Microsoft wants to buy.....EA?

[Nepenthe]

Does Riccietello have full autonomy for who he buys out and how much he buys them out for?

 

I kind of doubt it, certainly not for that kind of money.

 

I still think it's a calculated bid to build an actual RPG division into EA, under the supervision of the (so far pretty successful) former Bioware joint-CEOs. Last time I looked that division had a new studio in Montreal with no projects announced. Going to be interesting how they consolidate the different studios.

[alanschu]

I'll buy that Riccitiello had help selling the purchase to the rest of the board based on his previous experiences with BioWare. But anyways...

 

 

Even I don't know what's going on in that Montreal Studio

[Nepenthe]

I'll buy that Riccitiello had help selling the purchase to the rest of the board based on his previous experiences with BioWare. But anyways...

 

 

Even I don't know what's going on in that Montreal Studio

 

So now we've moved from insider knowledge to insider lack of knowledge. Probably developing real life applications of red alert 3 soviet tech, then

[Stephen Amber]

Microsoft published the Mechwarrior games.

[WILL THE ALMIGHTY]

... and Halo and Gears of War and Mass Effect, etc...

[Zoraptor]

It's been stated in this thread that if EA had bought the package for less, Elevation/VG Holdings/whatever would have sued Riccietello. Yet, Electronic Arts shareholders and board of directors have no issues with "Yup, pay more than the company is worth so that you can make several million dollars, while the company we represent takes on additional risk AND has our own personal investment squandered."

If Riccitiello had sold to EA for less than the 300$m originally paid he would likely have been sued, not less than it was actually sold for- in the Extreme case, selling from one company he was running to the one he was leaving for for, say, $5 and a stick of gum would almost certainly be outright fraudulent. That's what I was talking about, there was never suggestion that it would be resold for less than was paid for it.

 

It's also rather rare to headhunt a new CEO then turn down the first deal he suggests, especially in the time before the financial crisis- I'd suspect that if he suggested similar now/ was hired now it would be looked at a lot more closely.

 

As it stands, the doubling of the valuation appears to be almost solely on the back of TOR- else you're spending top dollar for a studio releasing one decently profitable AAA title every 18 months to two years. While TOR's a decent bet for success (and WoW like numbers would theoretically mean $1bn profit/yr to share) the market is littered with the corpses and or barely animated zombies of failed MMO 'decent bets', which cost huge amounts to develop too- far more than any standard game which doesn't have 'Grand Theft' or similar in its title.

[alanschu]

If Riccitiello had sold to EA for less than the 300$m originally paid he would likely have been sued, not less than it was actually sold for- in the Extreme

[Zoraptor]

It's also rather rare to headhunt a new CEO then turn down the first deal he suggests, especially in the time before the financial crisis

 

Why? It just seems rather convenient to say so, especially given that it supports your position. I'm not an expert on how to run a corporation by any means, so if you could explain it that'd be awesome. Especially given he was buying stuff he had a stake in, and given that average joe gamer can go "Hmmm, that looks fishy," it's seems rather suspect to then assume that the fat cats at EA wouldn't also think the same thing, especially given that it's THEIR money. You're going to have to do better than say that it's rare for a CEO that was raided to have his first deal turned down. Besides, I'm not privy to what deals Riccietello has suggested, so I couldn't even definitively state that this was his first one.

I'm not by any means an expert on how to run corporations. However, if you hire an expert in any field you usually do so to take his advice, not to ignore it. It's pretty much the same situation, if you bring in a CEO to fix your company and he says 'do this' then you will, by and large do exactly that, especially if he's new in the job. Else what's the point of hiring them in the first place? Plus you'd end up with a (potentially) very annoyed new employee if you ignore them.

[Nepenthe]

I'm not by any means an expert on how to run corporations. However, if you hire an expert in any field you usually do so to take his advice, not to ignore it. It's pretty much the same situation, if you bring in a CEO to fix your company and he says 'do this' then you will, by and large do exactly that, especially if he's new in the job. Else what's the point of hiring them in the first place? Plus you'd end up with a (potentially) very annoyed new employee if you ignore them.

 

The people who CEOs answer to in publicly traded companies are generally not complete muppets. There are exceptions, of course.

[Volourn]

"Mass Effect Galaxy."

 

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[Morgoth]

"Mass Effect Galaxy."

 

????????????????????????????????????????????????????????????????????????

That's an iPhone game.

[Volourn]

[Syraxis]

 

My thoughts exactly.

