EA Financials and the Future

As I quickly mentioned in the last post, EA’s stock price has dropped 50% in the past year, though most drastically since TOR’s launch period.  The total value lost is around 2 billion dollars.

The world 2nd largest gaming company (Activision being #1) lost half it’s value by hedging it’s bet on a game that was to compete with WoW and by all accounts has lost 90% of its playerbase in 6 months.  I guess they are praying that Madden and Battlefield can re-supply the coffers.  As an investor though, you really have to be wondering if the people leading the company are the ones that should be.

Let’s look at a couple misteps from EA over the years.  First and most obviously, is their inability to market any MMO.  They bought UO a few years after it’s prime, killed 3 expansion packs and have since left it alone.  The other ones that they’ve launched and failed are:

  • Motor City online
  • Earth and Beyond
  • Sims Online
  • Tiger Woods online
  • Warhammer Online
  • Star Wars Old Republic

I wouldn’t actually call any of their games real large successes but perhaps the Battlefield Heroes F2P game is the closest.  Even their Origin service has had issues.  First, they removed their games from Steam for no explained reason.  Then they launched a service that was always on, yet failed to connect.  Then they banned players who played storebought games through their service.  Then they simply had foot in mouth disease – lately the idea that Steam discounts are a bad idea while EA is simultaneously selling their games at 50% off.

Many of their new IPs have failed, for various reasons and those that have succeeded have been on a yearly pillage for some time now.   FIFA, NHL, Madden, Battlefield are all games with mediocre if barely noticeable improvements sold as a new game every year.  Any time there’s a small or medium company that makes decent games, EA will buy them up and turn them into a corporate beast.  BioWare is certainly the most prominent recent example where their quality games have been diluted to all new lows.

This coming from the company that used to send out amazing quality games, various IPs and always had people talking about them in a positive light.  10 years ago you’d be hard pressed to find someone who had something bad to say about EA.   Today’s it’s the complete opposite and investors have to be scratching their heads as to why that is.

What turn did EA take along the path that made the gamer base turn against them?  Was it a single step, did they take risks where inappropriate (Dante’s Inferno anyone?!), did they simply absorb the smaller companies and change the spirit of those games?  Is it possible for EA to turn the boat, the giant boat, so that they get back to their gaming roots and start giving us the quality games we know they are capable of producing?

As a gamer, you have to really worry when the #2 company loses half it’s value and is unable to turn out quality anymore.  That slope is getting slippery.

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