Sims 3 sells 3.7 million as EA reports mixed financials

By Tor Thorsen, GameSpotPosted Aug 4, 2009 2:26 pm PT

Deferred revenue costs force third-party publisher to report $234 million loss despite increase in sales; latest life-sim nears quadruple-platinum stats, EA Sports Active sales top 1.8 million.

The Sims 3 was EA's sugar daddy last quarter.

Following Microsoft, Nintendo, Sony, Capcom, THQ, and Sega Sammy, Electronic Arts has reported its earnings for the quarter ending June 30. Like many of its rivals, the company reported a loss--a $234 million loss, to be exact, on $644 million in revenue. During the same period in 2008, the company reported a $95 million shortfall on $804 million in revenue. Its loss per share was $0.72, compared with a $0.30 loss per share the year prior.

In a post-earnings conference call, EA CEO John Riccitiello blamed the ongoing recession and "the impact of deferred revenue" for the deficit. His company revealed that, outside of generally accepted accounting principles (GAAP), its net loss was just $6 million, versus a net non-GAAP loss of $135 million from April-June 2008. Its non-GAAP revenues were $816 million, and its non-GAAP loss per share was just $0.02, up from a $0.42 loss per share during the year prior.

EA's loss came despite the company declaring itself the top third-party publisher during the April-June quarter. The company singled out Fight Night Round 4, EA Sports Active, and The Sims 3 as its top earners, with the latter two games selling 1.8 million and 3.7 million worldwide, respectively. The NPD Group reported four of the top 10 US game SKUs in June were published by EA: EA Sports Active (Wii, 289,100 units), Tiger Woods PGA Tour 10 (Wii, 272,400), Fight Night Round 4 (Xbox 360, 260,800 units) and Fight Night Round 4 (PlayStation 3, 210,300 units.)

EA Sports Active now holds the distinction of being the best-selling Wii game ever published by EA, claiming a 21 percent share of the North American software market for the console. (In Europe, it claimed a 13 percent Wii market share.) The company has been aggressively going after the Wii market, going so far as to bundle Tiger Woods PGA Tour 10 and the far less popular Grand Slam Tennis with the Wii MotionPlus peripheral in the US and Europe, respectively. EA also released Boom Blox Bash Party, which has sold just over 70,000 units in the US as of June 30, according to NPD.

Looking ahead, EA is sticking to its full-year guidance of $3.7 billion to $3.85 billion in net revenue and a per-share loss of $0.85 and $1.35. Non-GAAP revenue is expected to be $4.3 billion, with per-share earnings of $1.00.

72 Comments

  • chuamishael

    Posted Sep 16, 2009 10:56 am PT

    EA still owned in SIMS 3, Maxis developer group still earning, regardless of EA's report.
    Sales on Sims 3 is still at large. probably the largest among all the games this year. they even outsold Microsoft office 2007. The good thing about SIMS 3 is that there is no DRM, you can use it as much as you want. unlike spore.

  • modernwarfare3

    Posted Aug 10, 2009 7:28 am PT

    EA's moto is challenge everything now is losing everything

  • Petercairns

    Posted Aug 6, 2009 3:30 am PT

    SIMS SUCK!!!!

  • Harvestbuddy

    Posted Aug 6, 2009 12:24 am PT

    Because it's so buggy >.>

  • andrew_ribbons

    Posted Aug 5, 2009 4:27 pm PT

    I hope this means they've learnt their lesson, and will release Mass Effect 2 by BioWare, a game dear to my heart, DRM-less in the same way they did the Sims 3.

  • SicklySunStorm

    Posted Aug 5, 2009 2:10 pm PT

    OK, so they reported a loss. Big whoop - so have probably 85% of the big companies out there across all industries.

    The main thing is EA are smart and clearly have the ability to ride out the storm, so this news doesn't even seem consequential to me... EA won't be disappearing any time soon

  • kavadias1981

    Posted Aug 5, 2009 1:24 pm PT

    Almost every company seems to be in a financial no win situation.

  • ThisNameIsDumb

    Posted Aug 5, 2009 12:26 pm PT

    This game looks boring...

