"There's the next 80 percent we have the opportunity go after," Rosensweig says. "So there are more consoles plus consoles getting more connected and we have the opportunity to sell more into that audience. So we're not particularly concerned about that."

He closes up with a pitch for the Guitar Hero 5 and Van Hagar combo offer, saying the cost for its 135 songs "are cheaper than if you just bought the music alone."

For the fiscal year, Microsoft's revenue from the Xbox 360 and from PC gaming was down $161 million, which the company mainly attributed to price reductions on its consoles over the past year. It was partially offset by increased revenue from Xbox Live and the rise in consoles shipped - 11.2 million in 2009 against 8.7 million in 2008. As a sign of the troubled global economy, foreign currency fluctuations were also singled out for a 1 percent revenue decrease in the fiscal year.

For the Entertainment and Devices division, the year-over-year picture looks bad. Microsoft EDD booked a 66 percent drop in profit - $169 million in 2009 compared to $497 million in 2008 - on a 6 percent reduction in revenue - $7.7 billion in 2009 to $8.2 billion in 2008.

But when comparing this quarter to the fourth quarter of 2008, before the collapse of the U.S. economy, the gaming side of the division did yeoman's work holding the line. And despite a 25 percent drop in revenue - largely attributable to non-gaming sources such as Zune and Mediaroom, the company's Internet protocol TV software - the division's $130 million operating loss for the quarter was actually 24 percent better than the loss posted in Q4 of 2008.

Decreased costs in the 360 platform, plus a 30 percent slash to sales and marketing expenses for it, helped stop the bleeding this quarter, the company said. For the year, the drop in profit was pegged to an overall revenue loss and, specifically, a 16 percent rise in R&D expenses, attributed to headcount from acquisitions associated with its Windows Mobile platform.

Company wide, Microsoft's fourth quarter profit was down 29 percent. For its fiscal year, the company's revenue declined - to $58.44 billion, which is a 3.3 percent decrease from last fiscal year's record of $60.4 billion. Net income was $14.57 billion, down 18 percent from $17.68 billion of a year ago.

Microsoft Reports Fourth-Quarter Results [Microsoft] [Image Credit]

THQ saw a fiscal 2009 deficit of $431.1 million, losses way, way up from the $35.3 million the company lost in 2008. Some of that net loss is due to the company's restructuring (read: laying off hundreds, canceling games and closing down facilities), while some may simply be due to lowered revenue.

The publisher announced earlier this year that it was shaving off some $220 million in spending, leading to cutbacks of 600 employees and the shedding of studios like Big Huge Games, Juice Games and Paradigm Entertainment.

For the quarter ending March 31st, THQ saw $170.3 million in sales, losing $96.9 million. It pointed to sales of WWE Legends of Wrestlemania and Warhammer 40,000 Dawn of War II as key drivers.

On the more positive side, THQ reports that it has sold 2.8 million units of Saints Row 2 since launch and calls Dawn of War II "the best selling PC game across major video game markets worldwide."

For the company's fiscal 2010, it plans to release Red Faction: Guerilla, Darksiders, UFC Undisputed 2009, and MX vs. ATV, as well as games based on its Pixar, WWE, SpongeBob SquarePants and Marvel Super Hero Squad licenses. THQ has three additional "Mass Appeal/Family" titles still to be announced for the year.

According to the company's recently released financial results for the fourth quarter and fiscal year 2009, 14% of EA's revenue was generated by Nintendo Wii titles during the year, as opposed to 8% the year previous. The rise came during a year when EA released 21 titles for the console, not counting co-publishing agreements and distribution. Notable games released during the period include MySims, MySims Kingdom, and several titles in the EA Sports All-Play line, which generally weren't very well received by sports fans.

The Wii still remains the smallest console portion of EA's revenue, however, with the Xbox 360 generating 24% and the PlayStation 3 generating 16% of GAAP revenue on average. Still, the little white box is catching up, and with Tiger Woods PGA Tour 10 and Grand Slam Tennis being the only two Wii MotionPlus titles launching with the peripheral in June, we can probably expect those numbers to grow.

The company's quarterly revenue was down by 24% year-over-year, as EA pulled in more than a billion dollars during the same quarter last year. But it saw decreased losses compared to the $94 million deficit it felt in Q4 2008. New multi-million selling games were a big help.

