EA could monopolize gaming?

What does the initial cost not depreciating have anything to do with what I'm talking about? If you spend 2 billion dollars on something your not making any profit until you recoupe 2 billion dollars. You can't start making a profit until that investment gains you 2 billion dollars. It really isn't that hard to understand. Why do you keep on insisting that the number one reason in investing in something is not to make profit? My fiance and I have invested over 75 thousand dollars in mutual funds and the whole point in us doing so was to increase on our initial investment.

There is another reason in investing in something. You don't always need to have the initial investment make a profit, but that investment to increase profits in other areas. For EA what would that be? How could spending billions of dollars on aquiring so many software companies increase profits else where by a considerable amount. A console is the only one that makes sense by controlling so many publishing rights EA could put out a console to be the console of all consoles. EA has been in the gaming business for along time neither you or I can imagine how much gaming knowledge they have accumulated over that time. So many console makers have tried and failed, but many were just barely in a position to crack the surface but EA could cause a typhoon if the wanted to.

It seems to me most of your post stems from fear than rationality. I'm not saying your not rational, but I can tell that you have some fear about this subject which every gamer should.

deebo_x

Fear? I'm not afraid. Don't try to read me because you don't understand my argument. I actually don't think it would be too bad if EA tried to enter the console race, mainly because a) I don't think it will spell the doom you imagine, and b) I'm not a rabid EA hater. I've actually supported them in more than one discussion, and don't find them particularly disagreeable. I actually like EA as much if not a little better than the average publishing house. So fear it ain't. It's pure, thorough rationality and knowledge of the topic.

You need to understand this part: you don't "spend" when you invest, so you don't need to "recoup" anything. You're still failing to grasp that basic concept of finances, and are twisting my words based on this misunderstanding on your part. You purchase other companies because the ROI of their stock (or your forecast of that ROI under your management) will be better than the interest rate a bank or another kind of investment (real estate, forex, random stock packages, etc). You're not technically losing money, you're just reducing it's liquidity in exchange for a possible increase in it's value. It's economy 101.

As for the console. I never said it was "inconcievable", I just said it's not the best move on EA's part. You see, there's an absolute number of consoles sold in the market for every generation (you don't know until the end of the generation, but it doesn't matter). Another competitor will not tend to add consoles to that market, but reduce the marketshare of the other companies, unless you pull a Wii (which I'm sure wouldn't be EA's focus, it's even riskier than a normal console).

Right now, EA has a potential customer base of 100%. They publish for the PC, 360, PS3 and Wii. If they were to enter the console market, no matter how big a share they got (let's assume 80%, which is quite high, more than what the PS2 managed). Now they have two choices: Make their games exclusive, in which case they're now selling to 80% of the customer base, and will statistically lose 20% of their sales, or they will still go multiplat, and access 100% of the customer base. So, best case scenario, they will get the same amount of game sales as they would get beforehand, but they'll have sunk billions into making the hardware. Assuming they're pocketing the $12 royalty fee, they're having a 20-30% of increase in revenue (more or less). Even if they got the whole console thing done completely free, they'd need to get 70-80% marketshare, and nobody has gotten that amount of the pie in a long time. Add the cost of R&D, installations, manufacturing, and subsidy of the console, and you're looking at a much more grim landscape.

So, why buy more companies? It's obvious. They have a bigger piece of the tastier pie of software revenue, and as SUD noted, they round their offering so much more, which will give them an even better position in the market, and much more freedom.

For EA, it's just not a very good idea to get a console up and running, financially.

Spending 2 billion dollars on a company doesn't mean you don't have 2billion dollars anymore your correct. If you can increase the value of that company then sell it or not even increase it at all you still can sell it and you would have 2 billion dollars again. Has EA sold any software company it has acquired? Why is EA the only company purchasing software companies at an alarming rate and Microsoft, Sony, or any other big third party software company like Ubisoft, Activision, or Capcom doing the same? I'm not talking about EA buying these companies then selling them for a greater profit, because they've yet to do so with any of their company aquisitons, so we don't need to argue about that. The fact is they acquire these companies and keep them but why? Why are they purchasing so many of them when they aren't increasing their profits by doing so and seem to have no intention of selling them?

The whole point of any business is to create profit maybe you need to take a business class or something. If you invest 2billion dollars in a company for instance if you unless you have an intention of selling it for more than what you paid for there makes absolutely no sense to purchase it unless you believe you'll make a profit on it. To make a profit that business would have had to recoupe the entire 2 billion dollars invested first. Common sense man I really don't know how else to break it down to you.

Far as amount of consoles sold in every generation being a fixed number you are incorrect. The Snes and Sega gen saw sales of barely 80 million consoles sold. The ps1, n64, and saturn gen saw sales of 170 million consoles sold. The ps2,xbox,dreamcast,and GC gen which isn't completely over has sales almost 200 million consoles sold so there isn't any definitive number of consoles in any one gen. Plus if EA was to release a console it wouldn't be this gen, but next gen.

I said if EA was to release a console alot of their big money making software titles would remain multiplat, but probably time exclusive. Look at the price of consoles today. The ps3 started out at 600 dollars the 360 400 dollars, the WII 250. You don't see all the profit in that. Especially as hardware developement costs go down during the generation there by increasing profits. How much do games cost 60 bucks so there is billions to be made in hardware sales more so than software sales. Now EA would lose a lot of money by making their software exclusive, but if they could gain anywhere around 50% of the console market that would more than make up the amount of money loss on making their software titles exclusive. Plus you forget that Sony, Microsoft, Nintendo make money on every game released on their consoles so third party developers don't recieve a 100% of the profits on their games. While EA would recieve a hundred percent profit on any firsty party game released for their system. The cost in manufacturing consoles are always high, but then they reduce in time noone knows that better than Sony.

