Each year the NASDAQ stock market compiles a list of the top 100 non-financial companies in the world based on criteria not limited to, but heavily dependent on, a company’s fiscal performance over the preceding 12 months. Last year both EA and Activision were on the list. This year only Activision made the cut. The reason?
Where does one start?
Perhaps it was the 40-percent drop experienced by EA shares since December of 2011. Or maybe it was the perceived failure of BioWare’s Star Wars: The Old Republic, a big-budget MMO that was supposed to supplant World of Warcraft as the king of the genre, before the publisher changed course and decided the game should instead adopt the free-to-play business model only a few months after its debut. Then again, maybe the NASDAQ officials are just huge basketball fans miffed that EA canceled NBA Live ’13.
Whatever the reason, at least EA can take solace in the fact that it’s among good company. Other notable firms dropped from the NASDAQ-100 include Netflix and RIM (the company behind the archaic yet surprisingly ubiquitous Blackberry).
Though NASDAQ isn’t in the habit of explaining each of its ranking decisions directly, NASDAQ executive vice president NASDAQ John L. Jacobs did offer a catch-all statement to explain the rationale behind this year’s Index. Most of it is congratulatory toward those companies new to the list, but it does include the following:
Our objective re-ranking process ensures the NASDAQ-100 remains a relevant investable index that is the underlying benchmark for about 7,100 products in 22 countries with a notional value of about $1 trillion.
Further, Jacobs claims that all companies on the list must comply with NASDAQ’s established guidelines for the NASDAQ-100 Index (and that those not on the list are not in compliance). A full list of those guidelines can be found on NASDAQ’s website, though it does little to explain specifically why EA fell from grace.
What does this mean for EA? Well, the NASDAQ-100 is a list designed to highlight the 100 best companies to invest in in any given year. If you slip from the list, your firm is less likely to receive crucial investment money. While we doubt EA is going to face bankruptcy as a result of this decision, it’s certainly not great news for the publisher. Hopefully it can use this black spot as motivation to do better during the course of 2013.
No one has commented yet? Ok..I’ll be the first…
I’m sure “Star Wars” going “Free-to-Play” wasn’t the cause…nor was NBA ’13 being cancelled. It’s the reality that their business model turned from “Innovation in gaming and bringing a realistic experience when viable” to “monopolize the market and force gamers to only choose between well us and nothing.”
Many gamers have chosen “Nothing”–including myself. The development ccle at EA–especially in regards to Madden NFL–is cute at best. Why did it take them ten years to produce a new, more realistic engine for football? Why do they continually remove features only to add them back and stamp “New” on them? Why have they been unable to accomplish a more realistic football experience? Well…that’s because they have monopolized the genre through exclusive deals with the NFL (both at fault in this regard, in my opinion…but no one is forcing EA to continually drag out their development cycles)…
It’s not only NFL games either.
From their basketball game being something akin to a Sega Genesis Beta version to their soccer game which–although good–struggles against its competitors, the problem at EA is their loss of innovation and their resting on laurels.
I look forward to the Ouya which may present EA a serious incentive to innovate, since there will be many more competitors (thanks to Indie games) and, if it catches on, then they will see themselves fighting a war where they MUST innovate and they MUST listen to their consumers. Period.
I get your arguments, and you’re not wrong, but I doubt that the international investing community much minds that EA’s sports titles are updated at a glacial rate, nor that the firm’s attempts to monopolize sports gaming in general has stunted the overall progress of virtual sports as a whole.
Why? Because both of these things are positives for anyone hoping that EA will turn as large a profit as possible. If anything your issues would be reasons to keep EA on the NASDAQ-100.