Electronic Arts, Inc (ERTS) > Articles
bids
30
30
Electronic Arts, Inc (ERTS)
Sequels are Dull & Threaten Industry says EA
Sequels are Dull & Threaten Industry says EA
Next Gen Biz - July 9, 2007
Submitted by rikitikitik (288) at 4:15AM PST on July 9, 2007
John Riccitiello, CEO of Electronic Arts, challenges software publishers and developers to offer more innovative titles. He says that sequels and rehashes are "boring people to death and making games that are harder and harder to play."
Discussion - Submit a comment
bids
3Deltaneutral posted on Electronic Arts, Inc (ERTS) at 2:21PM PST on July 9, 2007. RE: Sequels are Dull & Threaten Industry says EA@Alpha, the video game industry has the dichotomy where large publishers rely on recurring income from franchises while independent developers try to launch something new. This is similar to the drug industry where pharmaceutical companies are relying on the cash flow from clear cut winning patents while biotech firms are hoping to come up w/ the next hit.
The risk in investing in biotech firms is very clear. Your whole investment is made by the fact of a drug passing FDA testing. This results in a very risky investment that might sky rocket with an FDA announcement or leave you writing off some worthless shares.
In the video game industry, we can't even invest in these little risky guys as it's a lot harder for independent developers to go public. A single video game hit just isn't anywhere as big as a potential blockbuster drug. We really only have the more "secure" companies like ERTS and ATVI...and even then they are still very risky. The publisher stocks have been slumping for a while now because the products just aren't making the numbers.
The article seems to imply that taking more risks is what is necessary to make VG companies more impressive investment opportunities...but this would mean we need risky products to be successful every quarter to the extent that they pay for the risky products that do not succeed.[ Elite ] [ Level 20 ] [ Rank: 409 ]bids
6Alpha posted on Electronic Arts, Inc (ERTS) at 1:46PM PST on July 9, 2007. RE: Sequels are Dull & Threaten Industry says EAThis is an interesting issue to discuss here, as I think many simExchange users may be on the business side of gaming rather than actual gamers. As shareholders of video game companies, we want to see reliable and consistent revenue generators. We don't want our investments to rely on inventing the next hip IP each quarter to make earnings numbers (essentially having to re-invent the wheel with each product).
However, in the long-term, this can also turn away some people from gaming entirely as they get bored of annual updates. So far, it appears people still pick up sports games annually, but a lot of gamers have been looking towards the Wii due to the fact that its games are new IPs or new twists on old IPs. However, this strategy is certainly much more risky for gaming companies as game development costs grow.[ Guru ] [ Level 21 ] [ Rank: 173 ]bids
4rikitikitik posted on Electronic Arts, Inc (ERTS) at 4:15AM PST on July 9, 2007. RE: Sequels are Dull & Threaten Industry says EA
About Us - The simExchange is the video game stock market and the source
for video game sales forecasts.
5
Both have been turnaround stories. Apple risked its last days by betting big on the iPod, and now new consumer segments like the Apple TV and iPhone. This is signficantly riskier than the Dell strategy of doing more of the same but to a larger scale at lower costs. This has also become their downfall.
Nintendo is probably the best play in the video game industry right now and it is all about coming up with new IPs or new gameplay for old IPs rather than just recycling IPs annually.
Of course, there are tons of companies that take risks with new products and fail completely. Those companies you don't hear about so much.