I'm really not afraid of an EA console I go where the games are and I'm a big fan of EA sports titles so whatever happens happens.

Grive you make a compelling arguement against EA releasing a console, but I like to see how you make an arguement for Sony and even Microsoft being in a better position to enter the console market more so than EA? Your previous statements explaining why those two companies entered the market wasn't very compelling at all.

Spending 2 billion dollars on a company doesn't mean you don't have 2billion dollars anymore your correct. If you can increase the value of that company then sell it or not even increase it at all you still can sell it and you would have 2 billion dollars again. Has EA sold any software company it has acquired? Why is EA the only company purchasing software companies at an alarming rate and Microsoft, Sony, or any other big third party software company like Ubisoft, Activision, or Capcom doing the same? I'm not talking about EA buying these companies then selling them for a greater profit, because they've yet to do so with any of their company aquisitons, so we don't need to argue about that. The fact is they acquire these companies and keep them but why? Why are they purchasing so many of them when they aren't increasing their profits by doing so and seem to have no intention of selling them?

The whole point of any business is to create profit maybe you need to take a business class or something. If you invest 2billion dollars in a company for instance if you unless you have an intention of selling it for more than what you paid for there makes absolutely no sense to purchase it unless you believe you'll make a profit on it. To make a profit that business would have had to recoupe the entire 2 billion dollars invested first. Common sense man I really don't know how else to break it down to you.

Far as amount of consoles sold in every generation being a fixed number you are incorrect. The Snes and Sega gen saw sales of barely 80 million consoles sold. The ps1, n64, and saturn gen saw sales of 170 million consoles sold. The ps2,xbox,dreamcast,and GC gen which isn't completely over has sales almost 200 million consoles sold so there isn't any definitive number of consoles in any one gen. Plus if EA was to release a console it wouldn't be this gen, but next gen.

I said if EA was to release a console alot of their big money making software titles would remain multiplat, but probably time exclusive. Look at the price of consoles today. The ps3 started out at 600 dollars the 360 400 dollars, the WII 250. You don't see all the profit in that. Especially as hardware developement costs go down during the generation there by increasing profits. How much do games cost 60 bucks so there is billions to be made in hardware sales more so than software sales. Now EA would lose a lot of money by making their software exclusive, but if they could gain anywhere around 50% of the console market that would more than make up the amount of money loss on making their software titles exclusive. Plus you forget that Sony, Microsoft, Nintendo make money on every game released on their consoles so third party developers don't recieve a 100% of the profits on their games. While EA would recieve a hundred percent profit on any firsty party game released for their system. The cost in manufacturing consoles are always high, but then they reduce in time noone knows that better than Sony.

I'm really not afraid of an EA console I go where the games are and I'm a big fan of EA sports titles so whatever happens happens.

deebo_x

I have taken a business class. More than one, actually: An MBA on top of an industrial administration degree. So if I may say so, your advice is best used on yourself.

You still fail to grasp the basics of investing. You don't need to sell a company to profit from it, and you don't need to "break even" on it. Should be common sense. Your profit is the increase in value of your assets. Please, take a good college-level investment of engineering economy class. Heck, go to wikipedia, can't put you too astray.

You don't need to recoup the original cost of an asset unless you lose it in the process of generating more money. Look, you're wrong, you don't understand the concept, just believe me on this. You simply aren't seeing the difference between an investment and an expense.

As for my set number of consoles statement, how can you deny this? It's plainly obvious and unarguable: There's a set number of consoles sold per generation. I never said that number was the same across generations, you took that out of your own crop. Add the SNES and genesis sales, and you've got your number for that gen. Add the PS1, the Saturn, the N64 and the Jaguar, and you've got that number for that gen ,et al. Again, you don't understand my point.

And if you believe that hardware sales surpass software, let me tell you, they don't. The market cap of EA alone is a third of that of ALL of Sony. EA is a third of the size of all of sony, including all their divisions. Plus, software is a safer market. You don't need billions of investment in a single hit-or-miss product, and you're much, much more free to move when the winds of change blow. Hardware manufacturing is hardly the best idea compared to software.

Grive you make a compelling arguement against EA releasing a console, but I like to see how you make an arguement for Sony and even Microsoft being in a better position to enter the console market more so than EA? Your previous statements explaining why those two companies entered the market wasn't very compelling at all.

deebo_x

I fail to see what's not "compelling" about it.

I'll reiterate it:

1.- Sony entered in a time of nintendo dominance, when developers were unhappy with the status quo, but were forced to go to the almighty NES/SNES. In addition to this, Sony got their console R&D handed to them, as the PS1 was originally an add-on for the SNES that went sour. So, they got a market ripe for a competitor, and the engineering already done. And they fundamentally changed the landscape. So, it's compelling on two counts: The market was ready for another console, and Sony had a low barrier of entry. Only a fool wouldn't take that chance. EA has neither of these advantages.

2.- Microsoft didn't enter the console race to absolutely win it and make a lot of profit there (it would have been better spent on their other divisions). The Playstation brand is a threat to their overall stated goal, which involves Microsoft's presence in the entertainment center of the house: The Media Center PC, the table they're developing, and other initiatives. Total PS dominance would hurt them, and the Xbox brand has helped them gain a foothold into that branch. What's not compelling about this? A potentially profitable division (It hasn't been, but it could potentially be) with a relatively low barrier of entry (they used off-the-shelf components and already had strong software), and the ability to slow down a competitor to their future vision of the company. It's a good idea to enter. EA has neither the advantages nor the need to spar with the other companies.

EA would love a single console market http://www.1up.com/do/newsStory?cId=3163813

So who knows what they have planed, all these acquisitions along with their past comments about a one console market do make you wonder...

