Electronic Arts Is Bleeding Money, Slashes Studios

Electronic Arts has just reported a third quarter loss for fiscal 2008 of 641 million dollars. This is way more than in the same period of 2007, when the loss was of just 33 million. The third fiscal quarter ends on December 31 and comprises the crucial Christmas shopping season, when many videogame publishers release their most important titles for the year.

It's surprising to see that the revenue of Electronic Arts actually went up during the period. The company managed to earn more than 1.65 billion dollars, which is about 10% more than in 2007, and the publisher is saying that business charges are to blame for the loss, not the fact that its games are not making money.

John Riccitiello, who is the Chief Executive Officer of EA, commented that “Our holiday quarter came in below our expectations and we have significantly reduced our financial outlook for fiscal 2009, a clear disappointment.”

It seems that the loss, which is greater than that expected by industry analysts, will be reason for further cuts in personnel at Electronic Arts. It appears that 11% of those who are working for EA will be let go and that 12 “facilities” (which could or could not mean “game development studios”) will be closed down in the upcoming year. Those closed, while not named, might be “high cost” locations. The changes will lead to cost reductions in the operations area of about 500 million dollars.

For fiscal year 2010, the company is saying that it will launch 50 titles, coming to 125 SKUs or variations if you take into account different platforms, while in 2009, the number was 149 SKUs. Electronic Arts still believes that it's the biggest publisher in North America, with a market share of 20%. It nominated games like FIFA 09, which sold 7.8 million copies, Need For Speed: Undercover, and Mythic's Warhammer Online as the most successful properties it has.