’ll be fine in the long run.
May 30th, 2007
wowowowowee waa waa this is like totaly on the rack
May 30th, 2007
this is gay homosexual talk thank you very much
May 30th, 2007
this is gay homosexual talk thank you very
May 30th, 2007
Prince yoda very good comment i enjoyed reading it and it is a very good question
ps3 is the new big thing but so is Wii