http://www.gamesindustry.biz/articl...s-that-medal-of-honor-warfighter-disappointed
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And for fun, the transcript of the call so you can see the exact impact on their finances (as result of ctrl+F 'Medal').
Prepared Comments:
Q&A Section:
Electronic Arts, in a financial earnings call following its Q2 results, noted that Medal of Honor: Warfighter didn't sell as well as hoped. EA CEO John Riccitiello acknowledged that the game simply came in below expectations. This comes shortly after Cowen and Company analyst Doug Creutz said that the newest Medal of Honor was "likely to be a major disappointment."
EA did not state what level of sales Medal of Honor actually saw, but the company did say the "weaker than expected performance" is going to affect the company's third-quarter results.
EA Labels president Frank Gibeau also noted that EA "takes quality very seriously" and the company was not pleased with critics, saying that EA's own internal testing led them to think that Warfighter was much better than the reception it got from critics. Despite the disappointing performance, the publisher believes that Medal of Honor remains a "good game with a receptive audience" and EA fully intends to support the game with marketing, DLC and more through the holidays.
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And for fun, the transcript of the call so you can see the exact impact on their finances (as result of ctrl+F 'Medal').
Prepared Comments:
http://files.shareholder.com/downlo...ca07ea63fab/Q2 FY13 Earnings Script_FINAL.pdfEA Call said:Medal of Honor Warfighter shipped last week and the highly anticipated Need for Speed Most
Wanted launched today in North America. While we are very pleased with the demand
indicators on Need for Speed, the Medal of Honor launch is coming in below our expectations.
Blake and Frank will provide more detail on these.
We are managing the ups and downs. Our Q1 and Q2 were better than expected. Our Q3
appears soft due mostly to Medal of Honor. We’re expecting a strong finish in Q4, driven by a
powerful slate of titles.
Taken together, we are updating our FY13 non-GAAP EPS guidance to a range of $1.00 to
$1.15 -- down a nickel from our original guidance, which reflects the weakness in Q3 associated
with Medal of Honor. At the midpoint our guidance is to deliver over 25% non-GAAP EPS
growth and to beat the current street EPS estimate for our fiscal year.
For the quarter, we expect non-GAAP diluted EPS to be between $0.50 and $0.60 per share, as
compared to $0.99 last year. This reflects weaker than expected performance from Medal of
Honor Warfighter and our decision to cancel our NBA title.
Next, Medal of Honor Warfighter shipped last week to a critical reception that fell below our
expectations. While we’re disappointed with the critical response, we believe this is a good
game with a receptive audience. The game finished the weekend in the #1 position in the UK.
We will continue to support this game through the holidays with sales execution and marketing.
This includes a compelling content download tied to the December release of Sony Pictures’
film, Zero Dark Thirty.
Q&A Section:
http://seekingalpha.com/article/963...-results-earnings-call-transcript?part=singleSeekingAlpha said:Edward S. Williams - BMO Capital Markets U.S.
Just a quick question, if I could, on Medal of Honor and on NBA Live. What, in your opinion, really is kind of what drove the relative performance there? And how is it that you think you can kind of prevent that from occurring again?
Frank D. Gibeau - President of The EA Labels
Yes. This is Frank, I'll take those. We take product quality very seriously at Electronic Arts, and it's kind of lifeblood of what we do. And when we look at launches like Medal of Honor and NBA, we're not happy with the results there in terms of how they've been received, in the case of Medal of Honor, by the critics and reviewers, and in the case of NBA, it just didn't meet our standards of quality in order to go out and compete in basketball at a level that we felt was necessary and important for EA SPORTS. So in the case of basketball, we're committed to basketball, and we're going to be entering that category in the future, and it's going to be done in a way that we deliver a high-quality product. On Medal of Honor, we're disappointed with the critical reception. Our internal testing and mock reviews indicated that the game is better than the actual score that we have right now, and we believe that it is. However, we are seeing some folks out there that just don't like the game. We believe that it's going to find an audience. It's been -- had a good track record over the weekend in the U.K. We're going to continue to support the game going forward with marketing and additional content. And I think when you look at those 2 products and you take a step back and you look at the broader portfolio that Electronic Arts has been building, overall, we've got a quality record that's pretty remarkable inside the industry. I think no other studio has improved quality as dramatically as Electronic Arts over the last several years. And if you look at our recent track record, we've released the most popular FIFA game ever. We vastly improved Madden in terms of its quality. Battlefield 3 is a top 10 game and is past 17 million units. And today, we had a really good result with Need for Speed Most Wanted in terms of its release in the early critical reception. So we take quality very seriously. We're in a hit-driven business. And we don't reach our own high internal expectations, trust me, we're going to school on what happened and what occurred, and we're going to do better going forward.
