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Tidbits From Electronic Arts' Q4 Financial Results

$80 million invested into next-gen development, upcoming layoffs, and more sequels.

As tired as some of this generation's franchises are getting, I'll happily take another Dead Space.
As tired as some of this generation's franchises are getting, I'll happily take another Dead Space.

With financial quarters coming to an end, it’s that time again.

Electronic Arts announced its fourth quarter fiscal 2012 results today, and followed that up with a call for investors and analysts.

The biggest headline? Despite making money, Star Wars: The Old Republic subscriptions are down 400,000 users, from 1.7 million to 1.3 million. EA claimed that was in line with expectations.

The market responded by EA’s stock dropping nearly 10%.

After perusing through EA’s financial results and listening to its call (there wasn't much "news") here’s what stood out to me:

  • EA spending $80 million on next generation development (it's calling it “Gen4”) over the next year.
  • 11 million users are currently using Origin, and the service generated $150 million in 10 months.
  • As rumors have suggested (also, logic), there’s another Need For Speed game coming later this year. It should be Criterion's turn.
  • Another Dead Space game was mentioned, but no details. I wonder if the snow planet rumors are true?
  • The reception to The Old Republic is, in EA’s eyes, in line with “original assumptions.”
  • The company will undergo a “restructuring” between now and September 30 that will result in layoffs. It’s unclear how many employees will be impacted, but since it’s going to cost EA about $40 million to “restructure,” that’s not a very good sign.
  • A bunch of stuff about EA pushing deeper and deeper into social/casual gaming.
  • No PopCap news, which means EA did not announce Peggle 2. Grr.
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matti00

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Edited By matti00

@leem101 said:

wasn't there talk about the next space being a prequel and a first person shooter, at least EA or someone was mumbling about it

BOOOOOOOOOO

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Gordo789

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Edited By Gordo789

@chilipeppersman said:

@Gordo789: I dont buy EA games anymore. They are pretty games, not much more than that. I had to FORCE myself to finish crysis 2. ugh never again EA, never again. Ill take any game made by Rockstar anyday over an EA game.

I have a love-hate relationship with them. I hate what they did with Dragon Age and Mass Effect, you know, with the terrible sequels and all, but at the same time I want a sequel to Mirror's Edge which will never happen. Damn it.

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foggel

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Edited By foggel
@Saltank said:

Mirror's Edge 2? :*((

We can only pray for a miracle.
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chilipeppersman

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Edited By chilipeppersman

@Gordo789: I dont buy EA games anymore. They are pretty games, not much more than that. I had to FORCE myself to finish crysis 2. ugh never again EA, never again. Ill take any game made by Rockstar anyday over an EA game.

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Bourbon_Warrior

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Edited By Bourbon_Warrior

If i was EA I would get Mirrors Edge 2 and Burnout Paradise 2 ready for the next console launch, because they will sell like hotcakes.

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BlatantNinja23

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Edited By BlatantNinja23

Dear EA... let Criterion make a new Burnout

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Vlad_Tiberius

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Edited By Vlad_Tiberius

How about "the costs" for favorable reviews, exclusive previews, interviews and all that EA ass-kissing propaganda on various podcasts? Come on, because I'm curious to know how much is the EA bribe these days...

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Gordo789

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Edited By Gordo789

It's sad to see EA slipping back into its old fat jeans.

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DarthB

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Edited By DarthB

Unless you company is rolling in the dough, then layoffs are a fairly typical cost cutting measure. Sucks to see people lose their jobs, but can't fully blame EA alone for it. If they make less money, they have to spend less money.

Same shit is happening is the small business I work for. We have cut back employees hours and services for our customers to try and get a grip on costs. Not an easy thing to do in the services industry. Here's hoping they all get nice severance packages that get them through until they find a new place to work.

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markonfire

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Edited By markonfire

@cancerdancer: Speaking as a writer myself, it can be very difficult to proofread your own writing, particularly if you have a short turnaround time to go from notes to a full story. It might seem a bit counter-intuitive, but if you've re-written something over and over and over, you can start to miss simple, obvious things like that because you start reading what's in your head, not what's on the page. Without a second set of eyes (or in this case, a community of commenters), these things happen.