EA credits its ability to bleed less cash with a number of factors. Strong sales from Skate 2, Rock Band 2, The Lord of the Rings: Conquest, Left 4 Dead and Need for Speed: Undercover helped with revenue, for example, while serious cuts to its business and "investments in our digital service businesses" will help with the company's current fiscal year. The company highlighted a handful of its multi-million sellers as key drivers.

FIFA 09, Madden NFL 09 and Need for Speed Undercover each sold over 5 million copies in the year, according to the company, with Spore moving over 2 million copies. In all, Electronic Arts had 31 games that sold a million copies or more during its fiscal year.

EA also highlighted a boost in quarterly revenue from its Wii product line, with "14% of its total non-GAAP revenue" coming from titles published for Nintendo's platform. That's up from 8% last year's fourth quarter.

Revenue was down across the company by six percent on lowered software sales, but Microsoft's net income for the quarter (roughly, the company's profit) was also down to $2.98 billion. While netting almost three billion dollars is nothing to sneeze at, it represents a decline of 32% in net income from the same period last year. The Xbox division also saw a drop.

Sales of 1.7 million Xbox 360s couldn't stop the Entertainment and Devices Division from seeing a decline in revenue, which Microsoft figures was a 2% year-over-year drop.

Microsoft, trying to keep things on the positive tip, says that the Xbox 360 showed "strong" unit sales in its third quarter results PowerPoint. Xbox 360 sales were up some 30% from Q3 2008, but we'd expect the lower price on the console to have had some sort of impact on the division's total revenue.

The Xbox 360 is showing an improved attach rate as of the last quarter, with 8.3 software units and 3.9 accessories sold per console.

Microsoft Reports Third-Quarter Results [Microsoft] [Image Credit]

Activision CEO Bobby Kotick boasted that 2008 was the company's 17th consecutive year of growth, with operating income up 20% from the previous year. The company highlighted its publishing of two of the top-five best-selling franchises on the consoles across all platforms, Guitar Hero and Call of Duty, claiming it was the number one third-party publisher on Nintendo's Wii platform.

Similarly, World of Warcraft: Wrath of the Lich King was touted as the #1 PC title in North America and Europe for the calendar year.

Holiday quarter earnings were $1.2 billion, Activision Blizzard said. Thanks to being flooded with money, Blizzard Activision ended the year with $3 billion in cash and no debt.

Kotick said during a conference call that Activision Blizzard has "more products than ever before" planned for release in 2009, "a small minority of which will consist of a select few wholly owned, internally produced original intellectual properties."

It plans to launch new titles in the Guitar Hero and Call of Duty franchises, with new "properly vetted" intellectual properties such as the first-person shooter Singularity and music game DJ Hero in the calendar year.

THQ announced plans to layoff approximately 600 employees, a staggering 24% of its total workforce, as part of a plan to cut costs by $220 million in its fiscal 2010. The publisher will also cut additional projects and intends to reduce sales, marketing and corporate expenses globally through headcount and other cost reductions.

The publisher laid off 100 employees from its mobile division last week. It previously announced plans to reduce headcount by 250 after a similarly disappointing previous quarter, shedding studios and canceling in-development games.

"This is one of the most challenging holiday retail environments I have experienced in my 18 years at THQ," said CEO Brian Farrell during a conference call, lamenting a tough retail situation. Farrell reminded analysts of the industry's growth in 2008, noting "clearly, we did not participate in that growth"

THQ saw net sales of $357.3 million for the quarter ending December 31, 2008, a drop from the $509.6 million it brought in from the quarter the year prior. It pointed to titles WWE SmackDown vs. Raw 2009, Saints Row 2, Big Beach Sports and de Blob as product highlights.

THQ said it expects fourth quarter results to be significantly below its previous expectations.

The company will increase the number of jobs cut to 1,100, up from 1,000, or 11% of its total workforce. It expects approximately 75% of those layoffs to be completed by the end of March 2009. EA will also close more of its facilities than previously planned, announcing that the nine locations it previously planned to consolidated would increase to twelve.

Yes, that means you'll see more "Disturbance in the Workforce" posts for longer than expected.

The company will cut staff at all levels, according to EA execs, including "managers, directors, VPs and above" and put a freeze on raises. It will also cut 30% of its SKUS in 2010, expecting to publish 50 titles across 125 SKUS. The company published 145 SKUs in fiscal 2009.

