EA Confirms Investment in "Gen4" Consoles - Xbox 720 and PS4 Pressure is On

Profits Hit by Poor Boxed Games and Bad Medal of Honor

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EA Confirms Investment in "Gen4" Consoles - Xbox 720 and PS4 Pressure is On
EA's financials for the most recent quarter (its Third Quarter) are below par. It's blaming boxed console titles and, yes, Medal of Honor's under-performance.

The company is, however, looking to the future... of consoles. EA's CEO John Riccitiello stated this very loudly to analysts yesterday that his company was investing heavily in the next generation of consoles. Word for word he stated:

"We're also investing in Gen4 console technologies and content. We've signalled that we're working on the next editions of our two biggest franchises in Battlefield and FIFA."

And EA needs a boost.

The fact of the matter is that in the three months to December 31st 2012 - using general accounting principles, EA's net revenue was $922 million. The same, crucial period in 2011 saw the company net $ 1,061 million. Riccitiello explained to analysts that:

"In the third quarter of fiscal year '13, EA's non-GAAP revenue (basically, internally audited) was $1.18 billion, below expectations and guidance. The revenue shortfall was a result primarily of a miss with our Medal of Honor title, with stronger-than-expected sector headwinds for console packaged goods."

He then described a future for EA which is not healthy if you own a games shop and sell boxes:

"At the sector level, we continue to see strong industry growth in most digital areas: mobile, PC and console DLC. The console packaged goods market is a different story. We saw an approximate 20% decline in calendar year '12, and consumers are behaving in a way which reflects a console transition. Overall volumes are down. We're seeing some great unit volumes on a few winning titles. The losers are getting hit hard.

"Console transitions are difficult, but historically, they initiate periods of strong growth and for the companies ready to step up, these transitions represent significant opportunity. Near term, EA will complete the fiscal year with a strong lineup of Q4 titles. These include some of my favorite franchises: Dead Space 3, Crysis 3 from Crytek Studios; the return of an industry classic, SimCity; and finally, an incredible game for smartphones and tablets, Real Racing 3.

"Beyond Q4, we see a bright light at the end of the tunnel. For EA, digital remains a winner, and our investments are generating strong growth. We're also investing in Gen4 console technologies and content. We've signalled that we're working on the next editions of our two biggest franchises in Battlefield and FIFA. And we look forward to discussing these programs and many others with you when we provide our fiscal '14 guidance in May."

So, yes Gen4 can save us! Maybe.

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Comments

ohms 31 Jan 2013 11:10
1/1
I thought it would be Gen7.
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