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Schappert clarifies EA's sweeping DLC and online strategy
During this week's quarterly earning's report, EA COO John Schappert answered an investor question with a somewhat vague but potentially far-reaching comment regarding the publisher's future strategy for implementing online functionality into its games. "In fiscal 2011 [from April 31, 2010 to March 31, 2011], every one of EA's releases will have an online component, both downloadable content and online play," Schappert said, according to a VG247 report. CFO Eric Brown then cited Mass Effect 2's Cerberus Network as the company's "most recent example" of how this plan might manifest. The obvious question: Does the plan apply to all platforms, including Wii, DS, PSP, and mobile? Schappert clarified to Joystiq today: "My statement wasn't in reference to any specific platform as most of our titles are multiplatform and have different features per platform. Though you can expect our PC, PS3 and Xbox 360 titles to have very robust online features. Of course, depending on the title, this may extend to other platforms as well." While this clarification is not exactly the firestarter statement one might interpret from Schappert's original comment, the plan still raises concerns -- based on recent experiences -- that EA games' online components could continue to induce headaches so long as they are tied to EA.com accounts and the issues that have arisen as EA has increased its DLC efforts. If the plan is to include online components in all EA games in the future, then the wrinkles need to be ironed out of Project Ten Dollar now.
Losses, layoffs in EA's Q2 earnings report
EA announced a net loss of $391 million in its Q2 2010, which ended September 2009. The losses have increased from last year's $310 million. In addition, sales, at $788 million, are down $106 million in Q2 2010 from the same period last year. EA CEO John Riccitiello remains positive about EA's outlook, explaining, "EA is performing well, with quality, sales and segment share up so far this year." CFO Eric Brown echoed Riccitiello with his own confusingly half-upbeat statement, saying "We met our second quarter expectations and delivered a record quarter for revenue. Today we are announcing a significant cut in our operating expenses and the acquisition of a leader in social games, Playfish." Those cuts, revealed earlier today, will result in the loss of around 1,500 jobs by March 31, 2010. Last year's restructuring planned only 1,000 layoffs. EA estimates that the restructuring plan will save around $100 million after about $130 - 150 million of restructuring costs. We hope that, this time, the company arrives at a structure that works.
EA predicts longer console cycle, more price cuts
According to EA CFO Eric Brown, this console generation still has many years ahead of it and will be longer than console cycles of the past. Elements found in this generation, such as digital distribution channels (Xbox Live, PSN and WiiWare), still have high potential for growth, Brown said at a Wedbush Morgan Securities conference (via Gamasutra). We've also ostensibly hit a tech ceiling with this gen, as games consoles are capable of full HD resolution at 60fps, which means there's little need to upgrade to new hardware ( ... unless you've got a Wii). Price is another major factor Brown discussed, having said that the relatively high price for consoles is still keeping a large chunk of consumers away. Price cuts would drive more sales, as in Brown's example of PSOne and PS2 success at reduced $99 and $149 price points -- both systems sold nearly 50% of their lifetime sales at these prices. "... We've seen one major price drop thus far in this console cycle; we feel that we have a long ways to go," said Brown making reference to the 360 cuts which brought the Arcade down to $199. And by "long ways to go," he really means 'expect many more price drops to come.' Hopefully, we'll see some of those real soon.
EA hires former EA exec as new CFO
EA's named a replacement for outgoing Chief Financial Officer Warren Jenson and the winner is: Eric Brown of McAfee Inc. GameDaily reports Brown is no stranger to the ways of EA, having served as Chief Operating Officer of EA's Redwood Shores Studio.EA CEO John Riccitiello says Brown's broad international experience and industry knowledge make him a perfect fit for the company. Surprisingly there was no gloating about needing a CFO on board who can easily handle a major acquisition. Brown officially begins the job April 14, three days after EA's hostile takeover deadline against Take-Two.
