EA holiday titles Mirror's Edge, Rock Band 2 and Need For Speed: Undercover are all failing to meet sales goals, according to Lazard Capital Markets analyst Colin Sebastian.

Future sales of Spore and Warhammer Online may not be so great, either.

As reported by CVG, Sebastian predicts that EA will cut jobs and drop some underperforming game franchises in response. In a note to investors Sebastian writes:

While the video game industry continues to show some resilience in the face of a very challenging consumer environment, strength does not appear to be across the board, and we believe that several EA titles are underperforming expectations at retail.

 

Specifically, our checks indicate that sell-through trends of key holiday releases Need for Speed Undercover, Rock Band 2, and Mirror's Edge remain mixed, which may reflect some fatigue overall in the music and racing genres.

We believe further cost and franchise reductions are likely. Importantly, we believe EA is continuing to review its cost structure and franchise base, and it is possible that management will announce further cuts in headcount and the development pipeline (including existing franchises) over the coming quarters.

Although its video game business has apparently not been affected - yet - Sony announced today that it will cut 8,000 jobs from the electronics side of the house.

Bloomberg reports that Sony will also close some manufacturing facilities and delay planned investments in others.

A Sony statement said:

These initiatives are in response to the sudden and rapid changes in the global economic environment.

It would appear that financially-troubled NC Interactive (the US arm of Korea's NCsoft) has left the membership ranks of game publishers trade association the Entertainment Software Association.

Last month, NCsoft announced that it plans to shut down underperforming MMO Tabula Rasa early in 2009. Facing a difficult financial picture, NC Soft has laid off a number of employees at locations in both the US and UK. The publisher also recently parted ways with famed Ultima series designer Richard Garriott. 

Departing the ESA is likely a cost-cutting measure for NC, which also chose not to exhibit at E3 this year. Game publishers pay significant fees to belong to the organization. While no announcement was made by either NC Interactive or the ESA, the trade association's membership page no longer lists NC among its ranks.

It has been a difficult 2008 for the ESA, which began the year with 28 member companies. As NC exits there are now just 21, meaning that CEO Mike Gallagher's outfit has lost a quarter of its membership in 2008.

As GamePolitics reported in October, Codemasters was the most recent company to depart. Game publishers confirmed as leaving the ESA this year include:

• Activision
• Vivendi
• LucasArts
• id
• Crave
• Codemasters

We have a request in to the ESA for confirmation on NC's apparent departure.

UPDATE: Confirmed by ESA Senior VP Rich Taylor:

We can confirm that NCsoft decided not to renew its ESA membership.  We respect their decision and remain committed to serving the public affairs needs of the computer and video game industry.

UPDATE 2: NCsoft's David Wofford has told GP that the decision was not a financial one. See our follow-up story.

It's a good thing that Strauss Zelnick is so good at running media companies.

Because he'd never make it as a financial analyst.

Reuters reports on the Take-Two head's somewhat obtuse view of the current global financial meltdown. Zelnick made his remarks at the Reuters Media Summit:

I don’t think we’re in a financial crisis.

 

The use of the word crisis — I’m loathe to be critical of the media since I’m every bit a part of the media — but I don’t think the word has been especially helpful. We’re obviously in a recession and these are very very trying times.

Zelnick then pushed the metaphorical envelope with this bit of imagery:

We’re still seeing the car crash, and the ambulances are still showing up at the scene. Maybe we’re in the emergency room, but we’re not even in the intensive care unit yet for a lot of these companies. But they will get there.

A separate Reuters report offers the Z-man's take on how the game biz is weathering the current financial crisis ...oops, "very, very trying times":

I think everyone was encouraged by Black Friday. It was better than expectations, but it's pretty hard these days -- being slightly down is the new up.

Black Friday kicked off the holiday shopping season and, for third straight year, Nintendo's Wii console remains a smoking hot gift choice, according to PriceGrabber.com.

The well-trafficked price comparision site lists top products searched for by consumers. Its most recent results, which include Black Friday data, show the Wii at #1 and the Wii Fit exercise board/game at #4.

Despite recent economic conditions, a press release cites an 11% uptick in Black Friday traffic at PriceGrabber over 2007's numbers. Pointing to sales driven by retailer discounts, PriceGrabber Ron LaPierre remarked:

Prior to the Black Friday weekend, 71 percent of shoppers intended to spend less money this holiday season compared to last year and 66 percent planned to give practical gifts. Thanksgiving and Black Friday traffic shows that value drives consumer spending. Consumers are responding to aggressive promotions and price drops on popular electronics.

Although the PriceGrabber list is heavily populated by Ugg boots, digital cameras, laptops and flat-screen TVs, there are several game items in the top 200. Following the Wii and Wii Fit are:

• #21 Xbox 360 Premium System
• #34 80GB PlayStation 3
• #37 Xbox 360 Pro 60GB
• #54 PSP Slim
• #112 Xbox 360 Elite Bundle
• #114 PS3 Metal Gear Solid 4 Bundle
• #147 Xbox 360 Elite
• #160 Cobalt/Black DS Lite
• #163 Guitar Hero World Tour Band Kit (PS3)
• #164 40 GB PS3
• #165 Guitar Hero World Tour Band Kit (Wii)
• #167 Xbox 360 Arcade Holiday Bundle
• #168 Gears of War 2
• #169 PSP Core System
• #187 Guitar Hero World Tour Band Kit (360)

Via: Test Freaks

Direct TV has deep-sixed its Championship Gaming Series professional gaming league, according to the Hollywood Examiner.

An announcement on the CGS website calls the league "an idea whose time came too early" and laments that "profitability was too far in the future for us to sustain operations in the interim."

