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EA reports record revs, delays Mercenaries 2

By Tom Magrino, GameSpotPosted Jan 31, 2008 4:51 pm PT

[UPDATE] EA reports $1.5B in quarter sales despite $33 million profit slide; Pandemic's shooter pushed back alongside Battlefield: Bad Company.

The past few months have been tumultuous for publishing giant Electronic Arts, and the company's third-quarter financial report released today bears evidence of that fact.

EA posted a record $1.5 billion in revenue for the quarter ended December 31--a number nearly equivalent to Vivendi Games' full-year tally reported yesterday. According to EA CEO John Riccitiello, EA's third quarter haul, which was up 17 percent from 2006's $1.28 billion revenues, was "the single biggest revenue quarter for any third party publisher in our industry."

EA also laid claim to the top market share for calendar year 2007, with an 18 percent share in North America and 19 percent share in Europe. According to Activision chairman and CEO Robert Kotick in December, Activision's market share through November stood at 16.8 percent in the US. Though third-party publishers have struggled to find footing on Nintendo's Wii, EA said it had managed 12 percent share, up from 3 percent from the year before.

But while revenues were up, profits were not. The publisher's take for the quarter stood at $721 million, an 11 percent slide from the $811 million it brought in the year before. That figure represents a $33 million net loss for Q3 2007, compared to a $160 million net gain compared to the same period last year. Profitability has been a subject of much interest for EA in recent months, especially following the closing of Fight Night and Def Jam studio EA Chicago and the reportedly routine company-wide layoffs the company experienced in late 2007.

EA's numbers may have looked better had it not deferred an additional $234 million in sequential net revenue to unspecified "future periods" due to accounting changes related to some online-enabled games, as well as $78 million restructuring charge due to the aforementioned studio closures.

Top titles for the publisher during the quarter were Need for Speed ProStreet, FIFA 08, Rock Band, The Simpsons Game, Madden NFL 08, The Sims 2 Castaway, and NBA Live 08. FIFA Soccer 08 continued to be the top title in EA's catalog, with an additional 4.5 million units sold during the quarter. Need for Speed ProStreet did surprisingly well in the international market, selling 5.5 million copies globally, 65 percent of which were sold abroad. EA also noted that Rock Band, which has thus far played second fiddle to Activision's Guitar Hero III, sold 1.5 million units for the quarter, while the Simpsons Game moved 4 million units.

EA also took the opportunity to officially bump two of its high-profile action games to fiscal year 2009, which begins April 1, 2008. Lending credence to the retail radar's rumblings last week, Mercenaries 2 will go on extended shore leave until EA's next fiscal year. Pandemic's hyperdestructive action game was originally slated to arrive during the 2007 holiday deluge of games before being pushed back to the first quarter of 2008 for further tuning. Joining Mercenaries in fiscal 2009 will be Battlefield: Bad Company, the next console installment in DICE's realistic first-person shooter war game.

Following the windfall of third-quarter revenue, EA has narrowed its guidance for full year revenue projections. The publisher is now expecting revenues of $3.46 billion to $3.58 billion for the year ended March 31, from previous guidance of $3.35 billion to $3.65 billion. For its final quarter of fiscal 2008, the publisher is expecting $925 million to $1.05 billion in revenue.

[UPDATE] In a ranging post-earnings conference call following EA's third-quarter 2008 reporting, the publisher delved further into its performance for the quarter. Though EA stalwart Madden NFL 08 has sold more than 7 million units since taking to the gridiron in August, its tally is 13 percent off year over year. However, dwindling interest in Madden's annualized football was compensated by the debut of Skate, which EA claims is outselling Activision published rival Tony Hawk by nearly two to one.

EA also said that it 23 of the 37 games released for the year have attained platinum status, up from five million-sellers a year ago. Games that achieved platinum status during the third quarter include Need for Speed ProStreet, Rock Band, The Simpsons Game, The Orange Box, The Sims 2 Castaway, NBA live '08, and Crysis. Of these titles, EA called out Rock Band and The Simpsons Game as both beating significantly beating sales expectations.

Addressing Rock Band, EA noted that a European launch is now slated to arrive during its fiscal first quarter, which runs from the beginning of April through June. The publisher also tackled issues of broken or malfunctioning equipment for Harmonix's rhythm game, with EA CEO John Riccitiello saying, "We've had single digit complaints around the guitars and other parts of the package, and single digit percentage of consumers that have acquired them." Following those statements, Riccitiello confirmed speculation that a Wii version of Harmonix's rhythm rocker would join editions already available on the Xbox 360, PS3, and PS2, though he revealed no other details on the matter.

