Weak Madden 11 Sales Could Be The Beginning Of The End

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 7 years ago '07        #1
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Jago 1035 heat pts1035
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Weak Madden 11 Sales Could Be The Beginning Of The End
 

 
Try as it might, the video game industry just can’t catch a break this year.

Sales are down 8 percent year-to-date from 2009’s disappointing numbers. Even the most optimistic analysts are now saying that the best investors can hope for is a flat year. And this week has brought new signs that could indicate further weakness—specifically for Electronic Arts and game retailer GameStop.

Just one week after its flagship franchise hit the streets, EA is already seeing retailers dramatically discount this year’s installment of “Madden NFL”. Amazon, Wal-Mart and GameStop have all dropped the price from $60 to $50.

One possible way to interpret that is the 2010 version of the game hasn’t been selling at the same pace as the 2009 version (which, incidentally, failed to match the 2008 numbers). That’s troubling, since EA relies heavily on Madden for up to 10 percent of its annual revenues.

Admittedly, there were concerns about this year’s game prior to its launch. Pre-orders were flat and Colin Sebastian, an analyst with Lazard Capital Markets, noted that the 2010 installment was “a ‘show-me’ story … People who are tired of what ‘Madden’ has become are saying ‘I know some of my fiends are going to pick it up and I’ll see what they have to say first.'”

The price cuts could indicate the initial word of mouth was fair to middling. Critics have given the game fairly high marks—Metacritic.com, which compiles game review scores, gave “Madden NFL 11” a ranking of 85 out of 100. User scores on that same site, though, only rank it 5.3 out of 10.


Admittedly, the game has only been out for slightly over a week—and it’s a title that typically has a long tail at retail. It will be November (when EA is next scheduled to report earnings) before we get a solid sales comparison of this year and last year’s “Madden.”

It’s also possible these price cuts have little to do with the game’s initial sales and could be the first round in this year’s price wars between the retail giants. During holiday 2009, Amazon and Wal-Mart slugged it out for consumer loyalty, with book and video game prices often at the center of the battle. GameStop, which is typically slower to react to price wars, was ultimately forced to join in the fray.

GameStop’s probably not eager to see another price war this year, but it seems to be anticipating one. In its earnings report Thursday, the company lowered its profit outlook, saying it expects to earn 35 cents to 38 cents a share in the third quarter, down from a prior forecast of 38 cents to 41 cents.

More troubling from the most recent earnings, though, was the underperformance of used game sales. While higher (they climbed 1 percent over a year ago), they fell far short of analyst expectations of a 5 percent jump.

“This is the lowest-ever growth rate we have seen in this category,” said Arvind Bhatia of Sterne, Agee & Leach. “We suspect this reflects the general weakness seen in new software sales and perhaps the impact of various publishers’ initiatives to curtail used sales.”

Used game sales typically make up more than 50 percent of GameStop’s revenues. Because publishers don’t see a dime of income from them, though, they’ve recently been exploring ways to f!ght back.

Several publishers, including Electronic Arts, Microsoft, Sony and THQ, have changed the way they handle new product sales. Consumers who buy the game new find a one-use code included that unlocks a game’s online multiplayer mode or, sometimes, important levels of the game.

People who purchase a used copy, however, that want access to those elements must pay an additional fee directly to the publisher—usually in the range of $10 (but sometimes as much as $20), which is generally about the same amount they save by buying used.

GameStop, for its part, says it doesn’t think the publisher’s moves have had much of an impact, since only 25 percent of used game buyers bother to play online.

The video game industry is expecting things to pick up in September, with the launch of “Halo: Reach” and Sony’s PlayStation Move controller. Investors will be watching both carefully, though. If either falls far short of expectations, the effect on stocks in the shaky gaming sector could be ugly.
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135 comments for "Weak Madden 11 Sales Could Be The Beginning Of The End"

 7 years ago '05        #2
ebcrew 2 heat pts
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i didnt buy, first time since 06
 7 years ago '04        #3
KURUPTION!!! 541 heat pts541
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$34,595 | Props total: 1014 1014
Beginning of the end of what? They own the NFL License.
 7 years ago '07        #4
genobee 21 heat pts21
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cant wait for them to lose that license so 2k could take over again, I have never and will never buy a Madden game. Waste of $60 if you ask me...
 7 years ago '09        #5
Tiko377 1862 heat pts1862
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Yea end of what hopefully the license so 2k and scea could do something good
 7 years ago '09        #6
Tiko377 1862 heat pts1862
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 ak1 said:
when does their license expire
2012 ..
 7 years ago '04        #7
MochaWhitey 10 heat pts10
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 AK1 said:
When does their license expire
on their birthday
 7 years ago '07        #8
Drk 10 heat pts10
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well hopefully justice prevails and they loose the license in 2012
 7 years ago '10        #9
beast mode 25 heat pts25
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$13,974 | Props total: 1798 1798
i downloaded it and got a free online code,economy is too f**ked up for me to go pay 60 f**kin dollars for a game it cost 4 to make. ceo of Microsoft as well as ea are still gonna be way more rich then me without my lil 60 bucks
 7 years ago '04        #10
deziking 81 heat pts81
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everyone's getting the big picture now comming close to an end hopefully. we got 2 more years to go hopefully their sales keep going down and down into the gutter.
 7 years ago '04        #11
jdawgkemp 
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 beast mode said:
i downloaded it and got a free online code,economy is too f**ked up for me to go pay 60 f**kin dollars for a game it cost 4 to make. ceo of Microsoft as well as ea are still gonna be way more rich then me without my lil 60 bucks
The guys that actually developed the game would definitely disagree about how much it costs to make the game...

4 dollars to make a disc containing the game is not the same as how much it cost them to actually DEVELOP the game...
 7 years ago '07        #12
JamcnPrettyboy 96 heat pts96
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good.

would be great if 2k can come back into the football world. would also be great for Backbreaker if they get it right!
 7 years ago '06        #13
philly337 20 heat pts20
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Def not the end but hopefully they'll start to put more effort on improvements if they see people won't buy whatever they put out
 7 years ago '08        #14
AnyGiven 39 heat pts39
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I didn't know not buying Madden this year would do this to EA. I've been buying Madden since 1996
 7 years ago '07        #15
Jago 1035 heat pts1035 OP
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 kuruption said:
Beginning of the end of what? They own the NFL License.
Did you read brah? Their sales are down for the 3rd straight year. This could lead to the NFL not renewing their deal with EA. That would lead to EA having an even bigger decrease in profitability on top of the decreases they're already experiencing.

Interpretation skills people, learn them!
 7 years ago '07        #16
ttime236 38 heat pts38
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I still copped it, but damn EA is slacking hard. So many things are literally the same s**t as madden 10. That exclusive license is a muthaf**ka for the buyers, the game barely improves year to year cus of no competition
 7 years ago '04        #17
Da Ill One|M 4602 heat pts4602
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 Jago said:
Did you read brah? Their sales are down for the 3rd straight year. This could lead to the NFL not renewing their deal with EA. That would lead to EA having an even bigger decrease in profitability on top of the decreases they're already experiencing.

Interpretation skills people, learn them!
We won't know for sure if sales are down until the middle of september when August sales numbers are released...this isn't anything set in stone
 7 years ago '09        #18
k17designz 10 heat pts10
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 Tiko377 said:
2012 ..

end of the world
 7 years ago '08        #19
gagethedesigner 16 heat pts16
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If i were john madden I wouldnt even let these f**ks use my last name
 7 years ago '04        #20
franchise 60 heat pts60
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i hope this trend continues and impacts them enough to stop being lazy.
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