profitability
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Tesla reportedly asks for money back on payments to suppliers
Tesla's financial woes have been in the headlines for awhile now, and their latest move isn't exactly one that instills confidence. According to The Wall Street Journal, Tesla has been sending memos to its suppliers asking for retroactive discounts. In other words, it's asking for cash back on payments it has made to these suppliers since 2016. While hard numbers aren't available, Tesla described it as a "meaningful amount of money" in the memo.
Anonymous source sounds off on City of Heroes profitability, NCsoft responds
The chance to prevent City of Heroes from being shut down may have passed, but the debates about the game's profitability and the merit of that shutdown aren't going anywhere. An anonymous source has come forward reaffirming several previous data points but also elaborating on some of the details surrounding the closure, including Paragon Studios' plan to pull away from NCsoft entirely and why NCsoft wouldn't greenlight a sequel to the game. Surprisingly, NCsoft's Chief of Corporate Communications, Lincoln Davis, responded to the information, denying all claims but still shedding some light on the issue. Davis mentions repeatedly that Paragon Studios was not profitable, but at no point does he state that City of Heroes itself was not profitable. He also avoids saying that the company was unable to find a buyer for the game but simply that the company was unable to find a buyer that NCsoft thought would support the game "in a manner [players] were accustomed to for years to come." While it won't bring the game back, it certainly sheds some interesting light on the whole situation, albeit light that will likely be of cold comfort to the game's fans. [Update: We've reached out to NCsoft for a more detailed statement; we'll keep you posted when we hear more.]
Iwata: 3DS is Nintendo 'priority,' even at the sake of short-term profitability
In a recent Q&A following a semi-annual investor's meeting, Nintendo president Satoru Iwata laid out the company's plans for its slow-starting handheld, the 3DS. "We came to the conclusion that we needed to make that bold investment," Iwata explained, "instead of focusing just on this term's profitability, so that we would be able to make the Nintendo 3DS an important foundation for Nintendo for years to come." He added that the company expects the system's profitability to improve dramatically during the fiscal year ending March 2013. Iwata mentioned that, falling in line with this strategy, unspecified 3DS games were delayed from the holiday release window to prevent being overlooked due to overcrowding. The only major first-party 3DS titles scheduled for the rest of the year are Super Mario 3D Land (November 13) and Mario Kart 7 (December 4). He also discussed the company's plans to expand the eShop with an "add-on" marketplace for individual games, and the ability to access the store using PCs and Smartphones. You can read more about this initiative in our post from last week, though it lacks Iwata's almost comically tardy discovery of social networking platforms. He's kind of like your grandpa who just discovered Facebook, likes everything you post, and leaves embarrassing comments on all your pictures in all-caps.
The "big bet": EA aims at a half-million subscribers to make SWTOR profitable
"It's a big bet, but it's the right kind of bet to make for EA." These are the words of BioWare's Ray Muzyka, responding to a conference call to EA investors in which the company admitted that Star Wars: The Old Republic will need to pull in at least 500,000 subscribers to become profitable. This is substantially less than the two million subscriber mark that industry analysts previously predicted. During the conference call, EA CEO John Riccitiello drew a line in the sand between financial failure and victory for The Old Republic: "At half a million subscribers, the game is substantially profitable, but it's not the sort of thing we would write home about. Anything north of one million subscribers is a very profitable business. Essentially it turns on a dime from being quite sharply negative in terms of its EPS [Earnings Per Share] impact to positive the day the product ships. So it's our view that we can be very successful without fundamentally challenging the market leader [World of Warcraft] because we think we'll probably hit the smaller competitors harder when we get out there. Of course, we have no particular ambition to be a distant number two. Our ambitions are higher than that, but we throttle back a little bit relative to our financial projections." While Riccitiello admitted that the title has seen "significant development costs," he claims that costs proposed by the public are far higher than the actual costs of The Old Republic's development. He declined to share the actual costs or the number of staff working on the game. EA also announced that The Old Republic's release date will be in calendar 2011. BioWare has as recently as this January targeted a spring 2011 release. EA's estimate puts its launch somewhere between March 31st and December 31st of this year.
Sony wants NGP hardware to be profitable and affordable
The more responsible gaming hardware enthusiasts among you have probably reserved your excitement over the recently announced NGP until you learn the device's ever-important launch price. Given the impressive specs of the handheld -- as well as Sony's infamous tendency to overcharge for its new gaming hardware at launch -- we wouldn't blame you for worrying. Sony Computer Entertainment Europe boss Andrew House recently provided Eurogamer with the first potential hints about the console's MSRP, saying, "I can't put a ballpark on it in terms of figures, but what I would say is that we will shoot for an affordable price that's appropriate for the handheld gaming space." However, Sony's not going to be giving the things away; House also shot down a Eurogamer source who claimed Sony would be selling the device at a loss. House explained, "we would want to have our hardware be profitable, in addition to our software," later adding, "We've experienced both sides and we know which one we like to be on!" That seems like a tricky balancing act: How exactly is Sony planning on introducing new (assumedly high-investment) technology at an affordable consumer price point and still hope for the NGP to remain profitable? Wizardry? Alchemy? Both? As far as a firm number, Game Informer was the only outlet able to get anything out of Sony's biggest wigs -- when GI brought up the enormous launch price of the PS3, Sony Computer Entertainment president of worldwide studios Shu Yoshida laughed, and replied, "It's not going to be $599." We're glad events unfolded in that order -- had he said "It's not going to be $599," then laughed maniacally, we would have started to get really nervous.