It announced delays to upcoming marquee titles The Sims 3 and Dragon Age: Origins alongside its quarterly earnings results.

EA's total take for the holiday quarter was $1.74 billion, which was driven by sales of games like FIFA 09, Rock Band 2, Need for Speed Undercover, Rock Band, Left 4 Dead, Dead Space, Madden NFL 09, Littlest Pet Shop, NBA Live 09 and Mirror’s Edge.

EA Reports Third Quarter Fiscal Year 2009 Results [Yahoo!]

The company pointed to two other titles, NBA 2K9 and Carnival Games as leaders for the quarter, laying out its fiscal 2009 game plan. That includes two batches of Grand Theft Auto IV downloadable episodes due by October 31, 2009, one of which has already been announced and dated. The company boasted that more than 3 million games in the Carnival Games series have been shipped.

Take-Two list the PlayStation 3 as its biggest revenue generator on the publishing side, with 35% of the quarterly take. That beats out the Xbox 360, which brought in 28% of its publishing dollars, and the Wii, at 11%.

For the entire fiscal year, Take-Two brought in $1.5375 billion in revenue, with $97.1 million in net revenue. That's much better than the company's 2007, when it raked in $981.8 million, resulting in a loss of over $138 million.

That shouldn't come as a surprise, considering the financial success of the original Assassin's Creed. The game sold an estimated 5 million copies over the past year. Still, Guillemot's assertion that someone, somewhere at Ubisoft is "working hard on the product" is comforting.

Assassin's Creed producer Jade Raymond is rumored to be working on a new property, I Am Alive, with bearded Creative Director Patric Desilets working on ... something.

On the financial front, Ubisoft reported €24.7 million ($31.7 million USD) in operating income. That's almost twice what the publisher did during the same period last year.

It says that early sales of both Rayman Raving Rabbids TV Party and Shaun White Snowboarding have been "solid," with the former "outperforming expectations." Ubisoft similarly called early sales of Tom Clancy's EndWar "slower."

The majority of Midway's earnings came from the Xbox 360, on which it released Unreal Tournament III and TNA iMPACT! (emphasis Midway's). The quarter's second biggest earner, Nintendo's Wii, has given Midway the most money for the full year, with almost $30 million YTD in revenue.

Unsurprisingly, Midway is pinning its hopes on the upcoming Mortal Kombat vs. DC Universe to help pull it out of its financial funk next quarter. Midway CEO Matt Booty said something about "align" and "brand" and Mortal Kombat but we can't recall it all because we started thinking how Booty is a funny name.

MIDWAY REPORTS 2008 Q3 RESULTS (PDF) [Midway]

Considering Konami announced that MGS4 had already moved 3.94 million, we'd say sales have tapered off considerably from its launch quarter.

Konami might say it differently, noting in its quarterly earnings report that the game "continued to sell well."

PlayStation 3 software accounted for an impressive 38% of the company's "digital entertainment" sales, which totaled 11.75 million games. Konami also released Hellboy, Pro Yakyuu Spirits 5 and Silent Hill: Homecoming on the platform during the period.

Profit for the six month period was $232.8 million, with Konami's video game business doing a healthy $268 million in operating income.

THQ bled cash to the tune of $115.3 million, way up from Q2 2007's loss of $7 million. Potentially worse for gamers was the delay of Red Faction: Guerrilla and Darksiders: Wrath of War well into 2009.

The publisher also confirmed it would lay off 250 employees as part of a "strategic plan and business realignment."

THQ further explained that its plan involves "the cancellation of several titles that were in development but had not been publicly announced."

Both Red Faction: Guerilla for Xbox 360, PS3, and PC as well as Darksiders: Wrath of War for Xbox 360, and PS3 will now ship after March 31, 2009 a move that will hurt the company's fiscal 2009 to the tune of approximately $125 million.

For the quarter, THQ reported that the lion's share of its revenue came from the Nintendo DS and Wii, similar to Activision Blizzard's console earnings announced earlier today. THQ released de Blob and WALL-E (internationally) on those platforms, with the latter seeing lower than expected sales.

Acti-Blizz CEO Bobby Kotick pointed to titles such as Call of Duty 4: Modern Warfare, Guitar Hero: Aerosmith, Guitar Hero: On Tour, World of Warcraft and Star Wars: The Force Unleashed — which it published outside of North America — for the better than expected quarter.

