EA gets some stock market criticism on their lack of quality
- Thread starter xdarkyrex
- Start date
Based on an analysis of the phrase (as I'm no finance expert), I'm guessing it means "fixed research and development expense base." Adding the word "growing" in front, it would seem to suggest that EA's R&D expenses are going up while its sales are stagnating. We can only hope against hope this is the beginning of the end for EA (fat chance of there being that much justice in the world).
TheWesDude
Sonny, I Watched the Vault Bein' Built!
actually what i believe it means is that they are spending the same proportionally to what they are making, but the performance isnt going up...
in other words, 5 years ago they invest 5 million in a title and get 25 back.
today they invest 5 million and are still getting 25 mil or less back.
while it is a profit, its a diminishing returns profit
in other words, 5 years ago they invest 5 million in a title and get 25 back.
today they invest 5 million and are still getting 25 mil or less back.
while it is a profit, its a diminishing returns profit
Er, what? I don't think I'm understanding you properly.TheWesDude said:
For one thing, there's no way they're investing the same amount in a title as they were 5 years ago. Development costs have only increased as technology has moved forward in the gaming industry.
For another, the fact that it says their "growing R&D expense base" would lead to me to believe that they are definitely investing more money per title. They just aren't seeing a corresponding increase in their returns from the titles.
Eh, maybe I'm just too tired at the moment to think clearly.
You are quite correct, Kyuu, I believe that they are saying that today EA games are much more expensive to produce, and at the same time they don't sell more and they aren't getting more expensive.
Also, xdarkyrex, stop posting forum breaking links, there's an url function you can use instead.
Also, xdarkyrex, stop posting forum breaking links, there's an url function you can use instead.
Kyuu and DDD are right. To translate the mark-o-speak
Our thesis was and is that: the industry is growing, while EA is lagging behind in game quality, which could [note: not is] result in making relatively less sales (i.e. losing market share) and limiting profit margin growth. The fact is that the majority EA titles do not sell enormously well, while the fixed research and development base [that is, R&D base per game by definition, not factoring in experimenting with new technologies or delay of release] is growing. This means increased expenses and relatively less increase of sales. This is a problem.
I hardly think the lack of quality is his major issue, though, he's more worried about high costs and low profit margins. This guy is not complaining about Madden's NFL 'XX, he's complaining about expensive games that don't sell.
Our thesis was and is that: the industry is growing, while EA is lagging behind in game quality, which could [note: not is] result in making relatively less sales (i.e. losing market share) and limiting profit margin growth. The fact is that the majority EA titles do not sell enormously well, while the fixed research and development base [that is, R&D base per game by definition, not factoring in experimenting with new technologies or delay of release] is growing. This means increased expenses and relatively less increase of sales. This is a problem.
I hardly think the lack of quality is his major issue, though, he's more worried about high costs and low profit margins. This guy is not complaining about Madden's NFL 'XX, he's complaining about expensive games that don't sell.
INNOVASHUN will surely save EA! that's why they're going to buy some European studio!
D
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His questioning the quality of EA's products since even though the amount of money invested in development its high, the sales are low. This means basically that the content of EA's games most be low in quality "On the basis of this game is not worth buying even though it has pretty graphics and high name developers and celebrities voice acting in it, and the fact remains the game still sucks and is not selling"
Sounds familiar.
Sounds familiar.
At least we now know some of the reasons behind the EA aquisition of VGHolding/Elevation/Bioware&Pandemic/. They wanted to put some good quality games in their market basket so they could get some bank street cred which means getting a pad on the back from bankers & investors.
I do think that the statement made is accurate, though. It basically means what everyone has been saying. EA is putting a lot of money into the R&D departments but this really hasn't been paying off yet - in terms of higher sales or higher revenue for sold games.
Or in other words:
Costs are going up, revenues are going down. Lack of sales of released games will do that to any business, even EA. And the reason for the downgrading of sales is what gamers have been saying agian & again: lackluster games, sequels after sequels with the same boring gameplay, games without much content and challenge for the players, but with great & shiny graphics...
If even the bankers & investors now see EA's business strategy
as wrong, then maybe EA will finally change it...
I do think that the statement made is accurate, though. It basically means what everyone has been saying. EA is putting a lot of money into the R&D departments but this really hasn't been paying off yet - in terms of higher sales or higher revenue for sold games.
Or in other words:
Costs are going up, revenues are going down. Lack of sales of released games will do that to any business, even EA. And the reason for the downgrading of sales is what gamers have been saying agian & again: lackluster games, sequels after sequels with the same boring gameplay, games without much content and challenge for the players, but with great & shiny graphics...
If even the bankers & investors now see EA's business strategy
as wrong, then maybe EA will finally change it...