EA posts $391 million loss, Madden 10 sells 3.9 million

$788 million in earnings can't keep megapublisher out of the red; workforce slashed by 17%, development pipeline cut in half; Need for Speed Shift ships 2.5 million.

This morning saw a flurry of news from Electronic Arts, the world's second-biggest third-party game publisher. After announcing it had acquired social game publisher Playfish in a deal potentially worth $400 million, the company confirmed it was laying off 1,500 employees--or 17 percent of its global workforce--in an effort to save $100 million per year.

EA's Redwood City, California HQ was also hit by today's layoffs.

The job cuts were confirmed in EA's earnings report for the July-September quarter, during which the company posted net revenues of $788 million, down from $894 million during the same period in 2008. However, the Redwood City, California-based publisher said that $359 million in deferred revenue costs contributed to it posting a $391 million loss, an increase from the $310 million shortfall it suffered during the same quarter the year prior. Quarterly loss per share was $1.21, up from $0.97.

Despite the losses and the layoffs, EA executives tried put a brave face on things. In a conference call with analysts, CEO John Riccitiello touted the fact Madden NFL 10 has sold over 3.9 million copies worldwide since its August launch. He said that on the PlayStation 3 and Xbox 360, sales were up 5 percent over Madden NFL 09. EA Games president Frank Gibeau also played up the fact that Need for Speed Shift, the latest reboot of the once-mighty racing franchise, had shipped (not sold) 2.5 million units. The executives also said that "early read on sell-through is strong" for the role-playing game Dragon Age: Origins, which was released to glowing reviews last week.

However, Riccitiello did concede that, as a result of the restructuring, "over a dozen" games had been canceled. "Anything that doesn't measure up to be in a very high profit contributor and unit seller got cut from this point going forward," said the CEO.

While he did not identify any titles, the executive did say that EA has effectively reduced the number of games in its development pipeline by half in just two years. "Mid-60s would have been the way to think of it last year," said the CEO of the number titles EA had in the works. "The way we are looking at it now, there are approximately 50 there this year, and something in the high 30s next year. So when you consolidate this thing, it is about a 50 percent cut over two years."

Looking ahead, EA is forecasting revenues between $3.6 billion and $3.9 billion for the fiscal year ending March 31, 2010. It is also expecting a loss per share between $1.20 and $2.05, resulting from the $120 million to $145 million in restructuring costs, $24 million of "losses on strategic investments," and other charges.

239 Comments

  • project86dbl

    Posted Nov 13, 2009 12:32 am PT

    NFS Shift looks great, can't wait to pick that up along with the new Battlefield Bad Company 2 in March. However EA does need to venture more into new IP's, Mirrors Edge was a good attempt, lets see some more.

  • rad6666

    Posted Nov 12, 2009 1:15 am PT

    I said about 10 years ago EA would rule the gaming world I can`t stand them so it`s nice to see them loses big bucks hand over fist, I really can`t stand their 2nd rate sequels and laying off all those staff surely is going to lower the already shambolic quality of their releases..F**k you EA..Here`s hoping you disappear without trace...oh and btw can we have some original IP`s please if we do have to endure you ..Your 65th Fifa and 1 millionth NFS games are gonna stop selling SOONER or later....I can`t believe you haven`t been boycotted by now

  • thenephariouson

    Posted Nov 11, 2009 10:49 am PT

    might help if they concentrated on new IP's and stopped simply regurgitating the same games over and over again.

  • dsfl

    Posted Nov 11, 2009 8:36 am PT

    If EA made a new Road Rash next gen i think that would earn them alot of much needed $

  • Binpo

    Posted Nov 11, 2009 7:41 am PT

    The games they release are more like updates with a different title, they'll defenitely lose money.