The quarterly results note that 42% of the Activision Blizzard's revenue comes from "MMO" (read: World of Warcraft) revenue alone, at $271 million. Another 42% comes from console-based titles, with the Wii leading other platforms with 13%. Just behind that is the Nintendo DS, responsible for 10% of the publisher's revenue.

According to the NPD group, Guitar Hero: On Tour was the best-selling title in North America for the Nintendo DS for the quarter, with the Guitar Hero line remaining the best-selling franchise in U.S. on all console platforms year to date.

The current quarter, which ends in December, is expected to be much better, with the release of World of Warcraft: Wrath of the Lich King, Call of Duty: World at War and Guitar Hero: World Tour all hitting before the end of the year. Despite having what sounds like a cash-printing line up, Kotick noted "we remain cautious given the likely slowdown in consumer spending this holiday season."

Activision Blizzard has project it will see $4.9 billion in revenues and $1.2 billion in operating income for the year. It also announced that the company's board of directors had authorized a $1 billion stock repurchase program, which CEO Bobby Kotick said reflects Acti-Blizz's "confidence in the future of the company."

We'll have further details on the publisher's quarter later today.

Today it dipped even further, bottoming out at 79 cents a share, closing at 90 cents. The company recently cut loose some of its licenses to improve its financials, something we hope sales of Mortal Kombat vs. DC Universe goes a long way to revitalizing.

Tell you what Midway, you put out a respectable copy of Hydro Thunder on Live or PSN, and I'll buy two copies. Hope that'll help. :(

Bad Day For Midway [Forbes]

As we reported earlier, Konami revealed it had shipped out close to 4 million copies of the game, accounting for a massive chunk of its game revenue. Konami's total "digital entertainment" business did a cool 44.9 billion yen alone, with its "health and fitness" business ventures doing about 22 billion yen.

Konami is expecting to pull in an estimated $3.1 billion for the year.

Consolidated Results for the First Quarter ended June 30, 2008 [Konami]

Citing difficult economic conditions for arcades in general, Capcom explained:

"In this business segment, we tried to create demands and expand our customer base with a community-based approach while engaging the turbulent business environment. Such efforts included improving the efficiency of arcades operation and holding a variety of customer appreciation events."

It seems, however, that the efforts were unsuccessful:

"However, the number of customer visits and average customer spending grew at a sluggish pace reflecting market stagnation and declining customer confidence, forcing us to struggle."

Capcom's arcade business saw a decrease in sales to 3,128 million yen ($28.9 million), and took a 73 million yen loss ($675,515) — during the same time last year, it earned 261 million yen ($2.4 million). Looks like more people would rather play games at home.

[Pic credit Arcade Heroes]

Monster Hunter Freedom 2G sales have been "skyrocketing," according to Capcom, since its March 27, 2008 release. The company also said the game broke Japanese PSP sales records, with 2 million units sold.

On the downside, the company's arcade business is struggling, though the impact to Capcom is mitigated by its home software performance.

As we reported last night, the company saw 16,352 million yen ($153.2 million) in net sales for its fiscal first quarter, an increase of 14.5 percent over the same period last year. The company's overall revenues took a 43.5 percent jump to 2,978 yen ($27.6 million), and profits were up 60.1% to 4,024 million yen ($37.2 million).

The company's total sales were $804 million, a $409 million increase over last year's first quarter. The company still reported a $95 million loss, however, a narrowing from $132 million year-over-year.

“We are now seeing the early returns of the change agenda we started last year,” said EA CEO John Riccitiello. “Innovation and quality are rising, our games are more accessible and fun, and we have more new titles than at any time in our history. From Spore on the PC to Dead Space on the PlayStation 3 and Xbox 360 to MySims on the Wii and Nintendo DS to Scrabble on the iPhone and Facebook, this is the best title portfolio in the company’s history.”

Full announcement after the jump.

EA Reports First Quarter Fiscal Year 2009 Results
Battlefield Bad Company Sold 1.6 Million Copies; Madden NFL 09 20th Anniversary Launching on August 12; SPORE Debuts on September 7

REDWOOD CITY, Calif.—(BUSINESS WIRE)—Electronic Arts Inc. (NASDAQ:ERTS) today announced preliminary financial results for its fiscal first quarter ended June 30, 2008.

