August 1, 2006 - The largest third-party publisher in the world took a step back today as it announced quarterly losses of $81 million. Next generation development was partially to blame, but the company is still optimistic in its full year outlook.

It's no secret that developing for next generation consoles is an expensive undertaking. The topic has been up for debate for over a year now, and with Nintendo boasting lower development costs for the Nintendo Wii, many publishers are starting to shy away from PlayStation 3 and even Xbox 360 development. When Electronic Arts, the largest third-party publisher in the world, is posting losses partially due to next generation transitional costs, you have to wonder how the smaller publishers will make it through the next generation.

Coming shortly after the company announced a new focus toward supporting the Nintendo Wii, Electronic Arts has reported an $81 million loss during its first quarter, which ended on June 30, 2006.

"We're pleased to be the leading publisher on the Xbox 360," said Larry Probst, Chairman and Chief Executive Officer. "We are on schedule with strong support for the launch of PlayStation 3 and we have increased our development efforts for the Nintendo DS and Wii."

Despite the losses, net revenue for Electronic Arts during the first quarter was up 13 percent to $413 million, compared to $365 million for the same period one year ago. Gross profit for the quarter was up 14 percent to $245 million, offset by the expensing of stock-based compensation.

EA is also staying positive about the remainder of the year and the release of the PlayStation 3 and Nintendo Wii.

"We look forward to our slate of fall launches and the excitement surrounding next-generation software," said Warren Jenson, Chief Financial and Administrative Officer. "While the risks of this technology transition remain very real -- our franchises are well-positioned for the opportunities ahead."

While the Xbox 360 is currently performing well in the marketplace, which is good news for third-party publishers, it should be interesting to see how the release of the PS3 and Nintendo Wii affect the Xbox 360 and profits for publishers in the fourth quarter.

Source: GameDaily

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