The Examiner notes:

The CGS, was founded in 2007... and was sponsored by major brands in gaming and mainstream like Moutain Dew, Fatality gaming gear, Alienware and Xbox 360.

The league launched its first season with six franchises in six major cities in the United States including Los Angeles, New York, Dallas, San Fransico, Chicago and Carolina. In 2008, they launched new franchises in major international markets like Berlin, Spain, England and Mexico...

CGS was also the only league with international television coverage where the players where able to get more then bragging rights, but was also paid a salary like professional athletes.

Not unexpectedly, troubled electronics retailer Circuit City has filed for Chapter 11 bankruptcy protection, according to Bloomberg:

The Richmond-based company, founded in 1949... has lost more than $5 billion in stock-market value in two years. Circuit City plans to stay in business while it comes up with a plan to restructure...

 

Concerns among vendors that Circuit City wouldn't be able to pay for the merchandise it sells "escalated considerably'' in the past week, the company said in the filing.

Following last week's news that Circuit City would close more than 150 underperforming store, the chain will go forward with 566 locations in the United States.

Circuit City is the nation's second-largest electronics retailer and currently has between 5-10% of the video game market.

On Saturday GamePolitics reported that PlayStation 3 manufacturer Sony had cut off shipments to Circuit City, fearing that the troubled retailer would not be able to pay its bills.

Industry watchers had previously predicted that such a move would trigger a death spiral as other suppliers quickly followed suit. While there is no word of additional inventory shut-offs, Engadget is reporting that Circuit City will close 155 stores tomorrow:

Details are sketchy, but it seems that the company's traditional "holiday kickoff" meeting was actually a "holiday layoff" discussion instead. Apparently, a full list of store locations getting the axe will be revealed.

Meanwhile, Gizmodo reports that the Circuit City closings will begin in the Midwest.

One of the [Circuit City] store directors... is quoted as saying that "we should have done this 10 years ago". The source points out that Circuit City is trying to refocus on the customer: "They are really stressing to us that we must have better customer service than before because they want us to win back our customers".

GP: Perhaps CC can stop the bleeding by shuttering underperforming stores, but it's very late in the game...

Gizmodo reports that PlayStation manufacturer Sony literally turned its trucks around in mid-delivery yesterday over fears that struggling retailer Cicuit City would not be able to pay for the merchandise.

As GamePolitics reported in mid-October (see: Circuit City Facing Game Over), Sony's move could be the final blow for Circuit City. Look for a domino effect as other suppliers follow suit, leaving the troubled chain without merch to sell.

Circuit City currently controls 5-10% of the retail video game market.

Citing losses and difficult economic news, game publishing giant Electronic Arts announced yesterday that it was laying off 6% of its work force.

That's more than 500 employees.

As reported by VentureBeat:

During the quarter, EA relied on the staple of its sports franchise, Madden NFL 09, which sold 4.5 million copies. Spore sold two million units. That’s a respectable amount, and the title is sure to sell steadily into the future to mass market audiences. But it’s not the mega-hit that some had hoped for. Another big title was Warhammer Online... EA sold 1.2 million copies...

[EA CEO John] Riccitiello said in a conference call that the postponement of the Harry Potter movie and its accompanying game was a big reason for the shortfall...

In an investor's note issued moments ago, Wedbush-Morgan analyst Michael Pachter was critical of EA management, while still recommending the publisher's stock as a strong buy:

EA management was somewhat aloof during [yesterday's] earnings call. With the stock hovering near a seven-year low, management continued its recent history of disappointment, and spent an inordinate amount of time sowing seeds of fear about the potential for a tepid holiday sales season. EA’s share price in after hours trading reflects that many investors have abandoned hope...

 

management has demonstrated an uncanny ability to snatch defeat from the jaws of victory in the eyes of investors, and we think that these old habits will take a long time to die...

Seeking Alpha has a transcript of yesterday's conference call.

GP: We'd have to agree with Pachter. While John Riccitiello started strong when he returned to EA last year, in 2008 we've witnessed a series of embarrassments take place on his watch. From the lengthy, abortive attempt to seize Take-Two to the Spore DRM debacle and Ricitiello's subsequent insult to those who protested, it hasn't been pretty.

Regarding Spore, while it has done well at launch (thanks to the hype) the game is simply not going to be a Sims-like cash cow in the long run. It's not as well done as The Sims and lacks the feminine appeal which sustained The Sims over the long haul.

And then there were 22...

When 2008 began, the Entertainment Software Association, the lobbying group which represents U.S. video game publishers, had 28 member companies. Several well-publicized departures, however, reduced its ranks to 23 companies by the time that E3 rolled around in July.

A glance at current ESA membership reveals that prominent British game publisher Codemasters is no longer listed as part of the organization.

While there has been no announcement from the ESA, Codemasters' departure must be a fairly recent development. The publisher of the Operation Flashpoint and Colin McRae Rally series was officially reported to be an ESA member as recently as E3. An ESA booklet, Essential Facts About the Computer and Video Game Industry, distributed at the show, lists the firm as a member on page 12.

Codemasters thus apparently becomes the sixth publisher to leave the ESA since May, following Activision, Vivendi, LucasArts, id, and Crave out the door.

We have a request in to the ESA for comment.

GP: There has been speculation for some time that additional member companies might leave the ESA after E3. Current global economic conditions certainly can't be helpful to the ESA in its efforts to retain members.

UPDATE: The ESA has confirmed that Codemasters has left its membership ranks. A statement from Senior Vice President of Communications and Research Rich Taylor this morning says:

We can confirm that Codemasters has decided not to renew its ESA membership.  We respect Codemasters’ decision and look forward to continuing to work with them on issues of mutual interest.