EA posts $1 billion annual loss

[UPDATE] Madden publisher's earnings report shows huge fiscal year 2009 losses despite increased sales; Lord of the Rings: Conquest sells 1 million, Warhammer Online subscribers now 300,000.

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It's been a rough year for the industry, but few companies have taken it on the chin like Electronic Arts. Today the publisher released its financial results for the fourth quarter and fiscal year ended March 31, showing that the company limped to the finish line in a year that saw it lose more than a billion dollars.

EA's financial results were almost as grisly as a good round of Left 4 Dead.
EA's financial results were almost as grisly as a good round of Left 4 Dead.

Net losses for the 12 months were just less than $1.01 billion, more than twice the previous year's $454 million in red ink. However, the publisher's sales were up for the year, with revenues jumping 15 percent year-over-year to $4.21 billion.

For the fourth quarter on its own, EA posted sales of $860 million, down nearly 24 percent from the previous fourth quarter's $1.13 billion haul. Those sales were led by Skate 2, Rock Band 2, The Lord of the Rings: Conquest, Left 4 Dead, and Need for Speed: Undercover. The good news for the publisher was that it has a net loss of only $42 million during the three-month stretch, compared with $94 million during the same period last year.

In a statement accompanying the release of the numbers, EA CEO John Riccitiello focused on the company's future instead of its rough recent past.

"EA's strong cost actions in Q4 FY09 together with our investments in our digital service businesses will set us up for a stronger FY10," Riccitiello said. "EA is well positioned with the right strategies in a growing industry."

Unfortunately, those strategies might take a while to turn things around. EA updated its fiscal 2010 guidance, saying that it expects revenues for the full year to be down to between $3.7 billion and $3.85 billion. It also expects to lose money in fiscal 2010, although not quite as much as in fiscal 2009. For the full year, EA is expecting losses between $274 million and $469 million.

Electronic Arts is holding its quarterly conference call with investors this afternoon. This story will be updated with details as appropriate.

[UPDATE] Highlights from the conference call are listed below:

--Pandemic's recent release The Lord of the Rings: Conquest has sold more than 1 million copies.

--The most recent info on Warhammer Online puts the game's dedicated player base at 300,000.

--Electronic Arts is currently working on a lineup of 30 games for Apple's iPhone.

--EA Sports Active is confirmed for release this month.

--Riccitiello said that he's confident that 10 EA Wii games to be released during the current fiscal year will be hits.

--The Sims 3 should be a major reason why EA Play division sales are expected to be up $300 million in the coming year. There will be downloadable content for the game on day one, as well as Apple Macintosh and iPhone versions.

--EA Sports revenues are expected to be flat for the year, whereas EA Games should be up on the strength of Mass Effect 2, Dragon Age, Army of Two: The 40th Day, and more.

--In a Q&A session during the call, EA executives acknowledged "softness" in the rhythm-game category that has caused them to lower their expectations for that part of their business.

--Riccitiello said that he doesn't think softness in the Wii market in Japan necessarily presages similar softness in North America. However, he does think that Asian trends such as subscription-based games are gaining considerable traction in the West.

--When asked about research and development spending for the next generation of consoles, Riccitiello said that he hasn't seen indications that a next generation needs to come anytime soon. He added that the current generation could definitely be an extended console generation because there isn't as much need for advancement now that gaming has entered the HD era.

--Riccitiello said that one of the company's problem games that suffered as a result of the economic downturn last year was Need for Speed. EA is confident that this year's Need for Speed, Madden, and FIFA games "feel very strong," He also pointed to EA Sports Active and Brutal Legend as potential breakout games.

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Avatar image for King_Jeremy_77
King_Jeremy_77

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Can't say EA didn't have it coming.

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Desperados11

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it sucks that maybe the first year in a long while since EA has actually gone for some novelty they post a billion dollar loss. hope they can turn it around and reassess their spending, something is definitely not making a return.

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DirtyAl

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No one said that trying to monopolize popular sporting was going to be cheap... you see... exclusivity has no way to absorb cost in the long run and the fact that they waist valuable time and money on marketing without the quality to back it up is starting to show its face. They thought that gaining NFL exclusive rights would capture the other fanbase but the one thing they don't teach in business courses.. humanity and relations... They sink good money after bad with games like fifa street and gimmicks like the all-new dribble-a-pass-shoot system and other ridiculous names they come up with for basic $^%# and think they've done something new... Its a recession and we aren't spending money for no reason anymore... Either give us the quality we deserve for shelling out 65 bucks for video game entertainment or close the doors... I refuse to get all up-in-arms about a company who earns 4.16 billion dollars and cry about a loss... There is nowhere on this planet where you can go at collect 4 billion dollars and walk away... Grow up gentlemen... if it means you can't buy 3 bently's this year, just 2... go !$#@ yourselves...

