It negatively impacted the bottom line to some extent. That's business, and it's what you have to deal with.
Q: What are EA's investment priorities right now?
I think your best, close-in returns are always going to be where the market's already established. Our first priority: deliver great entertainment. Secondly, it's to be ready for the next generation. The critical thing for us is that we are ready with entertainment that utilizes that technology horsepower when those consoles emerge.
Q: Why is that so important?
A: I think that's what customers want. Transitions are where you really set the standard for the next several years of your business.
We just think it's the way you build a lead. If you look at our shares the last go-round in transition, our segment shares improved very dramatically by really being
leader. Making the necessary investments today, we'll be ready for this next generation of technology.
Q: But at least initially, aren't the games you put out for the new platforms essentially loss leaders, because there's not a big enough installed base of users?
I don't think you can look at it like that. You can say that, but look, this is about sustaining what will continue to be a very strong business, and we have to take a much longer-term perspective than how many Xbox 360 units are sold in the fourth quarter of this calendar year. This is about the next five years, not about the next two quarters.
Q: When do you expect revenue from next-generation console games to start moving the needle for EA? When will they start to replace sales of PS2 games?
I'm just not ready to forecast that. But what I would say without being quite that specific is the PlayStation 2 is going to be around for a while. And people are going to continue to buy that entertainment. I can show you a chart on just how strong pricing has held up for the top 20 titles in the marketplace. And the reason why it's holding up that strongly is because of the quality of the entertainment. People still love the stuff.