Electronic Arts in 5-year Facebook Credits deal

   From an AP article today, EA has entered into an agreement with Facebook where Facebook Credits becomes the coin of the realm for EA's games on the social network. A snippet from the article follows:

http://finance.yahoo.com/news/Electronic-Arts-in-5year-apf-65280168.html?x=0&.v=1
   Video game publisher Electronic Arts Inc. said Tuesday it signed a five-year deal to make Facebook's virtual currency, Facebook Credits, the sole way to pay for virtual items in its games on the social media website.
   EA said "Pet Society" and "Restaurant City" are two of the top 10 games on Facebook measured by daily active users. The games come from Playfish, which EA bought last year for $275 million. EA's soccer and football games also are playable on the site and it recently launched Monopoly for Facebook.

   Disclosure: J-Sonoma holds a position in shares of EA.

Zynga Valued Higher than Electronic Arts

Mark Pincus, CEO of Zynga

   The maker of Farmville is currently valued higher than Electronic Arts based on trading in privately held shares of Zynga on Sharepost. The difference in market capitalization is approximately $300 million as of of today.

   According to a Bloomberg article today:
   Started by Mark Pincus almost four years ago, Zynga has become one of the fastest-growing technology companies by using Facebook Inc.’s social network to distribute games. It makes money by selling virtual goods, such as vehicles and weapons that help players advance in games. The company has grabbed about a third of that market, which is worth $1.6 billion this year, according to Inside Network in Palo Alto, California.

   So, figure Zynga's revenue for this year is about $530 million and they'll probably net about $100 million in earnings. As a comparison, EA earned $98 million in the quarter ending June 2010 and they're on track to bring in nearly $4 billion in revenue for the entirety of 2010. Zynga's growth prospects allow traders on Sharepost to price the shares at bubble valuations but there are risks to Zynga's trajectory - namely, it's reliance on Farmville, Facebook, and competitors are on the prowl.

  

Electronic Arts Artist Dishes on Why Warhammer Failed

   An Electronic Arts employee dubbed "EALouse" who's drubbing EA management has posted an online rant for your reading pleasure. The link to the Wordpress blog hosting EALouse is pasted below at the bottom of this post. As of 10:15AM, there's 269 comments following the original posting:

http://ealouse.wordpress.com
Hi everyone,
I would think myself to be part of some noble cause, like the original EA Spouse trying to save her husband from a hellish work environment at EA. That had a happy ending, however, with tons of publicity and a total change of overtime wages and salaries and how they are handled within the company. I do not expect a happy ending, so I’ll be personal and selfish, and this is just for me.
So just call me EA Louse.

I found out recently that I will be dismissed from Bioware Mythic during the next round of layoffs EA coming this November. I’m sick of seeing EA outsource their art and find every excuse to get rid of us and still not achieve anything. Mythic is dying, and its not us who killed him but we’re taking the fall.
But if you want to know what really went down with Warhammer, I’ll tell you right now.

First, the project leaders did not know what they were doing. Jeff Hickman was the saddest excuse for a producer I’ve seen. All he did was drink the Koolaid and suck up to the right people. He was the perfect yes-man, and this reached down to almost all managers.

My boss who will not be named, again and again would tell us that Rob Denton, one of the original owners, said we should “do this” and “do that” and we would say “omg it makes NO sense, please explain A, B, and C to him. “And then he’d come back and tell us, after we thought he had gone to talk with him,” No, Rob wants in this way. Jeff agrees, this is what we’re going to do. Understood? ” They never actually talked back to Rob. We didn’t talk back to them.

Rob said jump, our leaders said, “How high?! And on who?”

So we shut up and did what we were told, by people too afraid to tackle real problems. It is a culture of fear, especially since Mark Jacobs was fired.

Oh, he left voluntarily you say? No, he was fired, and everything placed on his shoulders by those closest to him so they could divide his salary and annual bonus. I bet Rob is enjoying that sweet new Maserati he bought after leaving the knife in his partner of 15 years.
Want to know more? Keep reading. I can keep ranting.

Rob was never there during the development of Warhammer. We always joked about when his next weekly holiday was coming. (Answer? Next week!) Mark was not available, was way too head down trying to design his own contributions or whatever. Rob always handled things. We were told NOT to speak with Mark in person, never, or else we would be explaining to Rob.

The coup began long before Warhammer, and Jacobs did not even realize it.

And yet, this is common gossip in the company, and nobody in this industry seems to get it. So get it! Rob was responsible for the entire project, then blamed Mark when things went wrong.

Ah, but could not do it alone. No, he needed Jeff Hickman, promoted from customer service to produce the Warhammer project. Wait, let me let you have that sink in. The man running customer service, on the theory that the management of a large team of CSRs qualified him to run a game development project, was put in charge of a $50 million project with no previous experience.

