EA's Q1 earnings slip 4 percent

Touting eight original IPs in fiscal '08, publisher reports $395 million in quarterly revenue; latest Harry Potter game moves 2M units in four days.

Hours after rival THQ reported a decline in earnings for its first fiscal quarter, Electronic Arts has done the same. The world's biggest third-party publisher reported $395 million of net revenue for the April-June quarter, down four percent from the $413 million it took in during the same period in 2006. The company's net quarterly loss also grew year over year from $81 million to $132 million, or $0.26 and $0.42 per share, respectively.

EA's shortfall came during three boom months for the US game-industry, which saw revenues grow 20 percent in April, 49 percent in May, and 31 percent in June. In its earnings report, the publisher didn't cite any primary reason for the downturn, but did mention that changes to the way it bills for hosting online game services will cause "a $36 million sequential increase in deferred net revenue" which will be included in a later period's earnings.

Of its April-June releases, EA singled out its top title as the multiplatform film tie-in Harry Potter and the Order of the Phoenix, which sold--not shipped--two million units in the four days after its June 25 release. Other big sellers for the month were Need for Speed Carbon, The Sims 2 Pets and The Sims 2, and Command & Conquer 3 Tiberium Wars, which launched on 360 during the month. To date, the EALA-developed game has sold over 2 million units worldwide.

In a statement, EA CEO John Riccitiello talked up organization changes and two high-profile hires during the quarter. "In the last three months we announced the reorganization of our business into four labels and welcomed Kathy Vrabeck and Peter Moore to EA," he said. EA Casual president Vrabeck served as Activision president from 2003 to 2005, while EA Sports president Moore had been the Xbox 360's most public face as corporate vice president of the entertainment and devices division of Microsoft's interactive entertainment business.

EA also made much of the product lineup for its 2008 fiscal year, which ends on March 31, 2008. The 12 months will see the publisher release eight all-new IPs, including Boogie, EA Playground, Army of Two, Skate, Smarty Pants, Rock Band, Crysis (now due in early November), and "PQRS"--a code-named Wii game codeveloped by filmmaker Steven Spielberg. Two new titles based on existing licenses--board game-based Warhammer Online and the cartoon-inspired The Simpsons Game--will also hit stories during the period.

Also due in EA's 2008 fiscal year are Medal of Honor Airborne, Need for Speed ProStreet, SimCity Societies, and the latest Sims 2 expansion, The Sims 2: Bon Voyage. EA Sports will also roll out the latest installments in the FIFA, Tiger Woods PGA Tour, NBA Live, and all-important Madden NFL franchises. The division recently released NCAA Football 08 and NASCAR 08 on several platforms.

In a largely uneventful postearnings conference call with analysts, EA executives declined to give a price for Rock Band's instrument peripherals. They said Madden NFL 08 at least "a half million" preorders, and said they were considering lowering the price of the PlayStation 2 version of NCAA Football 07, which is lagging behind other platforms. Riccitiello also downplayed competition from Halo 3 and Grand Theft Auto IV, saying that the two games would boost console sales and thereby benefit the industry as a whole.

Though EA's earnings were reported after the Wall Street markets closed, its share price ended the day at $48.10, down $0.54 (1.11 percent). In after hours trading, it slid further, down $0.81 (1.68 percent) to $47.25 as of press time.

69 Comments

  • packernation31

    Posted Aug 12, 2007 6:28 pm PT

    EA's fine, they have plenty of blockbuster's ready to hit shelves soon.

  • wakko19991

    Posted Aug 8, 2007 11:46 am PT

    they dont do anything innovative anymore. period.

  • maxmax1234

    Posted Aug 8, 2007 3:50 am PT

    best seller, hptootp?