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nickythenewt21

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I wish I could say that I lost $1 billion, and still be optimistic about my money.

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xfalse

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wonderful :)

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jon181

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Deadspace was way scarey I should not have started playing it at 10pm in the dark. If EA can make more good games like that I'll be happy. more new games less recycled crap please!

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Lonelynight

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I don't see any company losing money as a good thing in times like this.

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insanitycheck3

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[This message was deleted at the request of the original poster]

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Jawehawk-DK

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What's with all the idiots saying that they deserve this? EA has a lot of good games out there. Like the MoH franshise, and Crysis, Deadspace, Need for Speed, and the list goes on. They are just as good as other big companies.

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roma_turok

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The DRM finally punch them to the face.

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SEEDman_X

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serves them right!!

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noles82

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Good.

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volcomstoner180

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everyone loves bashing EA...but they do release some of the sickest games for me skate 2, nhl 09....most of the time they have some of the best out there

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Hobbitslayer18

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It's their own fault they lost so much money. They released only crappy games this year.

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xbox4life76

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When i see a title like "EA lost 1 Billion Dollars" i was blown...blown away by that...i don't understand why people criticize them so harshly...they are the one's who brought sports video gaming to us and I'm honest when i say I've enjoyed pretty much every game I've purchased...from FIFA to Madden to NHL...and so on. I know they have the resources to deal with this and they have some great upcoming titles and when Mass Effect 2 comes out, that'll help also...I'm one for all of gaming to get back on there feet...EA included!

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raahsnavj

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@ChamomileBaths - "DLC, when done right, adds meaningful gameplay that would have been too expensive to add in production at a low cost. I think that's perfect" You know I'm not debating whether or not DLC is worth anything, but the fact they will have it available "Day one". We all know it should just go in the stinking box and shipped with it. "Day one" DLC is BS. "And EA HAS seen success on Wii" - But 10 just this year with the line-up they have? Right... "I'd give Riticello this one last shot. I really like him, he's turned the company into a gamer's game company again. They make pretty consistently great games." You know, if it was last year I would totally agree with you. Almost every title I really cared about was EA last year (Dead Space, Mirror's Edge, Rock Band, etc)... this year though, RB has gone GH on us with two sequels, Mirror's Edge was lacking, and their plan looks like they are getting back to what made them big - crap pushed out yearly or more often... Oh and one more thing for everyone, put a @ in front of the username it and sends a 'someone just replied to your comment' PM... pretty nifty if you actually want to have a discussion...

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spawnassasin

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well thats what happens when you release the same game year after year

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georged_3112

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EA is just pathetic... they deserve it!

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Chimpman_Z

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...and Moses sayeth, "Let my Nascar go." or there will be a plague of 1 billion dollar annual loss...OOPS! Too Late. It's still not too late to let my Nascar go. You can avoid the plague about balls... or was it boils?

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ben2557

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They'll be fine when Dragon Age comes out. :)

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Taegre

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I think they're banking too much on sales of The Sims 3 this year. Sure, the Sims has a huge install base, but that's exactly the problem. A lot of people are likely to be just fine with the Sims 1 and 2 no matter how many more features 3 provides.

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Rottenwood

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Relax, relax. I hear the new Madden this year is going to have an exciting new shoe-designing feature that will greatly distinguish it from last year.

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Sniper

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Maybe EA deserves to lose money after releasing, and not fixing, the mess that was Mercenaries 2. That one betrayed the company's disdain for its customers, so I feel no sympathy for their suspicious and contradictory "sales are up, so we lost money" report.

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TripSe7en

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The cow says its utters are sore now.... Please leave the cow alone EA.

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trick6952

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honestly I think they deserve it, if they didnt milk out thier franchises then this wouldnt of happen in the 1st place

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Abedeuss

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God damn, finally. Maybe now they'll stop rushing developers and making useless sports games every year.

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xtoperchris

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Releasing games for the pc punishes the devs unless it's an mmorpg like WoW. There are lots of pirates in the pc gaming community and that's one factor of losing tons of $.

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shaunamus

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they just need to stop charging ridiculous amounts for games, then less people would download/five finger discount them and just buy them. simples

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hunter8man

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They really need to take a break from the Need For Speed series for a while. It's the Dynasty Warriors of driving games. As for EA Sports, if it's not Madden, then they just cannot matchup to what 2K Sports has to offer. And maybe they need to put some more money into advertising, because if it's not word of mouth or an already household title, a lot of these new gamers don't know about them.