  • djmiranda15

    Posted Aug 5, 2009 11:51 am PT

    @ athenian29

    I don't consider paying 25-60€ a profit. Only a few games give more than what we pay for.
    Games that offer 200+ hours of entertainment are what I consider a profit.
    I don't care if other people pirate the game, I just want to enjoy what i have.
    And besides, what you pay for is so much better then what you download. Try it out. See for yourself.

  • vengeance00

    Posted Aug 5, 2009 11:16 am PT

    also @ athenian29

    DRM didn't work against piracy, it helped it because people who would of bought it didn't want the spyware on their pc and thus downloaded the DRM free crack. spore was pirated by 5 million compared to the 2.5million sold in the first few months it was out.

    as long as there are people with programming know-how no software will be piracy proof.

  • vengeance00

    Posted Aug 5, 2009 11:09 am PT

    i'm wondering if they'll horseshoe in simcity through an expansion into this now that they can have a whole town loaded.

  • Ravenswan32

    Posted Aug 5, 2009 10:24 am PT

    It's a clicking-based game, acessible to anyone, addictive, creative and personal. No wonder it sells so much, it's like a thousand games inside one, if you know how to play it.

  • wildamnesia

    Posted Aug 5, 2009 9:56 am PT

    The most addictive game on the planet. And for the most part, the gameplay is completely dull....and yet we are drawn to it like flies to a pile of poo.

  • -Celeste-

    Posted Aug 5, 2009 9:46 am PT

    @athenian29

    Piracy does hurt companies in this economy, but consumers will lock down spending for things they dont see as having a justifiable value. People do not pirate software because they dont want to pay, they pirate software because they are either skeptical of the product or dont see it having that value.

    Companies charging 50-60$ for bugged / short / shovelware games. Companies charging 100-350$ for an operate system. Companies charging 500-2k for graphics software (i understand a lot of these aren't meant for normal consumers, but 500-1000$ for photoshop?). You think that by putting DRM on something people will just go out and buy it? Not unless you lock down EVERYTHING; even then, people will just find something else that either costs less or is shareware instead of buying your product.

    DRM may help prevent piracy, but it does nothing to boost sales or opinions of companies. Its not like spore would have sold double the amount if it wasn't available off a torrent. Companies need to realize that as prices go up, income goes down ,people are going to weigh want vs need a LOT more then before.

  • Excedra

    Posted Aug 5, 2009 9:38 am PT

    Sims rule!!!!

  • Nxss-effa-sim

    Posted Aug 5, 2009 8:52 am PT

    @ lamprey263

    This will give you an idea of where all that money is going, it is actually pretty understandable. EA made $4.2 billion revenue last year. It cost them $2 billion to make that revenue (manufacturing and distribution costs). Which mean they have a $2 billion gross profit. Factor into that $1.3 billion in R&D, $1 billion for Selling (advertising) and Administrative, $400 million in Non-recurring items (if they took a loss on real estate or something), and other items of $50 million. Encompassing all of that and you stand roughly around an $800 million loss. Once you include Income Taxes it hits the Big b. But I have to admit the Non recurring items is rather large. I don't know what it includes unless I look at the official financial statements. R&D is also large.

    Anyways, what some people don't understand is that under GAAP just because you make revenue doesn't mean you literally taking in that money. A lot of revenue is based on Accounts Receivable which means people are promising to pay at a later date. That's why when you really want to understand the financial healthy of a company analysts look at Cash Flow--the amount of money on hand.

  • ldonyo

    Posted Aug 5, 2009 8:46 am PT

    Who knew there were that many people unwilling to live their own lives?

  • PlyrX

    Posted Aug 5, 2009 8:32 am PT

    Of course EA is going after Wii games, all they want is more money

  • TevoxZi

    Posted Aug 5, 2009 8:19 am PT

    I like the first Sims the most, but that's possibly because it was the first I played of them while it was still "new" to me.

    Now in my opinion; it's just getting more & more repetitive and isn't fun anymore. :/

    But hey, this is just my opinion: Overall all the Sims are great!

  • Inconnux

    Posted Aug 5, 2009 8:13 am PT

    not a big Sims fan, but to each their own... I just hope this sends a message to EA that a game will do well without the Securom Malware. If this had been a game that interested me (like mass effect 2 without Securom) I would have picked it up right away even though it is released by EA.

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