  • Noah05

    Posted Aug 7, 2007 6:32 pm PT

    4% isnt soo bad compared to other companies

  • MichaeltheCM

    Posted Aug 2, 2007 11:42 pm PT

    4% isnt soo bad compared to other companies

  • Sheiko

    Posted Aug 2, 2007 2:50 pm PT

    Whats 4% when you already have so many exclusive deals like the NFL contract and still try to advertise. Whats a few million out of a billion? Meh. We should just boycott this company.

  • thetealcaptain

    Posted Aug 2, 2007 1:15 pm PT

    ByeBye4545........

    EA should care about every customer they lose, it''s a common business practice to realize that if a hand full of people stop buying ur product it's a fluke. However when hundreds if not thousands stop buying a product it's a trend, trends happen for reasons. They need to identify what those reasons are and take some action. As far as I can tell EA is still looking at things as a fluke, however on the other side of the fence things are definately starting to trend downward. Both in their pocket book and in how people speak of them....

  • yian

    Posted Aug 2, 2007 12:13 pm PT

    The only time I see Harry Potter game in action was in a public library. A kid was playing it. The texture looks pretty decent and the animations get the job done. I guess it isn't too bad if the target audience are the kids.

  • ps3ruler

    Posted Aug 2, 2007 12:06 pm PT

    what tasteless gamers buy harry potter games?
    Hopefully none of you guys do and theres 2 million prepubescent children out there who have yet to aquire a decent palate for gaming.

  • stfolife

    Posted Aug 2, 2007 12:01 pm PT

    "First most wii games are shallow and most of them are minigames. Only poor gamers are fed up with expensive consoles"

    the first part was true but the second was not for various reasons i own all three and i run a small private company of 26 employes handed down to me by my father so i am in no way of the lower class and i am fed up with "big expensive" consoles well the 360 to be specific so just please in the future speak for yourself and only yourself

  • hjgc5e

    Posted Aug 2, 2007 11:49 am PT

    Humorguy_basic what do you mean "anything 'modern' is struggling or failing as gamers get fed up with expensive consoles and shallow gaming."
    First most wii games are shallow and most of them are minigames. Only poor gamers are fed up with expensive consoles.

  • Humorguy_basic

    Posted Aug 2, 2007 11:39 am PT

    Simplistic reporting:
    'EA's shortfall came during three boom months for the US game-industry, which saw revenues grow 20 percent in April, 49 percent in May, and 31 percent in June......' Boom months for the GAME-INDUSTRY?! No. They were a boom for DS and Wii and half the increase due to Worlds of Warcraft. How does that become an industry wide boom? It's just pinpoints of huge growth in certain areas while a general demise occurs elsewhere. If DS games sell ten million more this month, and PC games sell 5 million less, you would call the market 'mixed' in any other industry. In the gaming industry you call it 'game market up 50%' by taking the 5 million decline from the 10 million DS increase and call it a 5 million increase! You don't want to talk the market down by pointing out the PC gaming decline would you? Even if you are supposed to report ALL the information!

    DS and Wii and anything 'retro' is booming. PS3, 360 and PC and anything 'modern' is struggling or failing as gamers get fed up with expensive consoles and shallow gaming.

  • UnrealPro

    Posted Aug 2, 2007 10:23 am PT

    And they had no problem with one white guy facing off against an entire village of Spaniards. Hypocritical retards.

  • ByeBye4545

    Posted Aug 2, 2007 9:23 am PT

    "bforrester" lol im sure EA cares if they lose one person as dumb as you as a customer

  • mr_killer_man

    Posted Aug 2, 2007 9:07 am PT

    Sony is about to make a realy big mistake! If they take the 60gb PS3 off shelves and leave us with the 40gb with no backwards capability. I don't want that one. I don't think too many people want that version so this makes buying games much harder since gas prices keep going up and down.

  • MythPro1

    Posted Aug 2, 2007 8:57 am PT

    If mindless people didn't consistenly buy the latest version of EA sequel franchises, that 4 percent would be much, much higher. I just saw the commercial for the new Madden 2008 game, and I overhear several people acting excited about it since they own all the others. I laughed so hard I crapped my pants.

