According to the research firm The NPD Group, January, February, and March were a collective boom time for the US game industry. Today, though, the biggest third-party publisher in the business reported an increased loss for the first quarter of 2007.
For the three months ending March 31, Electronic Arts posted a net loss of $25 million, up from the $16 million shortfall it suffered during the same period in 2006. The company took in $613 million in net revenue during the quarter, down 4 percent from the $641 million it took in during the same period in 2006. In a statement, EA said its increased loss was "primarily due to the transition to next generation systems." It also cited a onetime $24 million charge it incurred due to "after-tax stock-based compensation charges."
The Redwood City, California-based publisher had only a few major releases during the quarter. However, those that did sell sold well. The Sims 2: Seasons expansion pack topped more than 1 million copies worldwide, with Burnout Dominator and Def Jam Icon moving 500,000 units apiece. Though he didn't give sales figures, EA CFO Warren Jenson did say during an analyst conference call that Command & Conquer 3: Tiberium Wars was a "successful relaunch" of the series. According to NPD data, the game has sold more than 128,000 copies on the PC in the US; an Xbox 360 version was released today.
While $25 million is a princely sum to most companies, EA's quarterly loss was dwarfed by the publisher's annual revenues. For the 12 months ending on March 13, 2007, the company took in $3.09 billion in net revenue, 5 percent more than the $2.95 billion it posted during its prior fiscal year.
However, virtually all of the $1.88 billion in gross profit the company took in during the year was wiped out by expenses. The company spent $107 million on stock-based compensation charges during the year and went on a shopping spree that saw it acquire independent developer Mythic Entertainment, Headgate Studios, and Battlefield-maker Digital Illusions CE.
Unsurprisingly, EA's biggest game of the year was Madden NFL 07. As of the end of March, the game had sold more than 7.1 million copies on 11 platforms in the US, a 15 percent increase. As for what the rest of the world calls football, EA's lock on the FIFA soccer license translated into 13 million games sold internationally, including FIFA 07, FIFA Street 2, and 2006 FIFA World Cup. Overall, Jenson said that EA Sports' revenue was up more than 20 percent for the year.
EA's second-best-selling game during its last fiscal year was Need for Speed Carbon, which Jenson said sold more than 8.5 million copies internationally. That bested both The Sims 2 Pets, which sold 5.6 million during the year, and The Sims 2, which sold 3.9 million. However, it wasn't good enough to beat the whole Sims franchise, which moved a whopping 22 million titles during the year, according to Jenson.
Looking ahead, EA now predicts net revenue for its current fiscal year to be between $3.1 billion and $3.4 billion. Major titles set to launch during that period are Medal of Honor Airborne, Army of Two, Boogie, MySims, Battlefield: Bad Company, Skate, and the next Need for Speed and Madden titles. EA estimates that it will take in $300 million to $360 million during the current quarter, which ends June 30.
As of press time, EA stock was down more than 2.6 percent in after-hours trading, selling for $1.39 less than its $52.94 closing price.