  • XenoLair

    Posted Nov 11, 2009 4:39 am PT

    daaaaaaaaaaaaaaaayum

  • madSomnambulist

    Posted Nov 11, 2009 2:11 am PT

    @S3P4eeever
    Square-Enix is now high-rolling with almost $1B flat in sales last quarter and is outperforming EA and Sega in both revenue and profit. I have no idea how you'd think they'd be able to buy either; not to mention EA would fight a collapse down to the last man, and SE... no.

    How on earth do you lose $391M in a quarter if your sales were $788M, anyway? Well, so long as they don't ask for a bailout I don't remotely care. If they were willing to they could probably find buyers for some of the internal studios.

  • S3P4eeever

    Posted Nov 11, 2009 12:21 am PT

    sega should buy ea, or square

  • DAKYON

    Posted Nov 10, 2009 10:24 pm PT

    just hoping EA will create some new great games

  • Sidrat2004

    Posted Nov 10, 2009 6:05 pm PT

    It would be far easier for them to admit they haven't got any new ideas and got out of both the gaming industry and publishing in general.

    But that's just my opinion and sadly I got Sims 3

  • killarse

    Posted Nov 10, 2009 5:26 pm PT

    That's okay, Obama will "create or save" 4 million jobs next month.

  • Ultramarinus

    Posted Nov 10, 2009 5:14 pm PT

    More support for cookie-cutter shooter clones and yearly injection of sports games, less new stuff. Just sounds like EA.

  • CHAOS100

    Posted Nov 10, 2009 2:40 pm PT

    I wouldnt be surprised if one of those canceled games was a dead space sequel that was not deemed to make enough profit. Perhaps they should have put out their dead space extraction on a real console or if they were serious perhaps a PC, where even with piracy it would have sold far more units than on the Wii.

    EA has been ignoring the PC for quite some time and this is certainty not gaining the respect of gamers. Even the new battlefields have been for the console, i mean WTF is that? Thankfully I believe one of their future BF titles will be for PC, but as you can see I am not keeping much up to date with that.

  • FoxExecutive

    Posted Nov 10, 2009 2:19 pm PT

    I really hope those people do well. EA looks like a terrible company to work for anyway; there is no job security.

  • f_river91

    Posted Nov 10, 2009 1:40 pm PT

    Maybe now they'll start spending money creating better more entertaining games like Dead space for example.

  • holtrocks

    Posted Nov 10, 2009 1:20 pm PT

    These things that say this game sales went down in the 2 quater or whatever is so dumb because duh the sales will go down because more and more ppl buy it so after a while no one buys it twice so ya the sales go down duh

  • NuKkU

    Posted Nov 10, 2009 1:15 pm PT

    woah that sucks for the people who lost their job at EA

  • corkyhookahking

    Posted Nov 10, 2009 12:38 pm PT

    Rottenwood

    Ok the reason for the infrastructure is it makes the game development easier for cross platform games now they only have to code for one network instead of two

  • viewtifuljon111

    Posted Nov 10, 2009 12:23 pm PT

    Sucks. On the bright side maybe they'll start actually caring about the gamers that support them.

  • VectrexFanBoy

    Posted Nov 10, 2009 12:09 pm PT

    wait.. this doesn't make sense to me. Ok so EA has cancelled 12 games, by doing this my common sense tells me they are lacking funds to make these games, they have too much on their plate.But they buy another company and take their game franchises ? i thought you already had a lack of funding? is anyone else agreeing ?

  • Beltbite

    Posted Nov 10, 2009 12:01 pm PT

    that sucks

  • solidstein

    Posted Nov 10, 2009 11:59 am PT

    @l0ve

    that comment is untrue that is 7-9 games a year that means there are atleast 60 games that are non sports related in development. the sports and need for speed is a small segment of there games. just look at dante inferno, mass effect 2, dead space2, dragon age just came out . now i do agree there is probably a cool unique game they cut such as mirrors edge 2 or something. and hopefully they continue there EA partners program and dont build a big corporate culture like activision. and keep helping the younger devs build great games also i hope they give bioware more people and let them develop alot more games

  • punkologist

    Posted Nov 10, 2009 11:43 am PT

    that's massive losses when you consider the revenue was $788 million. What are they doing? Sounds like bad management rather than a bad games industry.

