EA has to re-learn games publishing

As market leader in the games software business, Screen Digest analyst Ed Barton reminds us that, "EA rightfully remains an industry pacesetter by many measures, it remains the largest games production entity in the industry with an estimated 6,000 games development staff, even after the latest round of cuts."

"Activision Blizzard is naturally pushing (and in some cases, overtaking) EA harder than any competitor has previously. EA undertook to address the wider market challenges by investing heavily in new IP in the last two years and while this has resulted in some excellent products, they have unfortunately failed to sell in the enormous volumes EA has become accustomed to.

The fact is that EA's latest losses were also increased as the company "moved the release dates of a number of key titles from this fiscal year to the next, effectively making this a throwaway year and worsening an already lost set of results," says Barton.

Best franchises in games industry

"But one miss does not a bad company make, EA still enjoys some of the best franchises in the industry and some of the brightest management around. They invested heavily in innovative and refreshing new IP in 2008 and second iterations of games almost always do better than the first and cost less money to make."

So while the short-term belt-tightening measures are biting hard right now, the longer term outlook is much brighter for EA, not least because by Screen Digest's estimations, the market of current gen consoles will increase by around 70m units by the end of 2009 (including handhelds).

"I fully expect EA to deliver in 2009," adds Barton.

Adam Hartley