Jul
23

Big Surprise: Investors don’t want quality

7 Comments

In my mind, this kind of vindicates something Michael Zenke said a while ago when he mentioned:

The only thing I?m still a little offput by is Jacobs? statement that EA had nothing to do with this decision. I?m ? umm ? going to go out on a limb and call shenanigans on that. I?m willing to bet that *somewhere* behind this announcment is an EA exec looking at his watch and tapping his foot in cartoon-like impatience.

Except, maybe it was an investor tapping his foot somewhere saying “where’s my money bitch!”

Interesting…

Let’s look at what the CEO of my favorite game company said:

“I don’t think the investors give a sh*t about our quality. They care about our earnings per share. They wait for it to happen. We had three years where we didn’t make our expectations. If I were an investor, I would wait and see. That’s fine with me,” Riccitiello explained.

If this is the case for Warhammer, and I’m starting to suspect that it is, i.e. feature cuts to meet the release date (…I’ve seen it many times..), then I just don’t get it. Here we have a game that can potentially compete with WoW and these guys are not interested in the quality? It truly highlights the issue that investors don’t understand that gamers want good games. What investors seem to want is short-term profits from crappy games. Well, stick to the EA Sports franchise for that…

D out.

Posted in Blah blah
7 Comments Posted by Darren

7 Responses to "Big Surprise: Investors don’t want quality"

  • Snafzg says:
    July 23, 2008 at 11:23 am

    Here’s a quote from Gersh taken from Massively’s recent interview:

    “I’m sure that if EA as a developer and Mark [Jacobs] and everybody decided we really needed to push this game back again, we would do it. EA has supported us this entire time, and it’s really not EA pressure that led to this decision.”

    Maybe EA didn’t come out an directly tell them to launch… maybe they just told Mark, “Listen guy, we need this game out pronto. What can you cut from your original vision that won’t kill this game and will get you out on time.” I think it’s pretty evident, but hey, I don’t really have an inside scoop. You have to think that EA, a corporation who’s CEO is answerable to his investors, wants this game out ASAP.

    Supporting this, Mark has stated many times that even if they delayed againr, they would not be able to get the cities and classes in. Take that at face value and then apply it to this situation.

    The puzzle pieces fit for me…

  • p@tsh@t says:
    July 23, 2008 at 11:50 am

    What a tool. This guy has a way of saying all the right things wrong.

    EA is a public company. Its unlikely any investor is pressuring them in any way. No one investor owns more than 8.9% of EA which is a large and diverse company (see their proxy http://www.sec.gov/Archives/edgar/data/712515/000089161808000314/f40958dedef14a.htm#122).

    That said, he does answer to the street in the abstract sense and his job is to build shareholder value. Over the long term, that is. Of course investors don’t give a shit about anything— and this is the message he managed to FAIL to deliver– UNLESS it impacts shareholder value. Quality too low and you end up playing a low margin high volume game low quality disposable product game and ultimately erode shareholder value over time EVEN IF you have a good quarter here and there. Eventually all those expectations and earnings guidance start getting pre-discounted because, hey, they’re a company that continually over promises and underdelivers.

    Ask the Ford, GM and Chrysler etc. where that attitude got them in the last 30+ years…

    Now better is the enemy of good as the old adage goes and incremental ROI gains that result from additional heroic development efforts are always a tough call, but his lack of introspection is just astounding.

    I wonder why it was they didn’t meet their expectations for three years… Could it be because they continue to turn out shitty me too titles while over working an under qualified staff ensuring both shitty quality and lack of innovation?

    Bah. Somebody muzzle this guy.

  • sid67 says:
    July 23, 2008 at 11:51 am

    They care about our earnings per share.

    Duh. That?s what makes them investors. But don?t mistake that because investors don?t give a sh*t about quality that they want a company to make bad business decisions for short-term gains. Investors don?t need to understand games or gamers, they DO need to have confidence that a company is meeting or exceeding their forecasted earnings. Read what he said again: ?We had three years where we didn?t make our expectations.? THAT?S what investors care about. That they haven?t met expected earnings in three years. You are reading entirely too much into it if you believe that investors want short-term profits from crappy games. They simply don?t care how the profit occurs as long as it DOES occur and is sustainable over the long-term. I would argue that short-term profits from crappy games is NOT sustainable long-term, which is likely WHY they haven?t met expectations and investors are pissed off about it.

    Investors don?t care about quality is not the same thing as investors don?t WANT quality. Saying they don?t want quality means that they are expressing a preference for non-quality games. That?s not the case. They simply want PROFITABLE games. You are making the incorrect assumption that the only profitable games are crappy games. Now it may be that Riccitiello also believes that quick production times and aggressive marketing yields more profit and that certainly might be his strategy. As I wrote above, I think that type of thinking is not sustainable and it very well may be that?s why they failed to meet expectations.

  • Thallian says:
    July 23, 2008 at 12:08 pm

    For me also. The job of a manager is to get the mostest for the leastest. The job of a stock holder is to put money in and hope it makes you rich, but sometimes to get impatient and pull you money out before something bombs. The job of a game player is to demand quality. The job of a poor developer is to please them all as much as possible. The people at Mythic are doing a lot to please gamers but when it comes down to a question of how much enjoyment you are going to get from something that might be left out versus how much work(i.e. money) it costs to fully polish it and finish it, the decision becomes obvious. Roll it out without it if it isn’t critical, then patch it in later or charge for it again in an expansion. (Though this would make me put on my angry eyes alla mr. potato head).

    p.s. darren & co., come on over to my blog plz and give me suggestions for this turn based game me and anton are making! Or just vote on the polls I set up to get wind of what people like to see in a tactical game.

  • Sente says:
    July 23, 2008 at 2:20 pm

    Investors wants long term profitability and predictability. What they do not concern themselves about are the details – not to be confused with quality. If EA exec have said to financial analysts that they expect to make $$$ in Q4 2008 and they might only make $$ due to Warhammer not being on sale, then stock value will fall. With different predictions and estimates, the situation could have been different.

    Warhammer Online is just one game out of a lot of games EA makes, although investors might be interested in general how well EA will do in the online game space.

  • Keen says:
    July 23, 2008 at 6:38 pm

    Poor delivery, that’s all.

    I understand exactly what the Riccitiello is saying and he is, to a great extent, completely correct and not saying anything even remotely exclusive to EA or this industry. That’s business, yo.

  • Severius says:
    July 28, 2008 at 9:35 pm

    Well, of course investors care about one thing, one thing only: Profit.

    With that said look at Funcom’s stock. Now not being a professional analyst etc, and not being a fan of AoC (or anything funcom has put out) my analysis could be biased. Before AoC was released, a couple months actually, the talking heads from funcom were speaking about all the great things coming with the launch of AoC. They promised the stars the moon and everything in between. The stock appropriately rose and more than doubled it’s value by the time launch hit.

    Then came the truth about AoC, the issues within the game, more promises from funcom, etc etc etc. And what has happened with Funcom’s stock? Even after teh announcement of working on another mmo? It’s tanked to about pre-AoC levels of $20 or so. I think investors should be concerned about quality. With high quality you get high quantity. When you have low quality you get an initial surge of sales that drop off exponentially as the word gets out.

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