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While cheap wow gold the move certainly gives an advantage to one of its most successful titles, the world's largest game publisher is looking for more. To that end, it is expected to spend at least $725 million during the fiscal year to develop new games, outpacing its closest rival, Activision, nearly 4 to 1.
The difference in spending between the two firms, estimated at about $525 million by one analyst, is significant because this is the year when the next generation of video game machines, or consoles, will be introduced. That means game publishers need to carefully divide their resources among projects for the existing consoles PlayStation 2, Game Cube and Xbox and games for the new machines.
Microsoft is expected to kick off the move toward new hardware when it starts selling its Xbox 360 in autumn. Next year, Sony will introduce PlayStation 3 and Nintendo will bring Revolution to stores.
Getting off to a strong start with games for the new consoles is imperative for EA to increase its lead or even to hold its position. Still, EA's place in the publishing world is an enviable one. In the fiscal year that ended on March 31, the company posted a profit of $504 million on revenue of $3.1 billion. Activision is a distant second place with $138 million in earnings on $1.4 billion in sales in the same period.
Despite such financial strength, EA executive says his firm is not taking anything for granted.
"Every time we approach a transition, we're betting the company on a new set of technology. If you screw up a transition . you can find yourself out of position pretty quickly," said Gibeau, senior vice president of marketing.
Another challenge for publishers is the cost of developing games, which could be more than $20 million per title, which they are willing to pay to make more realistic games on more powerful consoles.
For the time being, they still need to continue developing games for the older consoles because they will still be in players' homes.
It's a tightrope act for everyone. Last month, EA reported that it lost $58 million in the first quarter as sales fell 16 percent.
Still, EA continues to enjoy a healthy balance sheet that includes a cash position of $2.7 billion.
"The first thing to understand is that EA has historically looked at transitions as an opportunity. We like to say around here that transition is our friend," Gibeau said.
For EA, the work of trying to outdo the competition already is under way.
Perhaps one of the best examples is the new Madden NFL game that goes on sale today. This is the first season that EA will be the only video game publisher using likenesses of current football players, team logos and stadiums.
That's because EA was able to broker an exclusive five year deal with the National Football League that effectively froze out its competition.
The deal, which was announced in December, was a critical blow to the NFL 2K games developed by Sega and published by Take Two. Last year, the two companies appeared to have loosened EA's iron grip on the football game market when they slashed the price of the NFL 2K game to $19.99, compared with Madden's $49.99.
Perhaps more importantly, Sega's game got rave reviews, said , an analyst at the market research firm .
"I think it was the first competition that EA really had, and it was a wake up call," she said. "Like any leader defending their territory and niche, they just shut this threat down."
To make matters worse for Sega and Take Two, once their licensing with ESPN expired, the popular TV sports network promptly signed on with EA to be in the Madden game.
EA won't say how much its paying NFL and ESPN. It's probably more than the estimated total of $15 million that the NFL received from various video game publishers, said , an analyst at .
"They do have a competitive advantage because they're really big, and they arguably have the best franchises," he said.
Although some critics say that a lack of competition could lead to less innovative ideas, exclusive deals are inevitable in the industry, Pachter said.
", , Lord of the Rings, they are all exclusive deals. NFL was the exception to the rule in licensing to more than one player, " he said.
EA's Gibeau said that the real competition for the Madden games wasn't other football games, but other titles.
"We're looking at things like Halo 2, , World of Warcraft. We're competing for entertainment dollars, whether they're sports games or non sports games," Gibeau said.
And he figures the competition will only heat up when new consoles come out. That's why it's important to get out of the gates early and make a strong impression on the minds of gamers, Gibeau said.
"You nail the first year or two (in the cycle) and you could be set for the rest of the cycle. It's that important," he said. EA at a glance
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