[QUOTE="deebo_x"]

Spending 2 billion dollars on a company doesn't mean you don't have 2billion dollars anymore your correct. If you can increase the value of that company then sell it or not even increase it at all you still can sell it and you would have 2 billion dollars again. Has EA sold any software company it has acquired? Why is EA the only company purchasing software companies at an alarming rate and Microsoft, Sony, or any other big third party software company like Ubisoft, Activision, or Capcom doing the same? I'm not talking about EA buying these companies then selling them for a greater profit, because they've yet to do so with any of their company aquisitons, so we don't need to argue about that. The fact is they acquire these companies and keep them but why? Why are they purchasing so many of them when they aren't increasing their profits by doing so and seem to have no intention of selling them?

The whole point of any business is to create profit maybe you need to take a business class or something. If you invest 2billion dollars in a company for instance if you unless you have an intention of selling it for more than what you paid for there makes absolutely no sense to purchase it unless you believe you'll make a profit on it. To make a profit that business would have had to recoupe the entire 2 billion dollars invested first. Common sense man I really don't know how else to break it down to you.

Far as amount of consoles sold in every generation being a fixed number you are incorrect. The Snes and Sega gen saw sales of barely 80 million consoles sold. The ps1, n64, and saturn gen saw sales of 170 million consoles sold. The ps2,xbox,dreamcast,and GC gen which isn't completely over has sales almost 200 million consoles sold so there isn't any definitive number of consoles in any one gen. Plus if EA was to release a console it wouldn't be this gen, but next gen.

I said if EA was to release a console alot of their big money making software titles would remain multiplat, but probably time exclusive. Look at the price of consoles today. The ps3 started out at 600 dollars the 360 400 dollars, the WII 250. You don't see all the profit in that. Especially as hardware developement costs go down during the generation there by increasing profits. How much do games cost 60 bucks so there is billions to be made in hardware sales more so than software sales. Now EA would lose a lot of money by making their software exclusive, but if they could gain anywhere around 50% of the console market that would more than make up the amount of money loss on making their software titles exclusive. Plus you forget that Sony, Microsoft, Nintendo make money on every game released on their consoles so third party developers don't recieve a 100% of the profits on their games. While EA would recieve a hundred percent profit on any firsty party game released for their system. The cost in manufacturing consoles are always high, but then they reduce in time noone knows that better than Sony.

I'm really not afraid of an EA console I go where the games are and I'm a big fan of EA sports titles so whatever happens happens.

Grive

I have taken a business class. More than one, actually: An MBA on top of an industrial administration degree. So if I may say so, your advice is best used on yourself.

You still fail to grasp the basics of investing. You don't need to sell a company to profit from it, and you don't need to "break even" on it. Should be common sense. Your profit is the increase in value of your assets. Please, take a good college-level investment of engineering economy class. Heck, go to wikipedia, can't put you too astray.

You don't need to recoup the original cost of an asset unless you lose it in the process of generating more money. Look, you're wrong, you don't understand the concept, just believe me on this. You simply aren't seeing the difference between an investment and an expense.

If you spent 2billion dollars which in profit dollars made from your other business and invested that money in another what would be the upside. What is the upside in buying up T2 and not selling it? Do you really think EA is interested in making T2 more profitable than it really is? You think EA's goal is to increase the value of all their aquisitions, but not in order to sell them, but keep them. Its like this you have 2 billion dollars you probably can think spending on better things than buying a software company. So either your trying to increase the money spent or your not. Whether your money is in the bank or all in a company its all seen as asset of course. 2billion dollars in worth of a company is almost as good as cash. You don't have to take a class to figure that out just play monopoly it works the same way.

Here's the problem though what would be the goal? You have all your money tide up in aquisitions and none of it to spend. What is the point in investing great deals of money and not increasing the money you have in the bank? For instance lets say invest 2billion dollars into a company and for arguement sake the company never depreciates in value, lets say it either remains the same or increases in value. Now you have a company either worth more or the same where is the gain? If you have no intention of selling, why would its worth mean anything? The company could be worth twice as much what you paid for it, but if you have no intention of selling it and you still haven't made a profit on it then what have you really gained?

If you sell it lets say after 5 years for the same price what you paid for it then all the companies profits during that time become the total profit you made on that investment. Lets say you after 5 years you keep that company then, but the company profits still have not matched the amount of money invested then you have made no profit at all until you sell the company or wait even longer to break even.

Anyone can sink their last dime into a company, but whats the point if your not going to sell it and you can't spend it. You think it makes sense what EA is doing in terms of acguiring assets, but its funney their the only company doing so at such a fast rate. Microsoft has more money than all these companies Microsoft could buy them all and it could be looked at as acquiring assets,but thats less money Microsoft would have to spend on anything else.

If EA's goal was to increase those companies worth then sell them like I said earlier how? It really isn't that easy to do. If it were Microsoft or Sony would have made a bid for those same companies that EA has acquired. It isn't easy and 2 billion dollars is alot of money to invest on the half chance that companies worth increases or possibly decreases. Why is EA the only gaming company taking these risks? I see a greater goal in mind that what you see, but lets just see how it plays out, to me it will be very interesting to see.

If any one does it, it will be EA. But I don't think they will. Firts of all, I doubt they'd ever make a console, because they wouldn't want to spend the development costs. They are happier just to use pre existing hardware. Second, Ithey'd have some trouble getting all the major devlopers. They've had some success, but getting nintendo or most japanese comapnies will be a huge problem.

I just don't h\think they'll do it, at least in the forseeable future.

