Electronic
“What weve been lacking so far this year is any reason to buy hardware,” Riccitiello said in an interview this week. “EA Sports Active may be the first software catalyst that can move hardware.” The sports game went on sale yesterday.
The number of Wii consoles sold in the U.S. slumped 52 percent in April following a 17 percent fall in March, according to researcher NPD Group Inc. The slide led a 17 percent drop in revenue for the industry last month. Electronic Arts is adding Wii games including “EA Sports Active” as part of a turnaround plan that includes the release of “The Sims 3″ on June 2, shuttering development studios and the elimination of 1,100 jobs.
Results from new Wii games, which include golf and tennis titles, and “Sims 3″ will improve perceptions of Electronic Arts among investors after a disappointing holiday period forced the company to make a “cost reset,” Riccitiello said.
“The reality and the perception will align when we prove that weve managed our costs effectively and weve managed to grow” revenue, Riccitiello said.
Nintendo, based in Kyoto, Japan, has slumped 24 percent this year on the Osaka Securities Exchange on concern slowing purchases will crimp earnings. Sales at the company fell 15 percent in January to March from a year earlier, the biggest quarterly decline since the three months ended September 2004, according to data compiled by Bloomberg.
Revenue Goals
In February 2008, Riccitiello told industry analysts that Electronic Arts was on pace to have $6 billion in revenue by the fiscal year ending in March 2011. In the May 18 interview, Riccitiello said the company had suspended that target and plans to readdress it later this year.
Electronic Arts didnt manage its marketing budget well and picked poor release dates for new games, Riccitiello said. New titles are typically referred to as intellectual property, or IP.
“We probably spread our marketing dollars too evenly over our titles as opposed to emphasizing our hits,” Riccitiello said. “We probably shouldnt have put new IP into the market against established IP when the world economy was crumbling.”
Electronic Arts gained 54 cents, or 2.5 percent, to $22.07 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have fallen 54 percent in the past 12 months.
Wii sales also will pick up when Nintendo cuts the price, Riccitiello said. The 2 1/2 years Nintendo has maintained the $249.99 price is an industry record, he said.
“The day that they hit $199, or ultimately $149, you are going to see a very sizable pickup,” said Riccitiello. He said he didnt have any information about Nintendos plans.
Nintendo, the worlds largest maker of video-game players, said on May 7 that Wii sales will rise less than 1 percent in the fiscal year ending March 2010 to 26 million consoles worldwide. President Satoru Iwata said hes “not optimistic” about demand outside Japan.
The “Active” game, which costs $60, uses the Wiis motion- sensing controllers and balance board to track players movements as they follow along with a virtual trainer. Players can make custom workouts and log how many calories they burn.
The game is being marketed to women with the help of Bob Greene, the personal trainer for television host Oprah Winfrey. It will compete against Nintendos “Wii Fit,” an exercise game that has sold 6.96 million copies in the U.S., according to Nintendo.