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As a strategy, it's better than being profitable: it's predictable. The forecasts for the upcoming financial quarters are much more likely to be accurate when y
by lmkg 12y ago
As a strategy, it's better than being profitable: it's predictable. The forecasts for the upcoming financial quarters are much more likely to be accurate when you only work with known IP.
The CEO is more beholden to analysts and stockholders than to customers. He has more to lose by failing expectations than he has to gain by exceeding expectations. Therefore, EA adopts a strategy that minimizes variance rather than maximizing profit.
But yes, it's profitable enough. Games and studios generally have more name-recognition than publishers. EA can take existing name-recognition on a series and generate large revenue from the first bad game they turn out. They launch a large marketing campaign, and by pushing pre-orders they can get more people to spend money on a game before they have an opportunity to find out what the product is that they're actually buying. At this point it's practically a science, and the market is only starting to push back (the latest Assassin's Creed may be doing a number on pre-orders).
- m_mueller 12y agoThis is pretty much how a deadly virus works, right? Infect a particular game brand (cell) by buying (infecting) it, generate enough new copies of the virus (selling the game), then destroy it and release the virus onto the next cells. If the analogy is correct, the game market will either die, find a cure and eject EA or EA adapts and finds a way to coexist such as not to kill the host cells anymore.
- Lordo 12y agoHahah excellent analogy.
- AndyKelley 12y agothis is nonsense
- hueving 12y agoExcellent rebuttal. I like how you clearly outlined and explained your counterpoints.
- fragsworth 12y agoThere isn't much to outline or explain, because the original comment (creating an analogy between EA and a virus?) simply doesn't make any sense...
- KhalilK 12y agoCare to elaborate?
- spiritplumber 12y agoYeah, you nailed it.
- neolefty 12y agoExcept when a company dies, no people actually die. They can go on and create new games and new companies.
- serf 12y ago>Except when a company dies, no people actually die. except that isn't always true. [0] Suicide Rates Rising for Older U.S. Adults - Rates for 40-64 year-olds may be increasing due to financial circumstances, according to American Journal of Preventive Medicine [0] : http://www.elsevier.com/about/press-releases/research-and-journals/suicide-rates-rising-for-older-u.s.-adults http://www.elsevier.com/about/press-releases/research-and-jo...
- louhike 12y agoAre we really talking about suicide in a discussion about a company unsurprisingly shutting down? It is not because it is EA, which have a really bad reputation (which they partly deserve), than we should have a discussion of such a low quality.
- pkinsky 12y agoNot really: in this case the games sold by an infected game studio aren't copies of the original entity that go on to infect other game studios. They're more of a waste product. EA consumes game studios for sustenance and excretes a steady stream of sub-par sequels as it slowly digests its prey.
- m_mueller 12y agoApparently I haven't been clear enough, so let me rephrase: What DNA is to a virus, money is to EA. Selling games is how they get their money, which is then used to infect more games and destroying them all in the process. Well that's at least how my analogy was supposed to work.
- pkinsky 12y agoI understood you, but your analogy doesn't work. Viruses are replicators, they infect cells to spawn new generations. EA is a monolithic entity that consumes studios to sustain itself, all without creating a single copy of itself. Money is food, not DNA.
- warfangle 12y agoSo cancer, then.
- m_mueller 12y agoI like how it all just went worse and worse for EA - from virus to a predator shitting out bad games to a cancer of gaming.
- warfangle 12y agoTo be honest, the virus might actually be more apt, if you change the kind of virus. Take HIV for example: it attacks the immune system of the host, but is fairly difficult to transmit and relies on insufficient protection for that. A studio that accepts a buyout from EA is like a person mainlining heroin using a needle that's been passed around a hundred different HIV+ heroin addicts. It gets the bug. Sometimes it takes years for symptoms of illness to show. Some studios last decades before they waste away - and they last longer if they have proper treatment (in the case of Maxis, this was having Will Wright stay on board). But in the end it's incurable and terminal once treatment ceases, and the studio becomes weaker and skeletal before finally passing.
- rwallace 12y agoThe way I figure it, when value is being knowingly and unnecessarily destroyed, someone somewhere in the chain is being irrational. Given that EA is a public company, the obvious candidate for that somewhere is Wall Street. Your analysis seems to confirm that. But the stock market is supposed to be hyper efficient nowadays such that it's practically impossible to outperform it even for the experts, let alone for random punters on the Internet. What's the resolution to this paradox? Not a rhetorical question; I'm actually curious.
- tempestn 12y agoSounds like the people buying games from EA are the ones being irrational in that description.
- blumkvist 12y ago>But the stock market is supposed to be hyper efficient nowadays such that it's practically impossible to outperform it even for the experts That's not true at all. Maybe in commodities, or foreign exchange or indexing, where algos can trade solely based on prices and public information it is true. But definitely not in individual stock picking. Domain knowledge is king here.
- kasey_junk 12y agoI'm not an efficient market hypothesis proponent in the least, but nearly every study, simulation, etc does in fact show that it is nearly impossible to beat the market via stock picking. Also as an aside, commodities and foreign exchange are places where it is explicitly allowed to have non-public information...
- blumkvist 12y agoThe average retail investor does not have, nor seeks domain knowledge. He's 21-black type of guy. Of course indexing will beat him.
- kasey_junk 12y agoI know that Wall Street is the boogey man for the HN crowd but how in the world can Wall Street be the villain in this story? The Sims was only completed because EA was able to prop up the studio while it was underdevelopment. They were able to do that because A) they are good at selling software and B) they were a large public company. Since then the studio has had a couple of huge flops (Spore and SimCity online) as well as a few enjoyable but disappointing from a sales perspective releases. In an industry built on the blockbuster model, I'd say its surprising they've lasted this long. They have because they have been spending other peoples money. So if there was an inefficiency here, it was that the studio got too much leeway, not that it was shutdown too soon. There is no paradox, because you started with a completely flawed conjecture.
- tomelders 12y agoIf that's the plan... why even get out of bed in a morning. It's depressing? Stop giving these people money people.