EA Stockholder Meeting Discussion/ Future Video Game Crash Speculation

[escapistpiggy]

https://www.google.com/finance?client=ob&q=NASDAQ:EA

Earlier today Electronic Arts held a shareholder presentation to discuss the past fiscal quarter. After a brief intro, stockholders were allowed to ask EA executives questions about the company's state and plans for the future. In the meeting EA's CEO, John Raviolipepperonitortellini, was asked about whether or not his position as CEO would last much longer and some EA guy denied those rumors(but I think it was just damage control and that Peter Moore is getting a promotion soon). Another stockholder asked why he should stay a stockholder given EA's stock trend. During the last shareholder presentation there were a few questions about SWTOR and it's success(or failue), but there weren't any this year, interestingly.

How much of this do you think is Bioware's fault? SWTOR has been bleeding subscribers and ME3, regardless of it's sales, had a huge backlash. I doubt if investors pay much attention to the gaming community's opinion of EA, but it's a might big coincidence.

In fact, the entire gaming industry seems to been going through tough times.EA's stocks have been plummeting for the past year, and are at about half the price it was last July. Vivendi is allegedly looking for buyers interested in ActiBlizzard, but can't find any. THQ is so close to going under it's sad. Nintendo is posting its second quarter loss in a row, which is also its second quarter loss ever. Sony's lost billions this gen because it took years to sell the PS3 at a profit.
Do you think another video game crash is on the way? Is this a good or bad thing? Nintendo ended the first video game crash and brought with it a renaissance in gaming. Can we expect another renaissance, or is there too little innovation left in the industry?

I think video games are officially "too big to fail" now, so it will never disappear completely; but I am curious to see how another crash would affect the way we game.

 

[xPrometheusx]

Interesting topic. If EA dies a little I certainly won't be crying, but that's beside the point. I think that a lot of what kept people gaming was the novelty, originally. Now that the market is settling down and EVERYTHING is overpriced (just because 60 dollars is standard doesn't mean people are willing to pay it every time they want a new game... plus DLC), people just aren't buying into it anymore. Also, stocks are weird. I think it might be a complete bubble, because somehow after recording record profits for years, they're finally subsiding. EA ain't going into the red anytime soon, it seems to just be a case of shitty development and a good chunk of their hardcore fanbase rejecting them for it affecting their profits. They aren't losing any money, but instead of making 100 million they're making 50 million, so stocks drop. They're still raking in metric butt-tons of profit, but people get skittish when a company doesn't do AMAZINGLY.

I can't say anything for the actual failing companies, but we have nowhere left to innovate, truthfully. 3D was and is continuing to be a bubble, most people just aren't interested so soon after buying a thousand dollar HD TV. Motion control is still interesting, but it doesn't appeal to most hardcore gamers. The next thing would be affordable Virtual Reality, there aren't too many other areas to go.

Interestingly, indie games have kept up that unique novelty and small independent studios are doing great while major sequel-pumpers are losing. Interesting.

 

[matrix3509]

I think video games are officially "too big to fail" now, so it will never disappear completely; but I am curious to see how another crash would affect the way we game.

The videogame industry as a whole will likely never fail completely. There will always be indie game devs plugging away on their dream projects.

The triple-A game industry though, is completely and utterly fucked. The triple-A industry is where dreams go to die, where devs go to be treated as sub-humans, and then wonder why they ever got into making games in the first place.

Also, anybody who has a horse in this proverbial race is starting to panic. All you have to do is put your ear to the ground and pay attention.

EA had to spend around $40 million to make $56 million with Mass Effect 3. Anybody with any business sense can look at those numbers and realize just how fucked the industry is.

 

[Zaik]

In before a million people post accusing you of blah blah kneejerk reactionary nonsense because they couldn't bother to read the last line of your post.

Most would say Bioware's drop in quality would be a result of EA, rather than opinion of EA dropping because of Bioware's drop in quality. Though to be fair, stockholders are all terrified little children when it comes to any potential risk to their money.

