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January 18, 2005
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of $3.13 billion was more than double those of second-place Activision's $1.41 billion--EA has recently struggled. For the first quarter of the company's fiscal 2006, which ended June 30, it lost $58 million on revenue of $365 million, in part because consumers may be holding off on purchases until the next-generation consoles are ready, analysts suggest.
But to some observers, EA is wise to accept short-term costs.
"As we move into the next-generation (consoles), being able to spend a lot of money on R&D is clearly very important," said Carless of Game Developer magazine. He thinks EA's decision to put hundreds of million of dollars into its NFL license and to secure the future of the "Madden" franchise was a good, if expensive, idea.
"I think that any other company, in EA's position, would be trying to push home any perceived advantage," Carless said. "If I was going to bet on a sports franchise, the NFL would be somewhere near the top of my list."
That's not to say EA is giving up on its nonsports titles. It has also been locking up exclusive licenses for movie games based on Hollywood hits such as "Harry Potter," "Lord of the Rings," "James Bond" and, most recently, "The Godfather."
However, EA has delayed releasing of "The Godfather," and analysts say that also led to lower-than-expected first-quarter revenue.
But there is little doubt that EA's bread and butter is sports. And that no title is more important than "Madden."
Alternatives for the competition
"Madden" is a "business we've been successful with for over 15 years," said Jeff Karp, group vice president for EA marketing. "So I think we have a pretty good barometer of the upside. We feel pretty strongly that these are great investments for the company."
Still, while EA remains, as Cole calls it, the 800-pound gorilla of the game industry, rivals who lost the right to publish NFL-licensed games say they can still more than hold their own.
"At this time, (Microsoft Game Studio) is focusing on developing creative, epic-scale, platform-driving games for both Xbox and Windows," said Molly O'Donnell, Microsoft's senior manager for Xbox global public relations.
Similarly, Midway, which previously published "Blitz Pro," said it made its own decision to distance itself from the NFL.
Take-Two also said it wouldn't be hurt by the loss of its NFL game. Indeed, even as EA locked up exclusive rights to the NFL, Take Two struck a multiyear deal with Major League Baseball for a reported $200 million to $250 million that excludes EA for the foreseeable future.
To Tim DaRosa, Midway's media relations manager, deals like that prove that EA's competitors, while impressed with the game giant's moves, aren't likely to be cowed.
"If I'm Take-Two, am I disappointed (at losing the NFL)? Yeah," he said. "But they did the smart thing. They went out and got the baseball rights."
Of course, Cole thinks that companies like Midway and Take-Two, regardless of what they say publicly, would love to see EA brought back to earth. But he thinks that's unlikely given the amount of money EA plans to spend on R&D and forthcoming games like "Spore" from Will Wright, the mastermind behind "The Sims," the best-selling PC game of all time.
"I think they're always rooting for (EA to fall)," Cole said. "EA is kind of seen as the big bad bully in the neighborhood. It's David versus Goliath."
See more CNET content tagged:
Electronic Arts Inc.,
David Cole,
R&D,
game company,
Take-Two Interactive Software Inc.
- Over-valued...
- Over-spending...
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- Its more like Madden 2005.00000000001
- Now that EA doesnt have any competition they can rebrand the same game every year without actual changes.
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- Why shoot yourselft in the foot?
- EA's buy HELPED everyone else. Look at Midway's upcoming Bltz: The League. When you don't have to get approval from corporate tight-***** you can be creative, make something original, and most importantly, fun. Now EA is stuck with the NFL. Suckers.
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- EA acts like money is as easy as water
- EA acts like money is as easy as water. What a waste of funds.
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