  • comthitnuong

    Posted Aug 2, 2007 8:55 am PT

    They do have some big sellers coming out in the not so far away Fall so the loss shouldn't be there long.

  • blackace

    Posted Aug 2, 2007 8:53 am PT

    EA relies to much on sequel franchises for their profits. Games like The Sims, Madden, NBA Live, NFS, C&C, MOH, Harry Potter, Tiger Woods PGA, March Madness, etc.. are mostly reharshed each year with a few small changes. Gamers are tired of it and many are skipping 1-2yrs instead of buying the same game again and again. This is why EA's profits keep dropping each year. At least with Crysis & Spore, there's actually something new to look forward to from EA.

  • MythPro1

    Posted Aug 2, 2007 8:52 am PT

    Here's a reason why the Harry Potter sold so many units! And it has nothing to do with the title...none whatsoever *rolls eyes*

  • kevy619

    Posted Aug 2, 2007 8:26 am PT

    "Razzi65

    ds n wii r'nt kicking psp n ps3 badly...it just matter of time...wait for some time..."

    How long do we have to wait? by the time the ps3 gets going, the next xbox will be almost ready for release.

  • VanGriffin

    Posted Aug 2, 2007 8:20 am PT

    Nascar 08? No wonder they sliipped. I still have Nascar 98 for the PS.
    Can't they at least skip a year?

  • link631

    Posted Aug 2, 2007 7:30 am PT

    nintendo is better than sony?

  • Razzi65

    Posted Aug 2, 2007 7:01 am PT

    ds n wii r'nt kicking psp n ps3 badly...it just matter of time...wait for some time...

  • Reetesh

    Posted Aug 2, 2007 7:00 am PT

    thats sad for EA...
    Recently Activision with the whole GH acquiring and all became the Biggest TP game publisher!

  • valakos

    Posted Aug 2, 2007 6:54 am PT

    EA & THQ are paying the price of supporting failing sony systems like the psp and ps3 - SUCK IT, the ds & wii are kicking them badly

  • bforrester

    Posted Aug 2, 2007 6:26 am PT

    All I can say is that I've stopped playing EA sports titles, as have the few gamer buddies I have. 2K sports makes superior Hockey and Basketball titles, in my opinion. We also stopped buying Madden after they obtained exclusive licensing rights to the NFL properties. Congrats, EA. You've pretty much lost me as a customer.

  • BadBoy10605

    Posted Aug 2, 2007 5:59 am PT

    "People bash EA because that's the "cool" thing to do now."

    Exactly!

    Someone else said:
    "I can't believe Crytek chose EA as publishers for Crysis over Ubisoft. All of the good EA games are made by 3rd party developers."

    Well what about Command and Conquer 3? That was done first party.

  • dschalmers

    Posted Aug 2, 2007 5:15 am PT

    I followed a link about Resident Evil 5 to find this beancounter porn. Sort your links out GameSpot!

  • nick0091

    Posted Aug 2, 2007 3:18 am PT

    I agree with hk-47-m4. I also hope EA continues to lose money from those reasons as well as a few others.

    I can't stand how EA just tries to money grab on anything. They always charge a little bit more for anything on the xbox live marketplace if you have not noticed, usally 200 for a theme 150 for gamer pics ( while other companies on average are 150 for a theme 100 for pics, some are even less then that if not free.)

    Also EA's downloable content is a joke on the xbox live marketplace, they are just charging for cheats, unlock Tiger Woods in tiger woods 07 for ,,, points, Unlock performance upgrades for ... points, etc , etc. Didn't cheats used to be with a click of a few buttons or a password? Besides I would rather not buy a game then spend an extra 3 or 4 dollars so the game plays itself.