Fiscal First Quarter Results (comparisons are to the quarter ended June 30, 2007)

Net revenue for the first quarter was $804 million, up $409 million as compared with $395 million for the prior year. During the quarter, EA had a net benefit of $231 million year-over-year related to the recognition of deferred net revenue for certain online enabled packaged goods games.

Non-GAAP net revenue was $609 million, up 41 percent as compared with $431 million for the prior year. Sales were driven by the launches of Battlefield: Bad Company™ and UEFA EURO 2008™, as well as the continued strength of Rock Band™.

Net loss for the quarter was $95 million as compared with net loss of $132 million for the prior year. Diluted loss per share was $0.30 as compared with diluted loss per share of $0.42 for the prior year.

Non-GAAP net loss was $135 million as compared with a non-GAAP net loss of $69 million a year ago. Non-GAAP diluted loss per share was $0.42 as compared with a non-GAAP diluted loss per share of $0.22 for the prior year.

Trailing-twelve-month operating cash flow was $239 million as compared with $243 million a year ago. The Company ended the year with cash and short-term investments of $1.947 billion.

“We are now seeing the early returns of the change agenda we started last year,” said John Riccitiello, Chief Executive Officer. “Innovation and quality are rising, our games are more accessible and fun, and we have more new titles than at any time in our history. From SPORE on the PC to Dead Space on the PLAYSTATION 3 and Xbox 360 to MySims on the Wii and Nintendo DS to Scrabble on the iPhone and Facebook, this is the best title portfolio in the company’s history.”

Highlights (comparisons are to the quarter ended June 30, 2007)

Battlefield: Bad Company, Mass Effect™ for the PC, SPORE™ Creature Creator and the recently launched NCAA® Football 09 debuted with strong quality ratings from critics.
The SPORE Creature Creator is in the hands of 2.5 million users. Over two million creatures have been uploaded into Sporepedia™ in just six weeks.
EA is the number one publisher in North America, with 17 percent segment share and number two in Europe with 14 percent segment share calendar year-to-date.
EA Mobile™ is the world’s leading publisher of games for phones – with revenue of $44 million – up 33 percent year-over-year.
EA Partners signed a co-publishing deal with id Software to bring RAGE™ to consumers around the world.
EA acquired Hands-On-Mobile™ Korea, a leading Korean mobile developer and publisher.
EA purchased ThreeSF, developers of an online social network for gamers.
Critics gave EA titles high marks for quality and innovation at the recent E3 industry summit in Los Angeles. Highlights included SPORE, Mirror’s Edge™, Dead Space™, Dragon Age™: Origins and Left 4 Dead™ from Valve.
Business Outlook

The following forward-looking statements, as well as those made above, reflect expectations as of July 29, 2008. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; changes in anticipated costs, expected savings and impact on EA’s operations of the Company’s reorganization plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; consumer demand for games for legacy consoles, particularly the PlayStation®2; the financial impact of potential future acquisitions by EA, including the potential acquisition of Take-Two Interactive Software, Inc.; the popular appeal of EA’s products; changes in foreign exchange rates; the health of the economy in the U.S. and abroad; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Year Expectations – Ending March 31, 2009

GAAP net revenue is expected to be between $4.9 and $5.15 billion as compared with $3.665 billion in the prior year – up 34 to 41 percent.
Non-GAAP net revenue is expected to be between $5.0 and $5.3 billion as compared with $4.020 billion in the prior year – up 24 to 32 percent.
GAAP diluted earnings per share are expected to be between $0.21 and $0.48 as compared with a diluted loss per share of $1.45 in the prior year.
Non-GAAP diluted earnings per share are expected to be between $1.30 and $1.70 as compared with $1.06 in the prior year.
Expected non-GAAP net income excludes the following pre-tax items from expected GAAP net income:
$100 to $150 million for the impact of the change in deferred net revenue (packaged goods and digital content),
$230 million of estimated stock-based compensation,
$70 million of amortization of intangible assets,
$40 million of restructuring charges,
$6 million of losses on strategic investments,
$2 million in acquired-in process technology,
Non-GAAP tax expense is expected to be $85 to $95 million higher than GAAP tax expense.
In fiscal 2009, the Company began using a fixed, long-term projected tax rate of 28 percent internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team. Accordingly, the Company has applied the same 28 percent tax rate to its fiscal 2009 non-GAAP financial results.