  • Shonuff331

    Posted Nov 10, 2009 11:35 am PT

    "TheVGamer Posted Nov 10, 2009 1:14 pm ET What is biggest game producer???"

    I assume you mean publisher, that would be Activision.

  • l0ve

    Posted Nov 10, 2009 11:32 am PT

    I am really interested in knowing what the games they cut were. They will now stick to high selling games only which means all of their sports titles and need for speed. Which means there might have been a cool unique game that could have been really good that was cut because it didn't fit into the sport or need for speed category.

  • alexh111

    Posted Nov 10, 2009 10:43 am PT

    After going through the nightmare of creating a Bioware account, an EA downloader account, an EA account and failing to have their tech support answer a simple question (via six different emails), this doesn't surprise me one bit. It's like they've created a government bureaucracy with typical inefficiencies built in...all of which piss off consumers and cost you more money.

  • metaljeff

    Posted Nov 10, 2009 10:41 am PT

    I WISH this would stop being such a 'BASH EA' thread, at least as far as their GAMES!!!...They have been getting BETTER!!!...Madden10 was at least a step in the right direction(certainly no 2k, and yes EA needs to give up their exclusive rights), and FIFA, NHL, and Dragons Age are great!!!!!!.....

  • jtuds

    Posted Nov 10, 2009 10:33 am PT

    In the end this should be a good thing for EA. Cut the fat, get lean, and stop making excuses for the unproductive.

  • drphizzle0

    Posted Nov 10, 2009 10:23 am PT

    It's about time. Maybe EA will finally initiate in this overly-mentioned but under-rated phenomenon known as customer service. EA has left a bad taste in many mouths and it's no surprise that they are slipping because of other services like Steam that are grabbing their leftovers, or just allowing customers to make the easy decision to not bother with them - like many I know. Perhaps they could gain some market share if they actually simplified their overly complex and ridiculous services.

  • cajunstrike

    Posted Nov 10, 2009 10:18 am PT

    Agreed. Electronic Arts could certainly reduce costs by opting out of the undoubtedly costly licensing fees associated with their NFL exclusivity contract.

  • sirkel28

    Posted Nov 10, 2009 10:16 am PT

    Sounds like poor management like our Government. They need to fire the big shot over paid corporate guys who do nothing and hire some country boy from the midwest to run the company. At least he would have common sense and wouldn't need millions in bonuses for a job poorly done.

  • TheVGamer

    Posted Nov 10, 2009 10:14 am PT

    What is biggest game producer???

  • Autolycus

    Posted Nov 10, 2009 10:05 am PT

    okay so let me get this right. Lay off 1500 employees, then pay 400 million for a company, which is a gamble. On top of that you are based in one of the most expensive states in this country (which means you have to pay higher wages to EVERY employee, even the Janitor). It doesn't take a rocket scientist to figure out why you keep loosing money.

  • Rottenwood

    Posted Nov 10, 2009 10:04 am PT

    As great as Dragon Age is, though, did Electronic Arts really need to invest in the network infrastructure for it so they wouldn't have to go through Live or the PSN? When your company is freefalling, why would you waste your dwindling clout on circumventing perfectly acceptable networks that your users are already signed up for? There's a time for hubris; a recession is not it.

    Just another case of investing large amounts of money with no obvious return.

  • Stefan

    Posted Nov 10, 2009 9:56 am PT

    Actually, EA owns Bioware so it technically was EA that made Dragon Age...

  • Alucard_Prime

    Posted Nov 10, 2009 9:51 am PT

    @jay_rock_:

    Yeah I know that I'm a huge Bioware fan, maybe my post makes it sound like EA made the game, but that's not what I meant , I was of course referring to them publishing the game , great choice they made to publish and support it.