As far as everyone losing money, I think this is more of an issue of all AAA developers spending more and more money to make games knowing damn well that if the prices are raised nowhere near enough people are going to be willing to pay them to result in an overall profit.

It's kind of like a boat that can hold 10,000 tons before sinking, and they keep adding to the weight and adding to it and adding to it and eventually they're either going to have to stop adding weight, get a better boat, or drown.

That said, even if larger publishers end up sinking completely, their IPs will be bought up by other large money corporations that will probably start off fine but make the same mistakes and this process will repeat in 10 or 20 years.

Or in other words, worst case scenario: Absolutely nothing changes at all.

 

[escapistpiggy]

They aren't losing any money, but instead of making 100 million they're making 50 million, so stocks drop. They're still raking in metric butt-tons of profit, but people get skittish when a company doesn't do AMAZINGLY.

Funnily enough, the video game industry isn't as lucrative as it seems, especially for EA and other AAA companies. For example, EA said it needs Dead Space 3 to sell 5 million copies in order to justify continuing the franchise; Capcom said it wanted Dragon's Dogma to sell 10 million copies. Both of those numbers are hilariously big and unreachable, but those are the numbers companies look for in order to really justify the expense of making games.

Another example is SWTOR. Estimates range from $120 million to $300 million, with about just as much being spent on marketing as development. SWTOR will never, ever, ever make that money back for EA. While some of that can be attributed to the recent MMO bubble caused by WoW, AAA titles cost tons to develop and only the most successful(think CoD, Halo, WoW, etc.) are the real money makers.

http://www.theverge.com/gaming/2012/7/2/3125866/the-state-of-games-state-of-aaa
This is a great article that spells out a lot of the points I tried to make about profitability and another video game crash.

 

[Vegosiux]

I'm going to watch that presentation more carefully when I'm not busted out after a night shift, but what I can say is...

Even if we run into another gaming crash, one, the industry will recover, and two, I have enough good games to last me through. And if I find myself at a loss and not feeling like playing them, I might pick up a book or a chessboard.

 

[FalloutJack]

The future game crash...?

Oh!

You mean the made up one they called '2012'.

 

[Vault101]

I would actually hope for a crash and some of the big publishers or console manufacturers leaving the face of gaming during next year, and imo it can only get better if that happens since they are so set down a self-destructive "for profit only" motive in their development of games nowadays and the entire industry is suffering.

any buisness is in it for the profit....developers and publishers are not charitys..simple as

I don't know enough about this to make an informed comment....but this anoys me in that I play AAA games exclusivly, I go to games for a certain experience and if they can;t deliver on that I'll go elseware for entertainment

 

[Grape_Bullion]

I don't really predict a "crash" as much as I see a stagnation, one even more stagnant than what we're already seeing. As many others have pointed out, the market is "too big to fail". Personally, I can imagine in 3 years time when all we'll play is variations of CoD and Gears of War, some cyber-punk variations of CoD and Gears of War, and classic games with a new coat of paint (Zelda, Mario, etc). Large video game publishers aren't so stupid as to stop making things that work, but I don't really think they're smart enough to use resources in new projects that might make a profit, when they can be put them into something which does. I'm speaking strictly of large publishers here, obviously there will always be independent developers who will make whatever.

tl;dr You can still enjoy games in the future, you just have to pick which one of three you like best.

 

[xPrometheusx]

There was an interesting shit-fit/rant about how the "AAA industry" operates by a developer that worked together with a few of these publishers on various games, and decided to open his own company and try his luck instead, worth reading, basically it says that they are hilariously overspending and just hindering development with stupid decisions: http://www.warhorsestudios.cz/index.php?page=blog&entry=blog_007

I love it! But this can't be completely true. If it was, than there wouldn't be people suing EA because they're working 100 hour work-weeks continually. Could you imagine a desk job like that though? Being paid to write 100 lines of code and design 2 textures over the course of a year or more?