If you spent 2billion dollars which in profit dollars made from your other business and invested that money in another what would be the upside. What is the upside in buying up T2 and not selling it? Do you really think EA is interested in making T2 more profitable than it really is? You think EA's goal is to increase the value of all their aquisitions, but not in order to sell them, but keep them. Its like this you have 2 billion dollars you probably can think spending on better things than buying a software company. So either your trying to increase the money spent or your not. Whether your money is in the bank or all in a company its all seen as asset of course. 2billion dollars in worth of a company is almost as good as cash. You don't have to take a class to figure that out just play monopoly it works the same way.

Here's the problem though what would be the goal? You have all your money tide up in aquisitions and none of it to spend. What is the point in investing great deals of money and not increasing the money you have in the bank? For instance lets say invest 2billion dollars into a company and for arguement sake the company never depreciates in value, lets say it either remains the same or increases in value. Now you have a company either worth more or the same where is the gain? If you have no intention of selling, why would its worth mean anything? The company could be worth twice as much what you paid for it, but if you have no intention of selling it and you still haven't made a profit on it then what have you really gained?

If you sell it lets say after 5 years for the same price what you paid for it then all the companies profits during that time become the total profit you made on that investment. Lets say you after 5 years you keep that company then, but the company profits still have not matched the amount of money invested then you have made no profit at all until you sell the company or wait even longer to break even.

deebo_x

What's the point of having more money in a bank?

With the Take 2 aquisition seeming inevitable EA which is already the biggest third party developer will become the third party developer. It wasn't that long ago that EA bought Bioware doesn't anyone find it a bit odd? We know this is a part of business practice for big companies to buy up smaller companies, but I think there is more to this than that. There must be a plan for EA to this.

Having the money to buy up all the companies doesn't matter if the amount of money your spending will take years maybe decades to recoupe before you can make a profit. So thats whats so strange about EA's actions its going to take years before they can make a profit on all the aquisitions maybe decades so why keep buying up more companies when they haven't broke even on the ones they already own?

There was a rumor awhile back that EA was planning on releasing a console. When I heard that rumor I thought it was plausible. EA sports titles like Madden, NBA live, Need For Speed, and Fifa could move consoles alone. I haven't looked into the companies that EA has bought in the past but with the aquisition of Bioware and soon to be Take 2 which would probably be the biggest of them all with with rights to GTA, 2k sports, Bioshock. Does anyone see where I'm going with this? It isn't a coincedance that EA is buying up so many companies it seems they are trying more than to enter the console business, but to completely control it. With all the publishing rights they currently have and soon will have EA could put out a console where those games can only be found.

Personlly I would buy a EA console just for EA sports titles alone, but with all the other franchises they own and soon to own it would make a EA console very attractive purchase for everyone. If EA were to make those games exclusive it could knock out Sony and Microsoft out of the console business. If it were to happen Sony and Microsoft would have to rely on more first party games where Sony isn't too bad in that department and where Microsoft is lacking a great deal in. Nintendo will be the only company not affected by EA because their biggest franchises and selling point are first party games. Sony and Microsoft better pray that Ubisoft, Activision, Konami, and Capcom don't fall prey to EA's plan.

If EA were to put out a console I would buy it because I'm a gamer I go where the games are I've had an Atari(not sure which one),NES,SNES,Sega,PS1,PS2,GC,Xbox,360,and PS3 so where ever the games are I'm there. So what do you guys think?

deebo_x

1. Partner with Apple, with Apple making the sleek and stylish hardware. They already have the means and the reputation, after all.

2. Less development costs, since EA would only need to target one platform. They can turn their games over faster, allowing more time to sell and less money to recoup to turn a profit.

3. Licensing fees. If EA controls the console (or perhaps EA and Apple), then they can do what Sony and Microsoft and the like do now: cash in on licensing fees. If people start gravitating towards an EA console, third parties will go there, too, and that'll mean increased licensing fees.

[QUOTE="deebo_x"]

If you spent 2billion dollars which in profit dollars made from your other business and invested that money in another what would be the upside. What is the upside in buying up T2 and not selling it? Do you really think EA is interested in making T2 more profitable than it really is? You think EA's goal is to increase the value of all their aquisitions, but not in order to sell them, but keep them. Its like this you have 2 billion dollars you probably can think spending on better things than buying a software company. So either your trying to increase the money spent or your not. Whether your money is in the bank or all in a company its all seen as asset of course. 2billion dollars in worth of a company is almost as good as cash. You don't have to take a class to figure that out just play monopoly it works the same way.

Here's the problem though what would be the goal? You have all your money tide up in aquisitions and none of it to spend. What is the point in investing great deals of money and not increasing the money you have in the bank? For instance lets say invest 2billion dollars into a company and for arguement sake the company never depreciates in value, lets say it either remains the same or increases in value. Now you have a company either worth more or the same where is the gain? If you have no intention of selling, why would its worth mean anything? The company could be worth twice as much what you paid for it, but if you have no intention of selling it and you still haven't made a profit on it then what have you really gained?

If you sell it lets say after 5 years for the same price what you paid for it then all the companies profits during that time become the total profit you made on that investment. Lets say you after 5 years you keep that company then, but the company profits still have not matched the amount of money invested then you have made no profit at all until you sell the company or wait even longer to break even.

Grive

What's the point of having more money in a bank?

Have you invested any money? Me and my fiance invested 75 thousand dollars in order to make more money so we can spend it why else invest? We could keep reinvesting the money we earned and so on and so on,but what would be the point in that when we can't enjoy that money?

Oh? How about these possibilities?

1. Partner with Apple, with Apple making the sleek and stylish hardware. They already have the means and the reputation, after all.

2. Less development costs, since EA would only need to target one platform. They can turn their games over faster, allowing more time to sell and less money to recoup to turn a profit.

3. Licensing fees. If EA controls the console (or perhaps EA and Apple), then they can do what Sony and Microsoft and the like do now: cash in on licensing fees. If people start gravitating towards an EA console, third parties will go there, too, and that'll mean increased licensing fees.