  • jay_rock_

    Posted Nov 10, 2009 9:41 am PT

    @ alucard_prime EA puts the game out there BIOWARE makes the great game that it is...

  • peewizzle

    Posted Nov 10, 2009 9:33 am PT

    EA: "oh no, expected same old madden with a big number 10 on the front cover to sell 4 million copies worldwide not 3.9...looks like we have to lay 1500 people off so that our 1 MPG H2's can still get a full tank"

    boo EA shame on you for your bad decisions and making someone else pay for your mistakes

  • Alucard_Prime

    Posted Nov 10, 2009 9:28 am PT

    Well, I wasn't a huge EA fan before. I mean they've definitely put out some good games in the past few years, like the NFS series, Burnout, Dead space, just to name a few. But now, with the release of Dragon Age, they certainly have my respect. This is the best RPG I've ever played, bar none, and any RPG fan who hasn't picked this one up yet, is missing out big time.

  • bm1212

    Posted Nov 10, 2009 9:24 am PT

    Damn, EA is really big games company and all the major sports games franchises belong to them. Imagine a world without EA? That would be really scary. I hope they are more successful and wiser with their money in the future because I would really hate to see them go.

  • JimmyJumpy

    Posted Nov 10, 2009 9:14 am PT

    It doesn't make sense that EA spend their 'hard-earned' cash to buy out a company, to later having to lay-off 1500-plus people because of a huge deficit.
    That's irresponsible...

  • GentlemanGamer

    Posted Nov 10, 2009 8:49 am PT

    Hated inside and out. Not a week goes by when this company doesnt do another thing to make me loathe them.

  • HazyNimbus

    Posted Nov 10, 2009 8:32 am PT

    @enoslives7 and Rottenwood: Could not agree more. The execs will keep their jobs while once again the people working hard are losing their jobs. They are not just cancelling the games, they are laying off the people making them: the other games will not be better because of of this as they are not improving how they make games. They've simply put more people out looking for work who now can't afford their games.

  • King_Gamer19

    Posted Nov 10, 2009 8:31 am PT

    The problem is that EA was number 1 with no real competition they really didn't care they thought they could just buy any real competition (ie RockStar) So they put out which were pretty much the same Then Activision & Blizzard became one While Activision is putting out COD:MW EA was putting out MOH:Airbourn the same crap like always just in a different package. It's finally catching up with EA maybe EA should have talk to 2K/RockStar into a partnership like Activision & Blizzard did & not try to be the the big a-hole company which is what everyone sees them as & also NFL needs to take away EA's full rights to there license

  • pungaboy

    Posted Nov 10, 2009 8:30 am PT

    @sellardwellar

    EA did not make or publish Soldier of Fortune Payback.

  • luigigreen

    Posted Nov 10, 2009 8:30 am PT

    Now their gonna focus more on Madden since it always sells so well. Hooray for year-after-year releases. /sarcasm

  • enoslives7

    Posted Nov 10, 2009 8:08 am PT

    EA is putting too much stock in their crappy sports "updates". People will not pay 65.00 every year for minor updates.

  • sellardwellar

    Posted Nov 10, 2009 8:05 am PT

    when their throwing titles out the door that really kill the ip like soldier of fortune payback i can see why they r loosing money... And why do companies have to make more and more money why cant they be satisfied with a marginal amount and just work on that... they got caught up in their own bs... im still waiting for my payback from payback...

  • Rottenwood

    Posted Nov 10, 2009 8:03 am PT

    For the moment, Electronic Arts appears to be rudderless. Their reliable brands are spinning in a rut, they've done a terrible job promoting the new games they've been putting out (and some of them have been legitimately great), and they blew hundreds of millions on Playfish, which is chasing fake money with real money. Sure, a lot of people love those little Facebook games, but that's because they're free and people are bored at work. You blew the salaries of thousands of people on 'Pet Society.'

    They need to stop firing the rank-and-file, and start cleaning house at the top.

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