[Wrath of Dagon]

I can guaranty EA will never make their $860 million back on Bioware. The only way that could happen is if TOR is as big as WoW, and chances of that are slim and none.

[alanschu]

It's also rather rare to headhunt a new CEO then turn down the first deal he suggests, especially in the time before the financial crisis

 

Why? It just seems rather convenient to say so, especially given that it supports your position. I'm not an expert on how to run a corporation by any means, so if you could explain it that'd be awesome. Especially given he was buying stuff he had a stake in, and given that average joe gamer can go "Hmmm, that looks fishy," it's seems rather suspect to then assume that the fat cats at EA wouldn't also think the same thing, especially given that it's THEIR money. You're going to have to do better than say that it's rare for a CEO that was raided to have his first deal turned down. Besides, I'm not privy to what deals Riccietello has suggested, so I couldn't even definitively state that this was his first one.

I'm not by any means an expert on how to run corporations. However, if you hire an expert in any field you usually do so to take his advice, not to ignore it. It's pretty much the same situation, if you bring in a CEO to fix your company and he says 'do this' then you will, by and large do exactly that, especially if he's new in the job. Else what's the point of hiring them in the first place? Plus you'd end up with a (potentially) very annoyed new employee if you ignore them.

 

 

I'll just say that I understand your perspective, I am just skeptical of that actually being the case. It could be, but you or I will never know

 

I enjoyed the discussion and I don't think there's much more to say without us just starting to repeat ourselves. Cheers.

[Calax]

I can guaranty EA will never make their $860 million back on Bioware. The only way that could happen is if TOR is as big as WoW, and chances of that are slim and none.

Well. if Bioware keeps posting profits than EA will make back their money, it's that simple.

[Wrath of Dagon]

Yes, but profits are supposed to exceed what you can get by buying treasury bonds for that amount. If they make their money back in 50 years it's not exactly a brilliant business move.

[Dark_Raven]

LOLZ The merging of two evil empires. Volo wouldn't like that. R00fles!

[Killian Kalthorne]

I can guaranty EA will never make their $860 million back on Bioware. The only way that could happen is if TOR is as big as WoW, and chances of that are slim and none.

Well. if Bioware keeps posting profits than EA will make back their money, it's that simple.

 

I think that ToR, the DA series, and the ME series will bring in a lot of money that EA will make a good profit return for buying Bioware.

[Volourn]

I doubt IT. BIO has been that successful in their 10+ existence but NOT that successful. Heck, I'd be surprised if ALL their games to date have even made 100mil in total profit. L0L

[alanschu]

It's an investment into capital.

 

BioWare/Pandemic doesn't need to generate $800 million in profit in order for Electronic arts to have "made a profit." I doubt the valuation for them disappears.

[Humodour]

I can guaranty EA will never make their $860 million back on Bioware. The only way that could happen is if TOR is as big as WoW, and chances of that are slim and none.

 

A single successful MMO would make that back, with Bioware's brand power and EA's market strength.

 

Granted, I have a hard time seeing them making that back on pay-once games.

 

But profit isn't the only issue here, as alanschu points out.

[Wrath of Dagon]

You have to have a reasonable return on investment, or else you investment loses value. So let's say a reasonable return would be at least 5%, i.e. $43 million / year, nothing Bioware ever had before I'm pretty sure. But as you say, a successful MMO with say 2 million subscribers would probably give them around $200 million a year in profits, of course this has to be shared with LA, but still more than a reasonable return. (Edit: This doesn't count the development costs of the MMO of course, so they would also have to be factored in).

Edited September 29, 2009 by Wrath of Dagon

[alanschu]

The total buyout includes Pandemic.

 

 

Looking just at revenue, if a game sells for $60 and they sell a million copies, that's $60 million in revenue.

 

I don't know how much development costs are for games now-a-days though so I can't comment how much of that would be pure profit, and there will be markups for the distribution of the game, so obviously EA won't make anywhere near $60 per copy of the game sold.

 

In the first twelve months of release, Mass Effect sold roughly 1.4 million copies according to VGChartz. I'm guessing that is pretty solid profit there.

Edited September 29, 2009 by alanschu

[Morgoth]

In the first twelve months of release, Mass Effect sold roughly 1.4 million copies according to VGChartz. I'm guessing that is pretty solid profit there.

Never trust VGCharts. Mass Effect actually sold 1,6 million units in the first month. That was confirmed by some MS dude.