Zelnick: GTA isn't Take-Two's only moneymaker
Take-Two Chairman Strauss Zelnick believes the company can be profitable in a non-Grand Theft Auto year. Speaking with Venture Beat, Zelnick explains that while GTA may have been the main source of profitability before, Take-Two is a different company in the wake of titles like BioShock and Carnival Games. Reportedly, the company now has "30 million-plus selling titles, 15 of which are full owned."Depending on the nature of the content in the first GTA IV DLC (expected later this year), the company might very well see some nice cash flow from the second episode next year. We also have no idea when to expect GTA: Chinatown Wars. From what we can see, GTA is going to be on the T2 fiscal calendar in one form or another for quite some time.[Via GI.biz]
Analyst: Activision is a better investment than EA
We'll start this one off with the caveat that these days, you can find an analyst to tell you anything you want, so just in case you want to hear that Activision is apparently a "better investment" than Electronic Arts, Deutsche Bank analyst Jeetil Patel is your man. He says that Activision (the company that's merging with Vivendi/Blizzard, doncha know) is "way ahead" of its big competitor EA in terms of profitability.His comments are more of an attack against EA than a compliment for Activision, however -- he mentions Call of Duty and Guitar Hero as big franchises for Activision, and they are, but he doesn't say a word about the Blizzard merger at all. And on the EA side, he leaves Rock Band off the list completely (EA is distributing it, not publishing it), and makes no mention at all of Madden or any of EA's other big franchises). Plus, he's been down on EA for a long time.In short, this isn't going to change anyone's mind. If you're a fan (or stockholder) of Activizzard, then great, there's a bright future in it for you. And if you're not, and you'd rather embrace EA, this guy is just biased enough that he's not going to change your mind. But we're all for competition anyway -- it can be good games time now?[via Joystiq]
Analysts: PlayStation 3 profitable by August, smaller chips likely
Sony is gunning for PS3 profitability this fiscal year – which, coincidentally, began this month – and it's hoping to get there by reducing the cost of key components, of course. The PS3's Cell CPU has already been shrunk from a big ol' 90nm to a relatively svelte 65nm, and there's an additional 45nm die-shrink in the works, which should be making its way to the PS3 "soon." A smaller Blu-ray laser could further erode the console's high cost. Notably absent from any speculation on cost reduction thus far: the system's 90nm RSX GPU.Reputed Japanese financial services firm Nikko Citigroup upgraded its rating on Sony this morning, pointing out that the PS3 may cross over the profitability hurdle as early as this August. While Nikko CG didn't attribute this to a specific cost reduction, it's a safe assumption that a 45nm Cell CPU and a sub-90nm RSX GPU would be the key ingredients to a deliciously profitable PlayStation 3. Next step: that rumored PS3 slim. Start holding your breath ... now![Via Engadget]
Samsung no longer selling flat panels, other wares in Japan
Yeah, we're still scratchin' our noggins too, but even after we rubbed our eyes and adjusted the bifocals, it still looks as if the AP is reporting that Samsung will stop selling flat panel televisions and "other consumer products" in Japan. Hot on the heels of Hitachi pulling the plug on RPTVs on this side of the pond, Samsung is citing "poor profitability" as the reasoning behind its dramatic move, and it noted that LCD TVs, DVD players, DAPs and "other items" would no longer be sold to individuals in the Land of the Rising Sun. It was, however, stated that the outfit would continue selling flat screen computer monitors directly to businesses along with memory chips, LCDs and mobile phones to Softbank, but considering that last year less than one-percent of the firm's total sales in the country were made up of consumer electronics sales, we guess it's a little easier to wrap our head around the decision. Nevertheless, there's no reason for us to think that Sammy will be pulling back the reins in any other regions of the world, but it'll be quite strange in Tokyo with no signs of Sammy in the CE realm.
Analyst: Developer profits to suffer until 2008
It might seem odd to suggest that the games industry is struggling in light of recent sales reports that show healthy growth in both software and hardware revenue. But a recent report from media analysts Screen Digest seems to do just that, saying most game developers will have trouble turning a profit until 2008. The analysis, as reported by the BBC, suggests that rising development costs, long production timelines and small, fragmented user bases for the newest generation of systems means sales often don't make up for production costs. The end result? "Sequels to popular games or those based on films are now the focus." Say it ain't so. The article goes on to contrast Microsoft's strategy of buying up exclusives to Sony and Nintendo's focus on home-grown hits, but it doesn't really address how to solve the core problem of runaway budgets and overwrought game design. If developers can't streamline and simplify their design processes, the industry may be doomed to a hard-to-escape downward spiral of increased costs and increased reliance on proven brands and unoriginal ideas.
