ALKHOBAR: As the effects of the global economic downturn become reflected in tech companies’ bottom lines, expect to see the announcement of serious, painful cost-cutting plans. An avalanche of bad news should be expected through the first quarter of 2009 as tech companies are forced to file end of year reports showing slowing sales, higher costs, financing difficulties and devalued assets and/or investments.
Tech companies whose revenues come from products and services considered less than essential may be hard hit. Electronic Arts (EA) showed weakness in preliminary financial results released for its fiscal second quarter ended Sept. 30, 2008. Despite increased revenue as compared to the prior year, the net loss for the quarter was $310 million as compared with a net loss of $195 million for the prior year. Sales were driven by the launches of Madden NFL 09, SPORE, Mercenaries 2: World in Flames, NCAA Football 09, Tiger Woods PGA TOUR 09, Warhammer Online: Age of Reckoning, as well as the continued strength of Rock Band.
“Considering the slowdown at retail we’ve seen in October, we are cautious in the short term,” said John Riccitiello, EA’s CEO. “Longer term, we are very bullish on the game sector overall and on EA in particular. The industry is growing double-digits on the strength of three new game consoles and increases in the number of homes with broadband Internet connections. EA is well positioned to benefit from these technology drivers due to the strength of our creative studios and our broad collection of game properties.”
Being bullish in the long term is fine, but losses must be stemmed. EA is moving forward with a cost reduction plan, which will include the elimination of approximately six percent of the company’s work force — or at least 500 employees. The company estimates its cost reduction plan will result in annual pre-tax cost savings of approximately $50 million. EA is cautious in its expectations for the upcoming winter holiday season, and is lowering its projected earnings forecast for its fiscal year ending March 31, 2009.
To boost profits, EA is branching out to include new platforms, younger players and smarter marketing strategies for its games. The company’s EA Mobile division is developing games for the US market’s T-Mobile G1 with Google, the first Android-powered mobile phone. Tetris and Monopoly are already available and Bejeweled is coming this month.
For younger players, EA is promoting NERF “N-Strike” as the first “mom approved” kid-friendly blaster game for the Nintendo Wii. The game, inspired by the globally popular franchise from Hasbro, Inc. features non-stop NERF-style pandemonium where players are faced with a series of challenging missions that put blasting strategies and skills to the test.
NERF “N-Strike” ships with a custom NERF SWITCH SHOT EX-3 blaster, the first ever 2-in-1 video game and toy peripheral bundle to hit the market. The bundled NERF SWITCH SHOT EX-3 blaster, which offers two ways to play, can be used in-game by snapping the Wii controller into the chamber or swapping in the dart cartridge to transform the blaster for classic NERF indoor and outdoor play. The bundled Wii game with blaster retails for $59.99 and for expanded multiplayer fun, additional SWITCH SHOT EX-3 blasters can be purchased separately for $14.99. The game is available in the US now and will ship internationally in 2009.
NERF “N-Strike” targets boys 10 and older. The game features more than 25 unlockable in-game blasters including digital replicas of popular real world NERF toy line blasters such as the Longshot CS-6 and Vulcan EBF-25, as well as never-before-seen fantasy blasters like the Crusher and Semper Fire created exclusively for the video game. As players enter the top-secret NERF training facility and begin to engage in the high-octane action, they quickly discover the importance of choosing the best blaster for the job as they pull down big victories or fall short and get taunted by in-game characters who have already achieved top blaster status.
NERF “N-Strike” game play progresses through various chambers, each featuring a series of missions and characters that must be overcome before moving to the next level. Example missions include “Dawn of Machines” which puts players behind the NERF blaster long-range scope and “Onslaught” which overloads the screen with moving targets that must be cleared as quickly as possible. NERF “N-Strike” offers multiplayer capabilities for up to four players to battle and determine who has what it takes to become the top Elite Striker.
So that’s EA’s offering for the new platform and younger player. Now consider the company’s cross industry marketing. The new 2009 Nissan Z will make its driving debut in EA’s “Need for Speed Undercover,” two months before the car hits dealerships. The driving title becomes available in North America on Nov. 18 and in Europe on Nov. 21.
From the signature boomerang headlights and taillights to the enhanced powertrain, Need for Speed Undercover designers worked closely with Nissan to accurately replicate the overall look, feel and performance of the Nissan Z. From the game’s opening moment, players will be thrust right into the action with gamers whipping the 370Z in-and-out of traffic at high speed. Need for Speed Undercover takes players back to the franchise’s roots and re-introduces break-neck police chases and spectacular highway battles. The all-new Heroic Driving Engine propels the action forward as players experience the dramatic story through Hollywood-style live-action in-game movies. EA hopes that the chance for high-stakes, high-speed action in some of the world’s hottest cars will be enough to convince gamers to fill the company’s coffers, helping EA navigate the bumpy economic road ahead.