HuusAsking

Erm, I think you're sparring with the wrong boxer. Deebo actually agrees with you - you're basically restating his whole argument.

Still, check my previous posts, I've mentioned counterpoints to your arguments.

Anyway, it is a possibility, and your three points would be the reasons why EA would theoretically enter the console race (With or without apple). Personally I don't believe it's in their best interests, though.

[QUOTE="deebo_x"]

With the Take 2 aquisition seeming inevitable EA which is already the biggest third party developer will become the third party developer. It wasn't that long ago that EA bought Bioware doesn't anyone find it a bit odd? We know this is a part of business practice for big companies to buy up smaller companies, but I think there is more to this than that. There must be a plan for EA to this.

Having the money to buy up all the companies doesn't matter if the amount of money your spending will take years maybe decades to recoupe before you can make a profit. So thats whats so strange about EA's actions its going to take years before they can make a profit on all the aquisitions maybe decades so why keep buying up more companies when they haven't broke even on the ones they already own?

There was a rumor awhile back that EA was planning on releasing a console. When I heard that rumor I thought it was plausible. EA sports titles like Madden, NBA live, Need For Speed, and Fifa could move consoles alone. I haven't looked into the companies that EA has bought in the past but with the aquisition of Bioware and soon to be Take 2 which would probably be the biggest of them all with with rights to GTA, 2k sports, Bioshock. Does anyone see where I'm going with this? It isn't a coincedance that EA is buying up so many companies it seems they are trying more than to enter the console business, but to completely control it. With all the publishing rights they currently have and soon will have EA could put out a console where those games can only be found.

Personlly I would buy a EA console just for EA sports titles alone, but with all the other franchises they own and soon to own it would make a EA console very attractive purchase for everyone. If EA were to make those games exclusive it could knock out Sony and Microsoft out of the console business. If it were to happen Sony and Microsoft would have to rely on more first party games where Sony isn't too bad in that department and where Microsoft is lacking a great deal in. Nintendo will be the only company not affected by EA because their biggest franchises and selling point are first party games. Sony and Microsoft better pray that Ubisoft, Activision, Konami, and Capcom don't fall prey to EA's plan.

If EA were to put out a console I would buy it because I'm a gamer I go where the games are I've had an Atari(not sure which one),NES,SNES,Sega,PS1,PS2,GC,Xbox,360,and PS3 so where ever the games are I'm there. So what do you guys think?

HuusAsking

1. Partner with Apple, with Apple making the sleek and stylish hardware. They already have the means and the reputation, after all.

2. Less development costs, since EA would only need to target one platform. They can turn their games over faster, allowing more time to sell and less money to recoup to turn a profit.

3. Licensing fees. If EA controls the console (or perhaps EA and Apple), then they can do what Sony and Microsoft and the like do now: cash in on licensing fees. If people start gravitating towards an EA console, third parties will go there, too, and that'll mean increased licensing fees.

Makes alot of sense to me partnering with a hardware company cuts down on developing cost. If an EA console were to become successful other third party developers would gravitate to them like a magnet.

Have you invested any money? Me and my fiance invested 75 thousand dollars in order to make more money so we can spend it why else invest? We could keep reinvesting the money we earned and so on and so on,but what would be the point in that when we can't enjoy that money?

deebo_x

Yes. I've invested a lot of money. I won't get into a pissing contest of my bank account size or my stock portfolio.

Right, you invest money in order to make more money. Correct. When you invested those savings, how long do you think it will be until you break even?

[QUOTE="deebo_x"]

If you spent 2billion dollars which in profit dollars made from your other business and invested that money in another what would be the upside. What is the upside in buying up T2 and not selling it? Do you really think EA is interested in making T2 more profitable than it really is? You think EA's goal is to increase the value of all their aquisitions, but not in order to sell them, but keep them. Its like this you have 2 billion dollars you probably can think spending on better things than buying a software company. So either your trying to increase the money spent or your not. Whether your money is in the bank or all in a company its all seen as asset of course. 2billion dollars in worth of a company is almost as good as cash. You don't have to take a class to figure that out just play monopoly it works the same way.

Here's the problem though what would be the goal? You have all your money tide up in aquisitions and none of it to spend. What is the point in investing great deals of money and not increasing the money you have in the bank? For instance lets say invest 2billion dollars into a company and for arguement sake the company never depreciates in value, lets say it either remains the same or increases in value. Now you have a company either worth more or the same where is the gain? If you have no intention of selling, why would its worth mean anything? The company could be worth twice as much what you paid for it, but if you have no intention of selling it and you still haven't made a profit on it then what have you really gained?

If you sell it lets say after 5 years for the same price what you paid for it then all the companies profits during that time become the total profit you made on that investment. Lets say you after 5 years you keep that company then, but the company profits still have not matched the amount of money invested then you have made no profit at all until you sell the company or wait even longer to break even.

Grive

What's the point of having more money in a bank?

Do you really think the Xbox 360 would be around if M$ didn't have so much extra cash to compensate for the losses of the original Xbox?

[QUOTE="deebo_x"]

Have you invested any money? Me and my fiance invested 75 thousand dollars in order to make more money so we can spend it why else invest? We could keep reinvesting the money we earned and so on and so on,but what would be the point in that when we can't enjoy that money?

Grive

Yes. I've invested a lot of money. I won't get into a pissing contest of my bank account size or my stock portfolio.

Right, you invest money in order to make more money. Correct. When you invested those savings, how long do you think it will be until you break even?

deebo, what Grive is trying to say is that perhaps EA is buying out successful software companies (like Bioware and Take-Two) so that it can take control of all those profits those companies take in. They're not buying the companies for their resale value. They're doing it to rake in the "dividends"--which may not be much compared to the buyout but keep coming in over time. Plus, in the case of Take-Two, this would squelch competition (2K Sports), reducing necessary development and advertising costs (no need to keep peeking in on the other side and having to come up with one-up tactics).

