ESA Honors Texas Governor Rick Perry for Supporting The Video Games Industry

The Entertainment Software Association (ESA) today presented Texas Gov. Rick Perry (and former Republican presidential candidate) an award for his efforts to create jobs, provide tax incentives and generally foster the growth of the computer and video game industry in the state. ESA president and CEO Michael D. Gallagher presented the award to the Governor and praised him for his “longstanding support for the industry” during an award ceremony at the historic Governor’s Mansion. The event included members from the video games industry, business leaders, and state officials.

“Governor Perry has been a true champion for Texas and for our industry,” said Mr. Gallagher. “At E3 in 2008, he made a personal pitch for computer and video game companies to come to Texas. Since then, he has dedicated his passion and energy to building the state’s global reputation as an innovation incubator and economic powerhouse, known for its creative community and cutting-edge businesses.”

Gov. Perry worked with the Texas Legislature to implement and later improve the Texas Moving Image Industry Incentive Program, which created a business friendly environment for computer and video game companies. The Texas Film Commission says that the video games industry invested $643.5 million in in-state productions between 2006 and 2009. The industry also created more full time jobs than any other moving image entertainment sector from 2007 to 2009, employing nearly 14,000 direct and indirect workers in 2009 and adding more than $490 million to the state economy.

Huge Xbox losses hidden by patent royalties

Nomura’s Rick Sherlund believes gaming business has been losing billions for Microsoft, but Android licensing fees obscure deficit.

Microsoft is hiding billions in losses from its Xbox gaming business, according to Nomura analyst Rick Sherlund. In a note to investors yesterday, Sherlund laid out a plan suggesting what steps Microsoft should take to resolve its current CEO vacancy and address some key issues going forward. One of Sherlund’s key points in the note is that the Xbox platform, despite being largely viewed as a success, is actually losing huge amounts of money for Microsoft, according to his own estimates.

“If we start with the overall traditional [Entertainment and Devices Division] business that actually loses money before corporate allocations and back out the nearly $2 billion 95 percent gross margin Android phone royalties, we conclude that Xbox platform plus Windows phone and Skype lose about $2.5 billion per year, and we estimate that the Xbox platform may account for roughly $2 billion of this,” Sherlund said. “This is contrary to conventional wisdom, we think investors do not realize how extensive the operating costs are for this business and it is concealed by the hugely profitable Android royalties.”

The Android royalties mentioned are the result of patents Microsoft holds on technology that Google infringed upon in developing the operating system. Microsoft has signed numerous licensing agreements with the manufacturers of Android and Chrome OS devices–Acer, LG, Samsung, and HTC among them–that bring in revenue while letting those companies continue using Android on their devices.

“Xbox is an orphan in our view,” Sherlund said. “It is a ‘cool’ product line and a successful consumer franchise, but it also loses a lot of money and we think is a distraction to the more enterprise strengths of Microsoft.”

As for the narrowing cast of potential CEOs for Microsoft, Sherlund said it is likely that Ford’s Alan Mulally will be appointed to the position by December.

Sherlund first made headlines for advocating Microsoft spin-off its gaming business back in June.

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Microsoft CEO Candidate thinking of Selling Off Xbox, Axing Bing Search?

After guiding Nokia out of choppy waters and into a Microsoft acquisition of its smartphone business, potential CEO candidate Stephen Elop could be mulling some very big changes if he becomes Redmond’s top dog.

Bloomberg reported Friday that former Nokia CEO Stephen Elop may already have some big ideas for running Microsoft, despite the fact that Steve Ballmer is still very much in charge of the company right now.

Elop is widely rumored to be on a short list of potential candidates for Ballmer’s position, and sources “with knowledge of his thinking” claim that the former Nokia CEO could shake up Microsoft in a big way if hired.

For one thing, Elop apparently wants to ramp up Microsoft’s strategy for putting the company’s popular Office productivity suite “on a broad variety of smartphones and tablets,” including iOS and Android. Touch-friendly versions of Word, Excel and PowerPoint are already in the works, but Ballmer has made it clear they won’t arrive until after first landing on the company’s Surface tablets.

Those closest to Elop claim that’s only the beginning, with the CEO    candidate considering the sale or shutdown of key Microsoft assets “to sharpen the company’s focus.” The costly Bing search engine is one such service that could get the axe, but Elop apparently feels selling off the company’s thriving Xbox game console business could be another area of interest.

As crazy as that might sound, there could be a method to Elop’s madness: After all, Microsoft clearly has its hands in too many pies at the moment, but that could prove to be a hard habit to break.

 

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Blockbuster U.S. leaves physical retail, 2800 jobs lost

300 stores and remaining distribution centres to close by January 2014

The Dish Network will close all remaining Blockbuster retail stores and distribution centres in the U.S., resulting in the loss of thousands of jobs.

Dish will call time on its Blockbuster retail business in January, 2014, with the DVD-by-mail service scheduled to close one month before. In total, around 2800 jobs will be lost in the process.

“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” said Dish CEO Joseph P. Clayton. “Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.”

Dish acquired Blockbuster for $320 million at auction after it filed for bankruptcy in September, 2010. Since then, the business has continued to struggle, trimming or selling assets both in the U.S. and abroad.

Blockbuster will continue to trade through its digital-only services, Blockbuster @Home and Blockbuster On Demand.

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Microsoft narrows CEO search to four candidates

Nokia, Skype, Ford bosses in the running for top post.

Microsoft has narrowed down its search for a new CEO to four known candidates, according to a report from Reuters.

Former Skype CTO Tony Bates and Microsoft’s Satya Nadella are in the running, alongside Nokia’s Stephen Elop and Ford’s Alan Mulally.

Bates is now responsible for Microsoft’s business development and Nadella has been running the company’s cloud and enterprise business.

Elop is returning to Microsoft once the acquisition of Nokia is complete, and Ford’s Mulally is a strong candidate despite being committed to the motor company until 2014, according to the report.

Current CEO Steve Ballmer has said he will retire within the next 12 months. He is overseeing the search for a successor, which has apparently been whittled down from a list of 40 candidates.

Microsoft reported record first quarter sales last month of $18.53 billion, with profit of $5.24 billion.

 

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