    Not to mention one of the worst trends coming out in the video game world. The collectors edition. EA has proven buying a collectors edition you have to be very carefull, For example need for speed carbon had all these additional tracks and cars with there collectors edition so of course alot of people wnat all the content so they decide to buy it. Of course if you owned an xbox and went on xbox live you already would have notice this is available to download for 800 MS points. Ok so that equals about 12$ or so, but here is the worst part. If you want to upgrade your non collectors edition game to the collectors edition you will have to spend you points to download it. So for all these new content it must be a pretty big file no? Well guess what its 108kb or a 1 second download. This is because it is called a unlocker file which means this content is currently on the disc this file just unlocks it for you. So basically there employees are not getting paid extra for this content it was ment for everyone but they decide to charge a little bit more for it.

    Anyways I could go on and on about EA but I figured this is enough for now because I already know I am going to get flamed alot. Just remember if you want to download those cheats you are basically just giving them free money that they did nothing for, so if 100,000 people download that 2$ cheat thats pretty easy money. If you really really want to do it, atleast do it on your sims2 visa card. (yes that is a real visa)

  • danny1011

    Posted Aug 2, 2007 2:50 am PT

    haha theyll be fine come christmas time

  • CianMCL

    Posted Aug 2, 2007 1:43 am PT

    Harry Potter: Phoenix (MAC) Harry Potter: Phoenix (GBA) Harry Potter: Phoenix (DS) Harry Potter: Phoenix (PSP) Harry Potter: Phoenix (PS3) Harry Potter: Phoenix (PS2) Harry Potter: Phoenix (PC) Harry Potter: Phoenix (X360) 2million sold thats only 250000 on each platform

  • darkfox101

    Posted Aug 2, 2007 1:41 am PT

    UBi already brought there self to suck.. there shi pc ports.. forget ubi too i hope they both burn and crash

  • beckoflight

    Posted Aug 2, 2007 12:01 am PT

    Ough i forgot to mention UBISOFT FTW they are allmost as big as EA ...& they are trying to be very creative with every new game that they create & they are & evan the movie based games made by UBI are superb think of King Kong ... & ough did i meantion that i'm huge fan of Prince of Persia , Splinter Cell , Assassins Creed , Rayman ..... & after alll UBI did for crytek by helping them to get a good start in this buisness they turned their back on them what should we think of Crytek now + their Crysis sure has graphics but i don't give 2 cents on a good looking game that has an old story with alien invasion & stolen ideeas for gameplay + from what i've saw till now in those gameplay movies is that the enemies can't evan react to your super duper moves & gizmoos !

  • beckoflight

    Posted Aug 1, 2007 11:53 pm PT

    Their games still dosen't impress me they arestill making sports , sequels & movie based game who still dosen't improve much in gameplay but only in graphics !

  • Shroomiz

    Posted Aug 1, 2007 10:54 pm PT

    Good for you EA....

  • HK-47-M4

    Posted Aug 1, 2007 10:48 pm PT

    I don't want EA to go bankrupt, but I want them to lose alot of money for several reasons. Hopefully they will have a failure someday, but with Madden they won't in the near future. But here are my reasons:

    They buy small developers only for their IP's and making those developers produce run of the mill games. They shut down some of their studios after a crappy game, sometimes large groups of employees are fired. Sometimes these employees set up their own studios like Petroglyph. They rush alot of games. They have agressive business methods, what was that thing with Ubisoft about? They force their employees to work long hours. They make licenseing deals to stop compeitors from making rival games. Their games get worse and worse. EA lacks innovation.

    Just imagine if EA bought out Ubisoft. That would be awful. Ubisoft would be reduced to a game factory.

  • Sam_Lowery

    Posted Aug 1, 2007 10:28 pm PT

    Gruug - "Most of us that were are on the "don't support EA" bandwagon are there because of the terrible job they have done in quality control."
    .
    ToxicMold - "People bash EA because that's the "cool" thing to do now. "
    .
    I dunno guys, I hate EA because of the way they treat their customers. EA throws their logo in your face constantly the whole time your playing a game. Every loading screen, Every time a new song plays they've got to have their logo pop up right next to it. They are the worst offender of product placement and adds in games. People used to love EA back in the day, but after they spit in everyone's face while picking their pocket for the past five to ten years the public has had more than enough reason to turn on them. EA is the closest thing to vampires we have in this world because they suck the lifeblood and fun out of the gaming industry.

