The following is written in business-speak, but you're all smart enough to understand it. This is part of EA CEO John Riccitiello's script for yesterday's conference call, in which he reported lower than expected revenues for EA.
First he laid out what he thinks went wrong for EA. Then he gives three ways he plans for EA to fix things. The question is, fellow gamers, does it point EA in a direction that excites you? Would you have them do it differently?
Take a look:
A few observations on our projected shortfall:
• While we saw significant improvement in the overall quality of our key
products this year -- that quality has not yet translated into enough sales.
So far in calendar 08 we have shipped 17 titles with metacritic scores of 80 or above versus seven this time last year. Quality is a prerequisite for a great selling game – but it is not the entire equation.
• Today consumers are particularly selective in how they spend their discretionary dollars. We are seeing a stronger polarization around the top-ten selling titles.
• Key catalog titles continue to underperform and
• Lastly, and unique to this year, some major retailers are reducing their year-end inventories, and in particular, those inventories for titles not in the top five sell-thru for November and December. This may not impact publishers with titles in the top 5; however, we expect this will sharply reduce our December revenue versus prior expectations.Given these observations – we are going to do three things differently.
• First, we will reduce titles and SKUs and invest more – particularly
marketing – on the titles with the greatest hit potential. [Note from Stephen: "SKUs" are versions of games, be they a specific platform release of a game or all the versions of a game]
• Second – we will focus on games with strong online features and ongoing
new content. This will prolong the catalog sales life of our products.
• Third, we will reduce expenses beyond cutting the number of titles and
SKUs. [Note from Stephen: Riccitiello said later in the call that there wouldn't be reductions in EA's sports games; indicating that instead cuts would be evenly balanced between "core" and "casual" titles.]
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