Do you really think the Xbox 360 would be around if M$ didn't have so much extra cash to compensate for the losses of the original Xbox?

najentus

I know the answer, I'm just trying to get somewhere.

In any case, note the "more". There's a set point beyond which having money in a bank is wasteful. Technically, all fully-liquid money is wasteful, since it will depreciate, but having some liquidity for emergencies or opportunities usually is more worthy that the tax on stagnated money inflation is. Usually, 6 months of expenses is a really good cushion.

Going to your example, yes, MS could have kept the Xbox without cash money reserves, it would just have been more time-consuming and expensive to them.

I think the crux of the argument is this: why is EA going buyout crazy?

deebo, what Grive is trying to say is that perhaps EA is buying out successful software companies (like Bioware and Take-Two) so that it can take control of all those profits those companies take in. They're not buying the companies for their resale value. They're doing it to rake in the "dividends"--which may not be much compared to the buyout but keep coming in over time. Plus, in the case of Take-Two, this would squelch competition (2K Sports), reducing necessary development and advertising costs (no need to keep peeking in on the other side and having to come up with one-up tactics).

HuusAsking

Exactly. I'm sure part of the issue is my bizarre compulsion to overexplain everything. Sadly, it's a very well entrenched vice I have quite a hard time supressing.

[QUOTE="deebo_x"]

Have you invested any money? Me and my fiance invested 75 thousand dollars in order to make more money so we can spend it why else invest? We could keep reinvesting the money we earned and so on and so on,but what would be the point in that when we can't enjoy that money?

Grive

Yes. I've invested a lot of money. I won't get into a pissing contest of my bank account size or my stock portfolio.

Right, you invest money in order to make more money. Correct. When you invested those savings, how long do you think it will be until you break even?

You get me wrong my only intentions of investing that money was in order to sell those stocks at a higher price later to make a profit, but that doesn't seem to be the case with EA they haven't sold any of their aquisitions. So breaking even is relevant in that situation not mine.

[QUOTE="Grive"][QUOTE="deebo_x"]

Have you invested any money? Me and my fiance invested 75 thousand dollars in order to make more money so we can spend it why else invest? We could keep reinvesting the money we earned and so on and so on,but what would be the point in that when we can't enjoy that money?

HuusAsking

Yes. I've invested a lot of money. I won't get into a pissing contest of my bank account size or my stock portfolio.

Right, you invest money in order to make more money. Correct. When you invested those savings, how long do you think it will be until you break even?

deebo, what Grive is trying to say is that perhaps EA is buying out successful software companies (like Bioware and Take-Two) so that it can take control of all those profits those companies take in. They're not buying the companies for their resale value. They're doing it to rake in the "dividends"--which may not be much compared to the buyout but keep coming in over time. Plus, in the case of Take-Two, this would squelch competition (2K Sports), reducing necessary development and advertising costs (no need to keep peeking in on the other side and having to come up with one-up tactics).

Yes it would make sense if EA sold those companies. Those companies will continue to make money, but it doesn't turn into real profit until either EA sells those companies or properties or waits to recoupe the initial investment.

My point is that EA hasn't resold any of them

Yes it would make sense if EA sold those companies. Those companies will continue to make money, but it doesn't turn into real profit until either EA sells those companies or properties or waits to recoupe the initial investment.

My point is that EA hasn't resold any of them

deebo_x

You get me wrong my only intentions of investing that money was in order to sell those stocks at a higher price later to make a profit, but that doesn't seem to be the case with EA they haven't sold any of their aquisitions. So breaking even is relevant in that situation not mine.

deebo_x

So you keep reserves to purchase something. Now we're getting somewhere. You don't have $75k just to state on System Wars that you have $75k.

Now, why on earth would you drop money on something?

There is only one answer to that question: Because you believe that that "something" is worth more to you than cash. In your case, it might be the downpayment of a house, a Porsche, a boat, a trip around the world, whatever.

In EA's case, it's Take Two. They don't need to recoup the cash, because cash is not an ends by itself. Cash is a means to get to an end. For EA, that end (which in turn is a means to something else) is a bigger presence and a more redituable business.

So they don't need to break even, since their only objective is to increase their value, not their cash reserves.

EA + Take 2 + profits of both is more valuable to EA than EA + 2 billion dollars + profits of both.

And that's the crux of the issue, and that's what you've been failing to see.

[QUOTE="deebo_x"]

You get me wrong my only intentions of investing that money was in order to sell those stocks at a higher price later to make a profit, but that doesn't seem to be the case with EA they haven't sold any of their aquisitions. So breaking even is relevant in that situation not mine.

Grive

So you keep reserves to purchase something. Now we're getting somewhere. You don't have $75k just to state on System Wars that you have $75k.

Now, why on earth would you drop money on something?

There is only one answer to that question: Because you believe that that "something" is worth more to you than cash. In your case, it might be the downpayment of a house, a Porsche, a boat, a trip around the world, whatever.

In EA's case, it's Take Two. They don't need to recoup the cash, because cash is not an ends by itself. Cash is a means to get to an end. For EA, that end (which in turn is a means to something else) is a bigger presence and a more redituable business.

So they don't need to break even, since their only objective is to increase their value, not their cash reserves.

EA + Take 2 + profits of both is more valuable to EA than EA + 2 billion dollars + profits of both.

And that's the crux of the issue, and that's what you've been failing to see.

I never said they did need to break even. The purpose of all acquisions is to increase profits in some kind of way. I think to those acquisitions is a means to gain a foot hold in the console business. You say cash is not a an ends, but a means. What is the means? You use cash to gain more cash thats business 101. The profits from T2 don't equal profit to EA until they sell T2.