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nappan

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@havocmerc: Yeah, that sums it up. I might add, "Enough nickle and diming" as a number 5.

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havocmerc

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Excellent report. Maybe they should try the following: 1.Don't fire 500 of your staff. 2.Don't pay six figure bonuses to your top dogs. 3.Stop trying to buy out the competition. 4.Get with the program and make games that gamers want and not what you think they want. That's all I have to say about that.

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nuwans_basic

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maybe they need a bailout? LOL they've grown too big, and have too much fat, they need to trim down, i.e. job losses and reorganisation!

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r_gam3

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well i geuss EA is glad that now half of their game count is on Wii. Can't wait for SSX Blur 2.

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smiguelv

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Well EA is far from my favorite company but I'm glad they're still afloat. I hope that these game companies out here stop closing doors and just buck up and point in the direction of quality instead of quantity.

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sj_nehama

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thats what happens when you start to release crappy games (NFS) and rush games not to miss holiday seasons

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BenGenio

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EA needs to rethink their strategy and how to develop their portfolio of games. For example, do they really need to make those 30 iphone games?, and make games for every platform under the sun? EA Sports Active seems like a solid game for the more casual 'gamers' and I personally support that specific strategy. I also like the annual sports titels, not all of them though, I mostly play the FIFA games. Other than that, they had some solid titles last year, like Mirror's Edge and Dead Space, EA needs to promote/hype their games better and focus on the better games ofcourse, because right now I feel like they are all over the place.

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coltsfan4ever

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Why the heck are some of you people acting like EA deserves this???? They have released some great games but guess what people not buying them!!! Probably the same people who cry about EA releasing the"same" games over and over. Dead Space and Mirros Edge were some pretty good games but the sales were not what EA expected. Anyway to the people who complain about EA releasing the Maddens,Lives,etc... give me a break. Just because you dont like sports games or racing games does not mean that millions of others dont. Its a reason EA releases those games every year. Its because they SELL!!! I hope EA turns it around profit wise. They starting to listen to fans and are releasing original games but some dumb people still not buying their games but have the nerve to complain.smh

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Nocturnal15

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This was bound to happen. About time they started to tank. Maybe now they will start focusing on making quality games instead of half a**ing them.

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nappan

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Here's a thought... less madden... more good games and variety.

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Avenger1324

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With companies this size posting a massive loss is more about avoiding tax in years to come than any genuine problems with the company. A lot of this "loss" will be attributed to exceptional items, and remember that in the last year EA signed on-going deals with just about every major sports franchise to ensure only they produce the games for the next 5 years.

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Mr_Fujiv1

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i hope pro evo dont take over fifa this year it will be a real shame cause i have been with EA for my whole life and i admit need for speed has gone down the drain these past years but its only because we want the old ones back like most wanted please listen to us

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fps_d0minat0r

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not suprised at all with the amount of mediocre games they make. deadspace was very good but it was first in the series and advertising was poor. FIFA will get beaten by PES this year since konami seem determined to take back no.1 spot. as for nfs.....what can i say, atleast its looking better then undercover. their revenue increased 15% but they made a twice as big loss as last year??? only reason i can see is that they've invested in fixed assets or hired more employees and game studios..... a high gearing ratio should take them out of trouble hopefully and keep the shareholders happy.

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firehawk998

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@government4213 :- Yeah you got a point there but still like you said though we will see new games from EA lets hope they are good.

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Davidooooo

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I wondered why they suddenly decided to remove DRM lol. I guess someone up there got the idea, that they shouldnt make people angry andd then - posibly sell more games.. Which means - bye bye DRM and all that limiting ´´´´ and hello fancy gaming :P

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government4213

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if anything a struggling company will make games they know will make money, that mean less innovation, i'm not saying that we won't see new games from ea but its a bussiness

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firehawk998

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This loss will lead EA to do one of these two things. Scrap the existing yearly tiltles e.g Madden and come up with Innovative titles like DS, Mirrors Edge and support developers like Double Fine with Brutal legend,etc or they will not take risks with new IPs and depend only on the yearly franchises. God I hope it is the former.

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Bumstafunk

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Sadek did you read the article ? those sales were led by Skate 2, Rock Band 2, The Lord of the Rings: Conquest, Left 4 Dead, and Need for Speed: Undercover. It sells, even though the game isn't that good, still why would they throw money out of the window

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Unlimitedbigdad

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This financial crisis never ends!

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Sadek

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They should scrap NFS... its been crap for the last couple of years. I think thats where they're losing a lot of their money.

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Squeets

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Also... Is this article saying that EA flat out lost $1,000,000,000? Or are they just saying that EA made $1,000,000,000 less profit this year compared to previous years?

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