Video game developer/publisher Electronic Arts today reported record revenues but a deep dip in profits as it announced preliminary fourth quarter and fiscal year financial results. While the company’s revenue is up 6 percent at $3.129 billion, net income for the quarter was only $8 million, compared to $90 million for the prior year. Net revenues for the frame are also down 8%.
EA attributes its boost in revenue to 31 platinum titles released during the fiscal year. Six of the company’s franchises sold more than five million units, including The Sims, Need for Speed, Madden NFL Football, FIFA, The Lord of the Rings and Harry Potter.
The dip in profits is being blamed on the transitional period the game industry has entered. EA says it has invested a lot of money in upcoming titles for the next-generation game consoles coming from Sony, Microsoft and Nintendo, as well as the new Sony PSP and Nintendo DS handheld units. Furthermore, EA expects the trying period to also be reflected in the current quarter and predicts a 26% drop in revenues compared to the same quarter last year.
Among the investments made by EA during the quarter is its acquisition of Criterion Software, which brings into the fold the award-winning Burnout and Black franchises, as well as RenderWare technology. EA also completed its tender offer for Digital Illusions, creators of the award-winning Battlefield franchise.
Pundits are predicting that the industry as a whole will experience such growing pains as companies ramp up to deliver next-gen titles, which gamers seem to waiting for rather than buying new games for the existing consoles.
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