Riccitiello also revisited the ongoing debate concerning development difficulties on the PS3. "Games where we essentially led development on the PS3 platform like Burnout, which is doing well in the market today, we had no issue at all," he said. "But in circumstances where we either led with the Xbox 360 or we ran parallel to partly cloudy production, for the most part, we're still experiencing some delay on the PS3. It is a little bit more challenging a development environment for us."

96 Comments

  • bernie0

    Posted Feb 11, 2008 4:13 pm PT

    the gafics suck ***

  • ghost867

    Posted Feb 4, 2008 5:37 pm PT

    VegetaMaelstrom:

    I thought the very same thing until I remembered that I have seen a lot of graphics cards that come packaged with Crysis

    That's why the Super Mario Bros on the NES sold 40 million, Tetris on the Gameboy sold 33 million, and why Super Mario World on the SNES sold 20 million copies. All because they were pack ins. 99% of the time, a game won't even touch those numbers unless it's a pack in.

    More recently, that's why Forza 2 and Marvel UA are forth and fifth best selling 360 games. Because they were packaged in with the console last holiday (and probably still are). I'm sure Nintendogs and Zelda are getting big boosts on the DS, because they were bundle pack ins. That's also why GT3 on the PS2 got such great sales, partially because it was an official bundle pack on for a while.

    So 1 million as a pack in is nothing, when they're probably talking worldwide. I would be willing to bet half of that is pack in sales.

  • sidious

    Posted Feb 4, 2008 8:14 am PT

    I've no opinion on Crysis since I haven't played it (I don't play PC games outside of RTS/TBS games).... well, other than to say it looks awesome.

    But I am sad Mercenaries 2 got pushed. I mean, I would rather a game get delayed to be made better of course, but I'm so excited to play it I just hate to see it get delayed. I LOVED the first game.

    Bad Company was one I wasn't that excited about until I watched some of the videos with the developers walking thru the game showing off the new engine and the things you can do... now I"m pretty excited about that one too...

  • VegetaMaelstrom

    Posted Feb 1, 2008 8:17 pm PT

    qiwihead:
    "I find it extremely hard to believe that Crysis sold a million copies."

    I thought the very same thing until I remembered that I have seen a lot of graphics cards that come packaged with Crysis. So every one of them that gets sold probably counts towards that million but is unreported by the NPD numbers. Even taking that into account I still find that million unit number a bit iffy but for now I will take EA's word. I sure hope Mercenaries 2 doesn't ship in the heat of the christmas holidays because it seems to me that it might get lost in the shuffle which would be a damn shame. Spore, March 2009. I'm calling it. No way in 2008.

  • 360wishlist

    Posted Feb 1, 2008 3:32 pm PT

    Mercenaries 2 delayed? Oh well GTA 4 is what im ready to play anyways

  • DeeCrutch

    Posted Feb 1, 2008 2:10 pm PT

    markharris31 Sooooo, I hear people complain on these boards all the time about EA pressuring dev teams to release games on schedule and then the games coming out buggy, or missing features, or whatever. Now they're delaying a couple anticipated titles to let the devs polish them up all shiny... and people are still complaining. I'm starting to think the problem isn't on the EA side....

    Somebody just won this little debate here. Given EA's history of rushing games, I would think that people would actually be GLAD that they'd delay a game like Mercs. Nobody likes delays, but dammit people, I'd rather wait and get a better game than get a buggy and unfinished game early.

    And I don't buy for a second that EA or any other company would delay its games (or other products) if they didn't feel that they had to. A game can't make any money for them if it isn't released... I can buy that they delayed Mercs so as to duck GTA a little bit though, and I don't blame them for that at all. GTA is the inventor of the genre that Mercs has treaded into, so I would probably delay the game for that reason as well. After all, there's no need to face down that 800 pound Go-rilla that is GTA if you don't have to!

  • monkeygodkill

    Posted Feb 1, 2008 1:25 pm PT

    More delays! Why is everything being delayed these days?!