You keep ignoring my question. EA hasn't sold any of their acquisitions so they have made no real profit on them. It doesn't seem to be EA's goal to sell them at all if not then why keep them?

You say EA's purpose is to increase their value which they are by acquiring these companies. The only reason to do that is to make your company more attractive to buyers. There's a limit some companies can become too valuable like Sony or Microsoft in which few companies can even try to acquire them.

Do you think EA's ultimate goal is to sell the entire company. I guess alot of companies sell if the price is right, but EA is already a very valuable company perhaps too valuable for any one company to purchase. So what is the point in increaseing companies worth when noone can afford to buy it?

I think EA is trying to control the console or in fact gaming market you think their trying to increase their worth. My opinion would result in greater profits to EA your opinion only allows EA bragging rights unless some company could afford to buy them.

I never said they did need to break even. The purpose of all acquisions is to increase profits in some kind of way. I think to those acquisitions is a means to gain a foot hold in the console business. You say cash is not a an ends, but a means. What is the means? You use cash to gain more cash thats business 101. The profits from T2 don't equal profit to EA until they sell T2.deebo_x

Actually, you did. Repeatedly. Your whole rebuttal to my argument is based on that. You even imply that in the second part of your paragraph.

And what's the point of more cash? Why are you going to sell those $75k of stocks? To purchase other stocks? To pad your mattress so you can keep saying in a forum you've got $75k or whatever it's final value is?

And btw, you're absolutely wrong. The Profits, both financial and strategic, from T2 are bigger than the profit to EA of that cash money in the bank. Otherwise, they wouldn't have made that transaction.

You keep ignoring my question. EA hasn't sold any of their acquisitions so they have made no real profit on them. It doesn't seem to be EA's goal to sell them at all if not then why keep them?deebo_x

I'm not ignoring anything. I've answered everything in full. You're simply lacking the understanding to comprehend it.

You say EA's purpose is to increase their value which they are by acquiring these companies. The only reason to do that is to make your company more attractive to buyers. There's a limit some companies can become too valuable like Sony or Microsoft in which few companies can even try to acquire them.

Do you think EA's ultimate goal is to sell the entire company. I guess alot of companies sell if the price is right, but EA is already a very valuable company perhaps too valuable for any one company to purchase. So what is the point in increaseing companies worth when noone can afford to buy it?

I think EA is trying to control the console or in fact gaming market you think their trying to increase their worth. My opinion would result in greater profits to EA your opinion only allows EA bragging rights unless some company could afford to buy them.

deebo_x

So, unless you're going to sell your company, you're supposed to lose money? An increase in cash is an increase in value. You stated yourself that the purpose of all companies is to generate profit. Guess what, profit is defined as the making of a gain in an operation. "Making of a gain" is the very definition of increasing your value.

"Increasing your value" is the only objective of a for-profit business.

[QUOTE="deebo_x"]

I never said they did need to break even. The purpose of all acquisions is to increase profits in some kind of way. I think to those acquisitions is a means to gain a foot hold in the console business. You say cash is not a an ends, but a means. What is the means? You use cash to gain more cash thats business 101. The profits from T2 don't equal profit to EA until they sell T2.Grive

Actually, you did. Repeatedly. Your whole rebuttal to my argument is based on that. You even imply that in the second part of your paragraph.

And what's the point of more cash? Why are you going to sell those $75k of stocks? To purchase other stocks? To pad your mattress so you can keep saying in a forum you've got $75k or whatever it's final value is?

And btw, you're absolutely wrong. The Profits, both financial and strategic, from T2 are bigger than the profit to EA of that cash money in the bank. Otherwise, they wouldn't have made that transaction.

You keep ignoring my question. EA hasn't sold any of their acquisitions so they have made no real profit on them. It doesn't seem to be EA's goal to sell them at all if not then why keep them?deebo_x

I'm not ignoring anything. I've answered everything in full. You're simply lacking the understanding to comprehend it.

You say EA's purpose is to increase their value which they are by acquiring these companies. The only reason to do that is to make your company more attractive to buyers. There's a limit some companies can become too valuable like Sony or Microsoft in which few companies can even try to acquire them.

Do you think EA's ultimate goal is to sell the entire company. I guess alot of companies sell if the price is right, but EA is already a very valuable company perhaps too valuable for any one company to purchase. So what is the point in increaseing companies worth when noone can afford to buy it?

I think EA is trying to control the console or in fact gaming market you think their trying to increase their worth. My opinion would result in greater profits to EA your opinion only allows EA bragging rights unless some company could afford to buy them.

deebo_x

So, unless you're going to sell your company, you're supposed to lose money? An increase in cash is an increase in value. You stated yourself that the purpose of all companies is to generate profit. Guess what, profit is defined as the making of a gain in an operation. "Making of a gain" is the very definition of increasing your value.

"Increasing your value" is the only objective of a for-profit business.

You still haven't answered my question why increase your value if you become so valuable noone can buy?

You still haven't answered my question why increase your value if you become so valuable noone can buy?

deebo_x

You haven't answered my question, either, and it's the same answer.

You want a real answer? There's no real reason. It's a game. That's the barebones truth. You don't need the $75k. There's no point in that either. There's no point in the downpayment, or in the porsche, or in whatever. It's a mindless ratrace to the top. Of course, I'm also a willing rat in the process which ultimately ends up in a mix of hedonism and self-assurance.

But I'm getting philosophical here. Let's just ignore the futility of overaccomplishment beyond sustainability and spiritual peace, since I think it's way out of the scope of your question.

The reason I did not directly answer to your question (for my posts clearly imply this) is simple: I never thought that was the question. The answer is so obvious and plain that I'm actually baffled you need me to say it.

