Here's a small question.
How can EA close down Pandemic when EA is making more money than Jesus on Madden and The Saboteur is looking to be a AAA title?
Addendum.
The bigger point i wanted to pose, was the big question of "Is the Western gaming model sustainable?"
My answer is, a huge resounding ... No.
EA has turned into the GM of gaming at some point in the last 10 years. EA West, East, Montreal, etc. etc. Not to mention gobbling up studios like Westwood(the last of whom are being fired when C&C4 is released), Maxis and Pandemic. I wondered when it will be that EA will gobble up Valve, but seeing as how Valve is probably doing much better than any given EA studio is right now, or even EA as a whole, not fucking likely(besides, if Valve's involved, the only gobbling being done is going to be done by Gabe Newell).
These extensions of their company is bleeding them dry, particularly during a period of time when their stock value dropped to 1/5th of what it was before October 2008. It lost something like, 40 points. Having to pay for overhead, marketing, support, distribution... EA can sell all the games they want, they can put out all the original, most thoughtful IP out there, but in the end, it's going to be economics that ends them, and probably Madden that's going to keep them afloat.
Ubisoft is similarly extended with offices everywhere short of Narnia and the Moon.
It's not just western development studios doing this. Square Enix also happens to own Taito and Eidos who also owns Crystal Dynamics and IO Interactive. Square Enix's approach to extension isn't going anywhere nearly as fast as EA is though, and that may be better for them in the long run, but who knows if the overall strategy of expansion is good?
|
taiki's blog
Follow
RSS
Contact
2: Because they can.
Keep the declaring of EA as the corporate devil to a minimum until Pandemic is confirmed dissolved.
There are no rumors in that post. Everything there is pretty much factual or speculation, but not rumor. There's a difference between the two.
If I had to guess it, its reactionary and skittish. But I guess that's what you'd have to do to be #2?
Aside from that speculation into anything carries risks. These companies were buying up studios when they had excess capital to burn, because it had the potential to be a profit making venture.
As for closing down one studio when they make money hand over fist from other areas in the company? Its because the business doesn't work as one big communal profit bucket that everyone pours into and dips out of. Its more than likely broken up into business units to track things like overhead/salary costs, versus profits generated. That allows you to track which units are profitable and which are not.
Its the goal of a stock providing company to make its shareholders a profit. If one business unit is not profitable, then it costs the company money to keep that studio alive. They have to take from the overall bottom line to keep afloat a business that doesn't make money. That's bad business, so when it comes to it, the only thing to do drop that business unit.
There is no sentimentality in business. It doesn't matter if you made the best games of all times. If you don't KEEP making the next best thing, then you can kiss your ass goodbye. It sucks, but that's the way ALL big business works.
Thanks for the fucking Econ 101 class.
Acquiring and expanding has been something that's been unique to West in terms of the Gaming market. Aside from Square-Enix, I can't name another Japanese development and publishing firm that's gone as nuts as EA and Activision has in terms of expanding their corporate empire.
You're confusing profitability with sustainability, which is a huge mistake. Being consistent and *in business* is good for the stock holders, not maximizing profits in the short run. Short term, profits and marketshare thinking is pretty destructive. It's not sustainable. It's what put the #1 Car maker in the *world* into bankruptcy, GM. Cutting now, means that you won't have what you'll need later, even if you run huge deficits going the alternate route. Loss of workforce, loss of creative talent, loss of ability to produce anything.