Just an observation on the business of gaming:
Recently ERTS bought Westwood, and I declared it to be a mistake. Lets look at why EA bought them (and though I feel that I know more about gaming than many on wall st., I am sure that ERTS knows a tad more than me :) so I am sure it really will not be a mistake for them).
EA is a franchise machine. If we look at their sports lineup we see the true strength of EA. Madden, Live, FIFA, NHL, etc. They are good games, with good licensing. They are fun to play. But the beuty is that every year roster's change, and with even the smallest changes to the game engine, the customer will buy the new edition. So they have 4 franchise titles in sports, that are playable across any platform. They are updated, at relatively low cost, annually, and appeal to both core gamers and casual gamers. It is my belief that sports titles have made EA as profitable as they are. Take away the sports games, and you have a different company.
Now when EA chooses to expand, they buy companies that also have franchise titles- Origin with Wing Commander and Ultima, Maxis with SimCity, and most recently Westwood with C&C.
But for $122M, they bought a looot of goodwill. And I don't think it will be worth it. For starters, aside from C&C they got Lands of Lore. Kind of a yawner. OK title, but not a big deal. So they get C&C. This is a title which doesn't really port well to consoles, and consoles are the true key to profitability. ERTS and EIDSY are proof of this. So they get C&C. How much longer will this Genre last? Is real time strategy getting a bit long in the tooth? How many clones have come out? Will come out? As far as retaining developers, I only saw that they kept 2 people for 5 years...On the whole, I think it is a mistake...
Now, if pursuing franchise titles was a priority (and I believe it is), why didn't they buy MPRS? For starters, they could have saved $50M And they could have had Falcon 4.0 and M1TP2, both of which would have fit into the Janes line quite nicely. X-com is a nice strategy franchise, not as successful as C&C, but solid none the less. And X-com offers a deeper back catalog of games, something else that EA does well (with the gold box games). In fact, MPRS offered a great back catalog of games, with Ultimate Race Pro, Worms, Pinball, Star Trek titles, Dark Earth, Colonization, etc...They would have also gained Gaurdians of Justice, 3 licenses to the Unreal engine including Klingon Honor Gaurd, and X-com Alliance...The MechWarrior license...the StarTrek license...and the grand daddy of them all, Civilization, a title they could have worked with Sid at Firaxis, to gain the old glory back...
MPRS is gone, but I must question ERTS and the Westwood deal... Does anyone know of some other, solid reason for buying that dog for better than a hundred mil?
jeff |
