Monday, June 27, 2011

Are they crazy?

First Activision|Blizzard then CCP. And it's not like EA are saints, either. Are they crazy?

Look, if you want to do successful business in Somalia you better murder the right people. That's what's effective. If you want to do successful business in Russia you better pay the right people. If you want to do successful business in China you better don't say the wrong things; and paying the right people helps, too.

If you want to do business in a working market economy you better satisfy your customers. That's the reason for the success of a working market economy: the best way to get rich is to satisfy your customers. Not your shareholders, not your employees, not the government, not some gangs, but your customers.

But that's not what they are doing! CCP first lies about mictro-transactions in Eve Online, then they repeatedly lie about non-vanity micro-transactions. Activision|Blizzard rather pays $2.2 Billion back to shareholders than expanding, or even offering a reasonable amount of new content for World of Warcraft players. And EA wants to focus on the core business. That's usually the point where shareholders start to speculate on your stock for about 1 year. And then they drop you, because focusing on core business is a bad decision 90% of the time.

If these companies are crazy not all hope is lost. If, however, our loved market economy has changed into a system were the best profit is not earned by producing the best product, we have a problem.


  1. The thing is that for most companies their products are interchangeable. It doesn't matter if you buy fuel from BP or Shell, it's the same.

    But computer games are more like art. There can't be another WoW because Blizzard owns the IP. Sure, someone can try to copy the game mechanic but you can't switch to their product like you switch a brand of fuel. You'll loose your guild and online friends and your raid and your chars plus all their achievement and gear and so on.

    Now take a look at how "art" companies treat their customer. Take a look at the music industries, take a look at the movie industries, take a look at Apple. They all make a fortune by giving a shit about their customers needs and wishes.

  2. if you wanna do business in USA first organize a terrorism strike to scare your own people, then buy all the media and you are the king..

    you speak about other countries like you really know whats going on there but you only know what your media told you..and then you speak about "working economy" like you ever tried to do something in that "working economy" and the big lions left you do it...

    there is no working economy in the world today, the best economy in your mind is the economy the media try to convince you is the best and they succeed to that.West economy is the worst ever and I live in west.

  3. Giannis,

    in addition do having lived in Germany, England, Swenden and Finland for several years each, I've been to several non-European countries, like Morocco, Thailand, US and Israel. I don't only read and watch NYT, BBC and The Atlantic, but also a lot of German news, like Spiegel, FAZ, Süddeutsche, Die Welt, Handelsblatt and FTD. I also like to watch Al Jazeera and Alarabiya. Occasionally I read some China Daily, but I admit the propaganda is sometimes a bit demotivating. I have yet to find a good english Russian, Southern American and Japanese news site, I admit.

    Now, maybe I was mislead by all these sources, including my own impressions. And I am certain some people have been to more places.

    But what I have learned so far is that the social market economies in western Europe work pretty well compared to the rest.

  4. Focusing on the core business is, mostly unfortunately, a part of the cycle.

    1) Companies decided they want to diversify. They can't get the growth they want in the markets they are in. CEO ambition can play a huge role here. E.g., Vivendi was a French water company for over a century until they started diversifying into many, many things included Vivendi games becoming Activision-Blizzard. Hopefully for the company, there is some buzz and excitement over the larger, faster growing markets and the stock goes up.

    2) Then the company and shareholders decide that those exciting new markets are not as profitable as they estimated and that maybe their success in one market does not meant they understand the new markets. So a new CEO or CEO wanting to keep his job, cleans out all the attempts and is "going to focus on the core business." Losses of discontinued operations are one-time charges so the ongoing profitability and ROE increase so the stock can go up.

    3) But now they are in a smaller market with smaller growth prospects so goto #1

    EA is losing a lot of money. I think most everyone would expect a cutback in titles. Besides, as per the music/movie industry, the blockbusters are far more important and frequently not the artistic success of the much smaller attempts.

    @Kring yes except with RIAA & MPAA suing their customers while strongly resisting what customers wanted (iTunes store with unencrypted is in spite of not because of the companies), I think music/movie companies are not good examples of consumer-friendly.

  5. That was exactly my point. Music and movie companies have a "monopoly" on the product they sell. There might be a lot of music to choose from but if you want the newest Lady Gaga song then there's only one source. The label who has her under contract.

    That's why they don't have to care about us. Because we don't have a choice (besides pirating it).

    Now, why should game companies be different? They also have a "monopoly". That's why I think it'll "never" change, because they don't have to change it.

  6. They should still care to make the best 'song' possible, Kring. I don't care whether they insult me with advertisement or sarcastic comments.