Eidos has released financial figures for its last 15 months of operation, revealing improvement in the form of decreasing losses and operating expenses but also showing a worrying decline in the company’s turnover.
The new figures, which were issued due to a change in the company’s accounting practices that will see its financial year ending in June rather than March in future, show that Eidos made an operating loss of £22.3 million in the 15 months ended June 30, 2002 – an improvement on a loss of £34.4 million in the equivalent period ended June 2001, but a hefty loss nonetheless.
While the company is keen to flag these figures as an improvement – with a decrease in operating losses of around 35 per cent and a decrease of operating expenses of over 20 per cent – one figure which is glossed over slightly by the company is its turnover. At £128.9 million, the turnover figure is down significantly on the £176.6 million figure for the previous period – despite the release of some 21 software titles during the 15 months covered in the report.
Eidos CEO Mike McGarvey is bullish about the results in his statement, however. Overall, our results for the fifteen-month period continue to reflect many of the significant improvements that we have reported on previously. These include improved gross margins, reduced operating expenses and reduced operating losses.
All of the next generation video game consoles have now successfully launched and the installed base of next generation consoles is expected to reach around 44 million units by Christmas 2002. As a result we believe that the outlook for the entertainment software industry remains strong.
While this kind of rhetoric may hold some water with the stock market, analysts are bound to point to the fact that many publishers have actually done perfectly well for themselves in the past year, and that waving the finger generally at the transition to next-generation consoles is no longer an excuse for making a loss. It’s not just the outlook for the entertainment software industry that’s strong; right now, much of the industry is strong, and the loss of such convenient excuses as the transition period and the September 11 attacks is leaving many companies struggling to explain their poor performance. Eidos is by no means the worst offender, however – although investors would be right to be disappointed by these figures, the company can at least argue that it has spent the last couple of years preparing a strong release schedule for the coming year.
Indeed, much of the focus of the report is on the company’s forthcoming release schedule, which is one of its strongest in years. Tomb Raider: Angel of Darkness, Hitman 2, TimeSplitters 2 and Championship Manager 4 are all due to emerge from the Eidos stable in the coming months – although the release dates for Championship Manager 4 may well be a bit over-optimistic. Some retailers originally posted September 2002 launch dates for the game, which were obviously incorrect, and the lack of any screenshots, feature lists or other product information to date tends to suggest that we may not be seeing this one in time for Christmas.
Of the games which will be showing up in time for the festive season, TimeSplitters 2 is by far the surest bet Eidos have; strong critical praise for the game and the good performance of its prequel at the launch of the PS2 make it into one of the best prospects not only for Eidos, but for the PS2 in general, in the run-up to Christmas. Tomb Raider: Angel of Darkness, despite the apparent confidence Eidos executives have in the title, is a less promising title; reaction from press and consumers alike at PlayStation Experience last week was generally disappointed, and the extremely unfinished state of the code at the show does not bode well for the game.