Edward S. Williams - BMO Capital Markets U.S.
So your thought at this point with regards to Need for Speed is that as far as the initial channel sale, that's been in line with your expectations and has not necessarily been affected by the Medal of Honor release?
Frank D. Gibeau - President of The EA Labels
Yes. Repeat that, Ed, I'm sorry?
Edward S. Williams - BMO Capital Markets U.S.
With regards to Need for Speed, the release of the game and the initial expectations in the channel sale, that has not been affected by the Medal of Honor performance?
Peter Robert Moore - Chief Operating Officer
Not at all. I was just glancing the Metacritic right there, we're an 86 of about an hour ago. In fact, we've getting better reviewed than Assassin's Creed as it currently stands on the Metacritic point of view. Our retailers have had early glimpse of Need for Speed. Our sell-in is strong. Our demand metrics are definite. Purchase intent, for example, is strong and our pre-orders as was mentioned on the prepared remarks are the highest we've ever seen for the Need for Speed franchise. So all of the data indicates a very strong start. And this, of course, as you know too well, is a title with a very long tail that will sell well. So no issues whatsoever. I don't think retailers link game performances from franchise to franchise. They place their orders accordingly based on their pre-orders and what they think their consumers are going to pick up.
Brian J. Pitz - Jefferies & Company, Inc., Research Division
John, I think you suggested sharp increases in EPS going forward. Can you please help us characterize the primary drivers of this trend? Also, mobile revenue is up 60% year-over-year. Would you give us a sense for the key drivers of mobile growth? And finally, it looks like you're taking down full year guidance by about $50 million on revenue, $0.05 on earnings, despite the beat. Can you give us a sense for the drivers? Is it Warfighter's softness? Any color would be great.
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Blake J. Jorgensen - Chief Financial Officer and Executive Vice President
Why don't I try to hit on the next 2 parts of the question? One is the digital question, and then the second is the guidance question. So digital, just hitting on some of the points that we made in the prepared remarks. Keys to digital growth have been across a wide variety of options for us or opportunities for us. Extra content and free-to-play have been a big driver. Battlefield is a great example of that, SimCity Social as well. Free game downloads, up 46% when you look at Battlefield 3. The mobile business, up dramatically, up 60%, driven primarily by the new smartphone formats and tablets. For those who haven't tried The Simpsons game, I think it's critical to go out and give it a go. It's been one of the top grossing apps on the App Store and it's just a fabulous game. But Bejeweled Blitz, for example, one of the PopCap Games we acquired, is doing extremely well. And then FIFA, on the mobile business, smartphone business has been great, particularly as people are playing Ultimate Team. So that, plus a subscription business, continues to really drive the overall digital revenue. And as a reminder, we haven't booked any of the Battlefield 3 Premium sales, already north of $80 million this year, and will all get recognized at the tail end of the year. On guidance, I'd say it's a combination of conservatism and impact from Medal of Honor. Our guidance though as a reminder also is still above the street in most cases. Our revenue guidance came down $50 million at the top end and the bottom end of the range and is right on top of the street guidance, and then at the earnings level, we came down $0.05, but are still above where street guidance is. We're confident in that because of the back half of the year portfolio that Frank spoke to you about, as well as the improvements in gross margin and our ability to hold OpEx and that yields the guidance, but we think that's realistic relative to the disappointment in Medal of Honor.
Atul Bagga - Lazard Capital Markets LLC, Research Division
Makes sense. And if I can have one more follow-up. You guys talked about NBA cancellation, some underperformance of Medal of Honor and you're taking down your revenue guidance by about $50 million. Can you talk what other puts and takes? Is it mostly the strength of FIFA? What are the things going on in the guidance? You talked about what's going down, but what's going up there?
John S. Riccitiello - Chief Executive Officer and Executive Director
Broadly, the over performance, we've talked about already, and I'll just bring you up to speed. We talked a lot about FIFA being positive. We've talked pretty sharp positive in the form of Battlefield and Battlefield Premium. We've talked about -- look, frankly, Need for Speed, relative to our initial expectations, looks very strong. Madden, with a solid entry this year and mobile across-the-board. So those are generally our upside scenarios. We've got what we think -- look, when you start the fiscal year, you don't know your fourth quarter title in terms of the exact quality that they're finishing at. Right now, what I've seen at Dead Space, what we've seen at Crysis, what we've seen on SimCity could do nothing other than bolster our confidence and the ability of those titles to deliver. We feel good about our numbers. But you're right, we've had -- I mean, the principal downside this year were Medal of Honor, NBA and frankly earlier, Star Wars has underperformed. But that's really the balanced equation.