Also, blaming fans is just a PR DISASTER, especially for a company like bioware. But I could see some pissed off manager somewhere doing it.

any buisness is in it for the profit....developers and publishers are not charitys..simple as

I don't know enough about this to make an informed comment....but this anoys me in that I play AAA games exclusivly, I go to games for a certain experience and if they can;t deliver on that I'll go elseware for entertainment

Playing AAA games exclusively is a recipe for disappointment. Sure, you're getting a continual good experience but you're robbing yourself of some really great ones just because they don't have as much shine and a million dollar advertising budget.

snip.

That's definitely an example of overspending and more importantly, stupid spending. Over the past few years developers have needlessly jumped a barrier that requires obscene sums of money to make even the most mediocre of games. On top of that, SWTOR specifically, had bioware not promised a shitload of things that weren't in the game anyway, they wouldn't have lost so many subs week one because not as many people would have subscribed. Additionally, had EA not forced them to talk about the game too soon and given them more time to work on it, they COULD HAVE delivered a product that met EA's sales numbers. I genuinely believe that.

 

[GiantRaven]

I think everybody needs to move away from the massive budget games for a while and remember that great games can be developed with smaller costs. It's all getting so bloated and over the top right now.

 

[Vault101]

That's blatantly not true and an oversimplification at best as well as apologistic for the entire corporate world "A company needs to make money, d'uh!". A lot of developers go into the industry because games are their passion and they want to make games, this is especially true for a lot of Indies, upon which they are often employed and sucked dry of creativity and pashion by said big publishers.

It wasn't even like this over a decade ago, the main difference is that back then:
A lot of people wanted to make games, and they made money doing it.
And nowadays the likes of EA or Activision want to make money and they are making games for that reason.

That's why most of their business models, "DLC"'s etc. look like they do, they don't seem to have any regard for making games other than what they deem would produce the largest revenue possible in the short term.

Good luck with that, I "go to games" for a certain experience too, and that experience isn't copying Call of Duty, World of Warcraft and (the newest candidate) Uncharted year-in-year-out with the lack of any creativity or innovation. That's why I mostly buy a lot of Indie games nowadays and try to stay away from the likes of Activision and EA.

yeah...back in the day the games industry was run on nothing but passion, magic and fairy dust...

no one (depending exactally on "who" it is) goes into a creative medium for the pure purpose of making money...

but the bottom line is [b/]you need money to thease things[/b] just like films or anything, you need to be paid for your work..its how things go, its why theres a structure and while "Indie" is great and all its also why the corproate systm exists


I'm not excusing bullshit buisness practices....its the difference between EA and Valve..excpet EA do it through assholery..Valve do it through maintaining their feircly loyal fan base (among other things of coarse) but at the end of the day theres a profit margin both need to think about

and I will thankyou very much

excpet whos copying uncharted? is the new tomb raider? did you play a demo? so thats one game.....I can think of any others excpet uncharted istelf

even if it is I would play the fuck out of unchated sans Nathan"****-face"Drake....so thats a bonus

and I'm sure you'll enjoy your indie platformer game with totally cool retro graphics...cuz liing different things is great innit?

EDIT; and oh look! screenshots of GAMES I DON'T WANT TO PLAY...whoop-dee-fucking do

 

[LetalisK]

Another example is SWTOR. Estimates range from $120 million to $300 million, with about just as much being spent on marketing as development. SWTOR will never, ever, ever make that money back for EA. While some of that can be attributed to the recent MMO bubble caused by WoW, AAA titles cost tons to develop and only the most successful(think CoD, Halo, WoW, etc.) are the real money makers.

Considering that in a worst case scenario SWTOR has brought in ~$126 million in box sales alone, they'll make their money back on development costs in a timely manner as long as it doesn't dip too far below a million subs for the next year or so. We'll see if the sub loses start to slow down or not here soon.

edit: screwed up the box math. Here, this guy talks about it more.

http://www.manaobscura.com/2012/01/23/how-swtor-will-make-a-profit/

 

[Ruzinus]

These companies may be struggling to break even... but breaking even is all they have to do, to continue existing. Once a company reaches a certain size it becomes progressively harder to do anything other than maintain your current size.

And that size represents a certain amount of value, such that the people involved generally don't just throw up their hands and go, "Oh well, end of this road," but will in fact work near eternally to hold onto that value.