... here's how not to do it.
[Sigh.]
OK, first things first.
One of the most uneasy partnerships in games is the one between publisher EA and Disney. For several years now, since the shuttering of LucasArts games, EA has had an exclusive deal with Disney to make Star Wars console titles. That's all well and good—except for the fact that none of those games have been unmitigated successes and there haven't exactly been a lot of them, either. As a result, many have speculated that Disney's deal with EA might not be long for this world—but apparently the Mouse House is fine with things as they are.
In a recent earnings call, Disney CEO Bob Iger replied to questions about the company's relationship with EA by saying that the deal works well for both parties. "We've had good relationships with some of those we're licensing to, notably EA and the relationship on the Star Wars properties, and we're probably going to stay on that side of the business and put our capital elsewhere," Iger said. "We're good at making movies and television shows and theme parks and cruise ships and the like, we've just never managed to demonstrate much skill on the publishing side of games." Welp, at least Disney is happy. Because, uh, no one else is.Now, I'll admit that I was as surprised as anybody, at first. Even if Disney didn't have a great video game track record, LucasArts did, at least up to the point when Disney acquired and then gutted their operation. Surely, given how aggressively Disney planned to push the boundaries of the Star Wars franchise, it would have made more sense to keep that team in place, along with their solid track record of doing exactly what Disney needed, rather than reducing them to a skeleton crew that would struggle to oversee anything much... and then outsourcing all responsibility for this huge part of the Star Wars portfolio.
EA needs to change its business model fundamentally. Its current model alienates players and makes EA more susceptible to competition. A significant source of profits, lootboxes, are being regulated away. Players are moving to mobile and free to play, where EA is weaker than its competitor Activision Blizzard. We believe that EA is currently heading towards another inflection point where players will start leaving en masse. EA could've already crossed the inflection point. Either way, things aren't looking good.
"Good short candidate" refers to the investment strategy of short-selling, essentially selling stock that you've only borrowed for just that purpose. It's basically a bet that the stock's value is about to drop; if it does, they you pocket the difference between what the stock was worth when you sold it, and what it was worth when you had to buy it back to "return" the shares that you'd "borrowed."
EA's Star Wars games in a nutshell. |