  • elite_ferns1

    Posted Aug 1, 2007 8:43 pm PT

    ubisoft is better than EA, but i got to admit though they do have some good games

  • Gruug

    Posted Aug 1, 2007 8:28 pm PT

    Most of us that were are on the "don't support EA" bandwagon are there because of the terrible job they have done in quality control. I point to games like BF2142 and NCAA '08 as two outstanding examples of games that EA has released without sufficent quality control. EA USE TO produce good games. But, in their over zealous attempt to pocket more and more profit they have overlooked the fact that quality DOES matter to those that purchase their games. IF EA gets back to producing consistantly high quality games then and only then will they become profitable again. Otherwise, by this time next year, many EA employees may be looking for jobs elsewhere.

  • enoslives7

    Posted Aug 1, 2007 7:50 pm PT

    EA sux....BOYCOTT EA

  • PiNoYPrOjEcT

    Posted Aug 1, 2007 7:46 pm PT

    I can't believe Crytek chose EA as publishers for Crysis over Ubisoft. All of the good EA games are made by 3rd party developers.

  • ToxicMold

    Posted Aug 1, 2007 6:57 pm PT

    People bash EA because that's the "cool" thing to do now.

  • imprezawrx500 posted Aug 1, 2007 6:52 pm PT (does not meet display criteria. sign in to show)

    imprezawrx500

    Posted Aug 1, 2007 6:52 pm PT (hide)

    why does everyone hate ea so much? they make some great games, don't blame ea when it's m$ that's charging for the content. You guys complain about the nfsc content being charged for when nothing costs you a cent in the pc version once you've bought the game.

  • DJSMITH007

    Posted Aug 1, 2007 6:37 pm PT

    Amazing how many Ea bashers there are. Yet all you guys are like/looking forward to Crysis, Madden, NFS, Sims, MoH, and Command and Conquer.

  • DoctorFu

    Posted Aug 1, 2007 6:24 pm PT

    I'm actually pretty shocked at this. It seemed they were doing so well.

  • henry4th

    Posted Aug 1, 2007 6:10 pm PT

    another example of how a so-so game (harry potter) can beat great games in sales. So why do publishers (Such as EA) invest tons of money to make great games?

  • thetealcaptain

    Posted Aug 1, 2007 5:26 pm PT

    We are the ones who make or break a game, if people keep buying crappy games then companies will continue to make them. Why? Because if people will buy a game no matter how crappy it is then, they will continue to make/support a game of that caliber. Crappy games cost less to make (most of the time), which means if it sells well then there is more revenue generated from that product. We as a whole are responsible for making crap games popular. Though the thing that sucks if a game is crappy you can't return it, you can only trade it in for another. Which means they don't feel the impact, if this could somehow change then it would be easier for people to let companies know a product blows by sending it right back to them.

  • RaiKageRyu

    Posted Aug 1, 2007 5:12 pm PT

    Yay?

  • Kounji

    Posted Aug 1, 2007 4:49 pm PT

    EA is going to have a great year a lot of their new ips have had a lot of buzz. Again you better hope that they do well, so that investors don't pull their cash out of the gaming industry. They're doing everything they're supposed to do its just that consumers have less money and are getting less raises to buy all this pricey electronics crap so you can expect revenue to drop. Though in order to give an accurate picture I was gamespot would show the ticker symbols or the data for some of the other public gaming companies. Say like activision atari, or ubisoft to get a more accurate idea. Just goes to show you how much non financial media sucks at reporting financial information

  • darendt69

    Posted Aug 1, 2007 4:39 pm PT

    Thats what they get for going multi with everything and putting out crappy games. Put out less games of higher quality on a specific console and they will do better.

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