And he needed Eugene Evans, the man who brought you the almost non-existent marketing campaign behind Warhammer. We could not even believe how bad they fucked up the marketing campaign. There was almost none. We slaved for years, and this is how we were rewarded for it by Eugene and the people of EA? Being told that Warhammer was not “worth” a lot of money spent on it? LOL. Now he’s in charge of Bioware Mythic.

Oh yeah, and he needed Paul Barnett. You know him as the crazy British dude that appears in random videos at EA to promote his latest bullshittery. We know him as the crazy British dude who we have no idea of how he still has a job. This man was supposed to be the savior of Warhammer’s vision and design. Now all he can do is promote his strange ideas about his little secret project web Ultima game that’s been almost universally criticized by all of us and focus groups. What’s that? You didn”t know Paul loves one of those old Ultima games sooooo much he’s making a literal copy of it for Facebook? Well, the cats outta the bag. Too bad it sucks ass.

So what do they all have in common? All of them failed, badly, in Warhammer, and each of them is in a position of authority in the new company, while the rest of us are facing pink slips. How do they sleep at night? They spin aruond, blame everything on Mark, divide his old salary between them, and never speak about it again. Oh, and they fuck us little guys as well.

Almost makes me congratulate them for having the balls, but after watching them work, it’s obvious they don’t have any. They’re cowards running scared trying to hide under the wing of Bioware, now that Rob has become a general manager of EA.

And Bioware? Don’t make me laugh. They’ve spent more money making the Old Republic than James Cameron spent on Avatar. Shit you not. More than $ 300 million! Can you believe that?

And you know what they’re most proud of? This is the kicker. They are most proud of the sound. No seriously. Something like a 20Gig installation, and most of it is voiceover work. That’s the best they have. The rest of the game is a joke. EA knows it and so does George Lucas,they’re panicking , and so most of Mythic has already been cannibalized to work in Austin on it because they can’t keep pushing back launch.

Old Republic will be one of the greatest failures in the history of MMOs from EA. Probably at the level of the Sims Online. We all know it too ……

Anyway, back to Warhammer. We shouldn’t have released when we did, everyone knows it. The game wasn’t done, but EA gave us a deadline and threatened the leaders of Mythic with pink slips. We slipped so many times, it had to go out.

We sold more than a million boxes, and only had 300k subs a month later. Going down every since. It’s “stable” now, but guess what? Even Dark Age and Ultima have more subs than we have. How great is that? Games almost a decade make more money than our biggest project.
So there it is. Rewarding the incompetent. Firing the competent.
I say it anonymously so I can keep my next few paychecks coming.
So I’m a louse. A big fat EA louse.
Want some more questions answered? Ask away.

[EALouse @ WordPress

EA shares drop 5.95% on Medal of Honor Reviews

   I completed my buying of Electronic Arts shares today on the drop this afternoon. I am now sitting on 4,000 shares that I've purchased in increments over the course of the past 8 months. When I saw the shares under pressure today from what I consider BS news about "mediocre" early reviews, I had to take the opportunity and buy. EA could continue to drop in the next few days but I'm comfortable in the position and I may add 1,000 more shares if I can get them at $16.

   The next position I'm considering is AMZN. I already own shares in my core brokerage account but I'm thinking of buying trading shares because it's breaking out nicely. I tend to buy a stock when it goes higher and then add to the position as the shares continue higher. My target on AMZN is $200 for the first level but I could see it running all the way up to $300. Amazon's market cap stands at $70 billion but I think it's a $140 billion dollar company in the next 5 years. What happens after it hits $300? It'll probably crash all the way down to the single digits like it did during the 2000-2001 dot-com crash. I never fall in love with a stock but I see the potential appreciation in EA and AMZN's share price over the next 60 months.

Electronics Arts shares look attractive

   I sold my EA shares a few years ago but I've been buying them back again between $16 and $18. EA closed at $17.65 on Friday and I think they're a buy all the way up to $19. The strategy that I use to purchase shares in a position is as follows:

1) I determine an amount of shares that I want to own. In EA's case, my target quantity is 4000 shares.
2) When price reaches a level where I gauge the risk/reward proposition to be attractive, I enter a limit buy for 200-500 shares in each trade. For example, I started the position earlier this year by buying 200 shares at $17.
3) I bought shares all the way down to $16 but stopped when EA dropped to the $14-$15 area. Yes, I was feeling queasy when I saw prints that I didn't expect.
4) When EA recovered to $16+, I started buying again on strength. As it continued higher, I added shares above $16. I'm currently sitting on 2800 shares and I have another 1200 to buy before my position is full.

   Some may question why I didn't buy when EA was $15. Well, when shares drop below my comfort level, I won't sell my position but I won't add to it anymore because I don't know if the next price is going to be $13 or even $11. EA has been punished by the market and rightfully so for the moves and acquisitions they've made in the past couple of years.

   With the economy recovering in the next few years, I am willing to buy into EA now because they'll improve with the economy as more consumers return to their freespending ways. What's my target on EA? I think the highs of 2005 wouldn't be out of the question. That's when EA traded around $60 and I think there's at least one more split in EA when it reaches that level again within the next 5 years.