  • nate1222

    Posted Feb 1, 2008 1:20 pm PT

    @ctg867

    Some good points, man. Crysis was such a resource hog that I don't know ANYONE who bought it. And I know some serious tech heads. I know plenty who'd bought UT3 for PC and Orange Box for PC and 360. But, Crysis? Nada! And Rock Band is cool, but its cost kept many from buying it. Only two people I know bought RB. Everyone else just played it at Best Buy or the 'TWO's' apartments.

  • ctg867

    Posted Feb 1, 2008 1:13 pm PT

    65% of NFS sales were out of country. Glad to know US gamers aren't falling for that crap as much anymore. That game has been so rehashed over the years. The two highlights in the last two generations are Hot Pursuit 2 and Most Wanted, both of which, as far as I'm concerned, are racing classic. But ProStreet, is definitely not a classic. Only a huge disappointment.

    Glad to see Rock Band sales stepping it up. Though they'd step up a lot more if (a) the bundle wasn't so overpriced ($170 for a game and three wired instruments?), and (b) the guitar/drums weren't breaking left and right. That probably hurt the actual amount of money made on the whole game big time. The damn things are dying like 360s, they gotta fix that crap.

    Does anybody care about Mercs 2 or BF: Bad Company, because I lost interest in the two a long time ago. Let's hope they can finally get the two out already.

    Wait, Crysis hit platinum status? Oh really, where? Cause last I checked it sold less then 90k in the US in November. Are they talking worldwide? Did it really go up that much in December? Or am I missing something here?

    "We've had single digit complaints around the guitars and other parts of the package, and single digit percentage of consumers that have acquired them."

    Bull ****. I don't believe that for a second. A ridiculous amount of people have had guitar and drum problems. The flicker breaks, the buttons stop responding, the drum pads loose sensitivity or don't work at all. Plus there are a lot of people there are just dealing with low responsiveness, because they physically can play through it, but it sucks, and a lot of people don't know they can send them in.

  • nate1222

    Posted Feb 1, 2008 1:13 pm PT

    DAMN IT! Mercenaries 2 is pushed back AGAIN! I loved it on PS2 and I was hoping for the 360/PS3 version. Now I'll have to settle for 'Frontlines: Fuel of War'. The apperent equivelent.

  • qiwihead

    Posted Feb 1, 2008 12:27 pm PT

    I find it extremely hard to believe that Crysis sold a million copies. It was not in the top 10 PC games of 2007, which means that it sold fewer than 200,000 copies at retail. Sure, digital downloads are catching on, especially on PC thanks to services like Steam, but it would be very surprising if Crysis sold over 800,000 via digital download. This is especially true considering how Crytek themselves have complained about the amount of piracy they are seeing of this game. I suspect that Crysis being included in EA's platinum list is a typo, either on Gamespot's part or EA's.

  • FraserAlexander

    Posted Feb 1, 2008 12:08 pm PT

    I want Bad Company NOW...like that guy in the whopper commercial who's like "GET ME A WHOPPER!"

  • MaxCadillac

    Posted Feb 1, 2008 10:52 am PT

    More time for dev equals better quality. Someone explain to me how any game company makes money by delaying a product. I'm curious why anyone would think that.

  • technowiz999

    Posted Feb 1, 2008 10:20 am PT

    Tisk tisk poor EA. Still impressive numbers, but they need to come up with an MMO game to beat out WoW. I'm not a huge fan of Vivindi (French companies don't help the American economy) so I guess I'm rooting for EA in this war. And the reason they are having PS3 trouble...because PS3 doesn't make companies any money so why bother.
    Oh and come on people, they are delaying the games to make them BETTER, not to piss people off. A month or two delay would be to make finances look good...but a half year delay is to fix things, so be happy they are being that considerate unlike usual.

  • yungswift44

    Posted Feb 1, 2008 10:03 am PT

    damn it EA..........

  • SchoollyB

    Posted Feb 1, 2008 9:39 am PT

    skate. Or Die!!!

  • Spyhunter_101

    Posted Feb 1, 2008 9:32 am PT

    i think mercenaries 2 wont be out till Q3 or Q4 just in time for the holidays i think developers need to think about how they give release dates they only piss of fans every time there's a delay

  • tatu2004

    Posted Feb 1, 2008 9:28 am PT

    if they keep delaying the title's people will just forget them and not buy.

  • BigDaveyDogz

    Posted Feb 1, 2008 8:30 am PT

    Money ruins everything...give us our damn games EA and stop holding out to make your numbers seem impressive...noone cares, we just want out games!!!!

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