Electronic Arts’ (ERTS) earnings yesterday disappointed again: The company posted earnings of only 56 cents a share against an analyst consensus estimate of $0.88 EPS.
So what’s the plan to recover? For one, cut expenses, to the tune of 12 studio closings and 1100 layoffs. But in yesterday’s earnings call, EA CEO John Riccitiello reaffirmed his company’s dedication to Nintendo’s (NTDOY) Wii over the coming year.
When Ben Schachter from UBS explicitly asked about games for the PS3, John replied he see saw his business as divided into three “buckets”: Online, PS3/X360 combined, and the Wii. And EA’s console emphasis was split in half, with 20+ Wii titles, and about the same for the PS3 and X360 combined. John offers some lip service about how proud he is to have exclusives on either the PS3 or X360, but adds “the lion’s share of titles developed for these platforms are common.”
A couple interesting points in that: First, obviously bad news for Microsoft (MSFT) and in particular Sony (SNE), which needs non-SCEA exclusive PS3 titles to justify its premium pricing. As the Wii continues to dominate in sales, obviously, publishers like EA are focusing more resources on it, making the Wii even more attractive to consumers going forwards.
But for EA, we wonder: How well will the company’s portfolio translate to the Wii? The Wii is more than just the best-selling console, its philosophy of intuitive controls with pick-up-and-play simplicity is what attracted people otherwise not into gaming. John mentioned some of the Wii titles EA has in the works: Tiger Woods PGA tour, EA Sports Active, EA Sports Tennis, Boom Blox 2, Harry Potter, and MySims Racing.
The proof will be in the implementation. EA Sports Active is taking a more cardio-based approach to “Wii Fit,” and we’ll see how that pans out. But titles like “Tiger Woods” and “EA Sports Tennis” on other consoles have traditionally had steep learning curves and appealed to “hardcore gamers.” The secret of the Wii’s success is our mother can play Wii Sports baseball or Mario Kart and have a blast. Will EA make that possible with Wii Tiger Woods?
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