The world’s largest video game publisher, Electronic Arts, posted a larger-than-expected quarterly loss this week, and lowered its forecasts of future profits below Wall Street estimates as it admits it is not counting on revenue from its much-anticipated video game Spore for its fiscal year ending in March 2008—meaning it could be up to a year (or more!) before the game reaches consumers.
Electronic Arts offers a number of top-selling franchise titles, including the Madden football series, Need for Speed, and The Sims. Despite beating analysts’ numbers for the fourth quarter of its fiscal year (which ended March 31), the company lowered profit forecasts for its 2008 fiscal year from street estimates of $1.31 a share to anywhere from $0.90 to $1.20 a share. Those numbers would give the mega-studio a net loss for 2008. During the last year, company revenue fell 4 percent to $613 million.
Electronic Arts ha a number of high-profile, costly project in the works, including titles based on the Harry Potter and Simpsons franchises, as well as an as-yet-untitled new game for the Nintendo Wii being developed by Oscar-winning film director Steven Spielberg.
But among EA’s costly endeavors is Spore, a new game in which players built their own organisms and civilizations from the ground up and, of course, pit them against each other. Unlike many of EA’s top-selling titles (including the upcoming Crysis), Electronic Arts owns all the rights to Spore, which should let the company earn very high profits on the game. With franchise titles and co-publishing arrangements, EA recoups only a portion of profits generated from sales.
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