08 May 2007

Word of the Day (It's In the Game Edition)

Not your usual story for a daily smack of the gob, I know, but how poorly EA performed in 1Q '07 is pretty astounding. The supply problems for the Wii and the high price for the PS3 have had major repurcussions across the industry. Even though the PS2 is still plenty of game system for most people and great games continue to get made for it, it's not shiny and new and folks know there's something better out there, so suddenly what was fun before now seems kind of dull and drab.

The jump from semi-realistic modeling fit for standard definition TVs to uncannily realistic modeling fit for HDTV is a major cost for a company like EA whose games often rely on realism as a selling point. They are having to absorb the cost of developing titles for Xbox360 and PS3, even while the installed user base for both those consoles remains comparatively tiny. Meanwhile the Wii has developed a substantial following, but given the oddball control scheme and appeal to non-traditional gamers, developing titles for the Wii takes a completely different mindset than what EA is used to cultivating.

EA will bounce back, gaming isn't a fad that will go away, guys in their 30s have grown up with consoles in their houses, and most continue to buy each new console and games, so as gamers mature, so does the market for games.

Hopefully they've banked enough funds during the fat years to survive the transition, if not they'll be an attractive takeover target for one of the bigger behemoths in the industry.

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