It's simple. Because EA is a corporation, and "EA" as the monolithic entity you make it out to be has no will or desire, and thus does not wish to increase it's value. All this value increase ultimately refers to the investors who own EA. From the kid who believes that Madden will be big enough and thus puts his savings in stocks to the holding companies that want to increase their worth so that their shareholders increase theirs.

You don't need to "sell" EA for it's increase in worth. The shareholders increase their personal assets through an appreciation of EA. Their board of directives increase their assets. Everyone involved does - just like you want to increase your $75k in assets.

The cash money on EA's account by itself has no direct value to stockholders. Indirectly, yes, since cash will make a company solvent which makes it more valuable which makes it's stock rise, but directly, no. They have no access to it.

So, stockholders want their EA stock to appreciate. Stock is essentially a percentage of the value of a company, and $2 billion in cash is the same percentage of assets than $2 billion in game studios. So they're not losing anything through purchasing a studio, and thus they do not need to break even. The difference between those two is their appreciation over time. Money has a negative appreciation (it's better to have money now than to have money tomorrow), while a studio has the potential for both. You usually get interest on your money because you're essentially loaning it to the bank, who then invests it in something else and gives you a cut.

In the bank investment route, it's obvious that there's a middleman, and thus you're not getting the full profit your money is generating. This is good if you want to be isolated from risk, but not if you wish to maximise profit. If you want to maximize profit, you invest directly. When investing directly, you have two choices: Invest in miscellaneous things, which maximizes risk but minimizes your effort, or invest in something you can affect, which makes risk a variable controlled by your skill, and will supplement your other redituable endeavors, but increases the effort required.

For profit maximization, the last option is usually the best one if you want your value to appreciate as fast as possible while minimizing random losses you have no control over...

Hey! Profit maximization? Controlled risk? That's what stockholders originally wanted!

And that, is finances 101.

[QUOTE="deebo_x"]

You still haven't answered my question why increase your value if you become so valuable noone can buy?

Grive

You haven't answered my question, either, and it's the same answer.

You want a real answer? There's no real reason. It's a game. That's the barebones truth. You don't need the $75k. There's no point in that either. There's no point in the downpayment, or in the porsche, or in whatever. It's a mindless ratrace to the top. Of course, I'm also a willing rat in the process which ultimately ends up in a mix of hedonism and self-assurance.

But I'm getting philosophical here. Let's just ignore the futility of overaccomplishment beyond sustainability and spiritual peace, since I think it's way out of the scope of your question.

The reason I did not directly answer to your question (for my posts clearly imply this) is simple: I never thought that was the question. The answer is so obvious and plain that I'm actually baffled you need me to say it.

It's simple. Because EA is a corporation, and "EA" as the monolithic entity you make it out to be has no will or desire, and thus does not wish to increase it's value. All this value increase ultimately refers to the investors who own EA. From the kid who believes that Madden will be big enough and thus puts his savings in stocks to the holding companies that want to increase their worth so that their shareholders increase theirs.

You don't need to "sell" EA for it's increase in worth. The shareholders increase their personal assets through an appreciation of EA. Their board of directives increase their assets. Everyone involved does - just like you want to increase your $75k in assets.

The cash money on EA's account by itself has no direct value to stockholders. Indirectly, yes, since cash will make a company solvent which makes it more valuable which makes it's stock rise, but directly, no. They have no access to it.

So, stockholders want their EA stock to appreciate. Stock is essentially a percentage of the value of a company, and $2 billion in cash is the same percentage of assets than $2 billion in game studios. So they're not losing anything through purchasing a studio, and thus they do not need to break even. The difference between those two is their appreciation over time. Money has a negative appreciation (it's better to have money now than to have money tomorrow), while a studio has the potential for both. You usually get interest on your money because you're essentially loaning it to the bank, who then invests it in something else and gives you a cut.

In the bank investment route, it's obvious that there's a middleman, and thus you're not getting the full profit your money is generating. This is good if you want to be isolated from risk, but not if you wish to maximise profit. If you want to maximize profit, you invest directly. When investing directly, you have two choices: Invest in miscellaneous things, which maximizes risk but minimizes your effort, or invest in something you can affect, which makes risk a variable controlled by your skill, and will supplement your other redituable endeavors, but increases the effort required.

For profit maximization, the last option is usually the best one if you want your value to appreciate as fast as possible while minimizing random losses you have no control over...

Hey! Profit maximization? Controlled risk? That's what stockholders originally wanted!

And that, is finances 101.

ah increasing value only to increase value in stock so its all a game. I guess I can see it that way, but why is EA the only company acquiring at such a rate?

ah increasing value only to increase value in stock so its all a game. I guess I can see it that way, but why is EA the only company acquiring at such a rate?

deebo_x

Who knows for sure?

Maybe they're the only publisher with the cash to do so.

Maybe their executives are more aggressive.

Maybe they have a grand plan for all of it.

Maybe there's a financial incentive we don't know about.

Maybe EA more profit-driven than the competition.

Maybe the EA decisionmakers have a certain personal goal that involves that.

Maybe the purchase of, say, take-two is not equally profitable for all companies, and EA is the only one who believes that they're going to profit enough.

There are many reasons. I probably would see it as their style of management coupled with timing, as other publishers have gone into takeover spree mode in the past, and others will in the future.

or maybe to produce console thats just my opinion. It makes just as much sense for EA to release as it did for Sony and Microsoft. Who knows, but it'll probably be next gen if it happens.deebo_x

Technically, it has to be "next gen" if it happents :P (yeah, I understand what you mean, now I'm just being annoying).

I don't know. I don't think so - I just don't see it being their most profitable move. Neither one of us has the answer, anyway.