Party on

/rant

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Edited By BiG_Weasel

"Star Wars: The Old Republic subscriptions are down 400,000 users, from 1.7 million to 1.3 million. EA claimed that was in line with expectations." Translation-"Yeah, we figured that once everyone learned there was no endgame, and SWTOR was essentially WoW-in-space, they would leave"

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JBG4

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Edited By JBG4

Man, anything that gets me a new Dead Space game is fine with me. I absolutely love that series.

However, I am not happy with the fact that a number of people will lose their jobs that is always a terrible aspect of business.

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dfsvegas

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Edited By dfsvegas

@cancerdancer said:

Patrick, fucking proof read your shit dude. You get PAID to do this kind of crap.

I was unaware he was paid to be an android who never made mistakes.

I knew he was hiding something under that mane.

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huser

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Edited By huser

@outerabiz said:

@Incapability said:

Also, I'm surprised to see that 11 million people decided to use Origin - I wonder what that number would have looked like, if games were not exclusively sold through there. I also wonder what the sales would have looked like.

And by that, I mean that Steam currently has over 40 million active accounts - imagine if Battlefield 3 was made available to 40 million potential customers, rather than 11 million. But they have to peddle their delivery software somehow.

my thoughts exactly. I wonder what Bf3 and Mass Effects pc sales would have been if they had been on steam.

Doubt it would have been dramatic for ME. The dirty little secret is that for all the accolades it's never exactly sold that great anyways and that goes double for PC.

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Grimluck343

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Edited By Grimluck343

@EXTomar said:

From my "back of the envelop" math, Star Wars The Old Republic has lost about 25% of its subscribers since March. I'm not saying they are DOOOOOOMED but they aren't flying high either.

And that also reminds me that this the game where the producers boldly stated they weren't going to settle for a distant second place.

Considering all of the hyperventilating fan boys who were convinced that TOR was the death of WoW it's definitely DOOOOOOOOM for them.

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huser

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Edited By huser

@Voladric said:

@AiurFlux said:

  • 11 million users are currently using Origin, and the service generated $150 million in 10 months.

You people make me sick. In fact I make me sick. Fucking EA.

Eh, I'd say those numbers go to show people aren't really using origin. I mean the average selling price would be less than $14 if every user had even bought a single game. Since the majority of that is probably BF3/TOR/ME3, it means around 3/4ths of that 11 million haven't bought anything. (150/60=2.5.......2.5/11=23% [assuming every game sold on origin was at $60 and no person bought more than one game. Obviously it gets fuzzier since some people would have bought cheap stuff, some $80 deluxe editions, some DLC, etc.]) Maybe even less if they are counting Old Republic 60 day time codes bought through origin.

It's gotten better. Last time these numbers went out it worked out to be like $5 per Origin user. But yeah, while 150 million can't be ignored, it's not exactly a rousing success.

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BlueWolverine

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Edited By BlueWolverine

Maybe with Dead Space 3 being in a snowy environment, it may actually be scary.

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jmood88

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Edited By jmood88

@cancerdancer said:

Patrick, fucking proof read your shit dude. You get PAID to do this kind of crap.

Calm down.

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ultra2extreme

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Edited By ultra2extreme

Interesting to note the effect on EA stock based solely on the market expectation of TOR. Shows that the investment market in video game tech is wildly naiive something hard to find on the modern markets outside of the high risk sectors (which i would not classify a major publisher like EA as). Suggests to me that the stock was overvalued in the first place based on the misapprehension that TOR would somehow see WoW levels of use something i doubt we will ever see again (although something like WoW2, if it comes, may rekindle the desires of a very strong userbase). The fact is investors are way off the mark with growth in this sector, if they over valued 10% then they must have been expecting a minimum 15-25% growth on the stock to make it worth investing, i would have bought negative indexes all day at that level. Alas hindsight is an armchair analysts worst enemy. Inflated price grabbing might just be the way to go as we exit this generation, huge expectation and vast userbases making apparent easy pickings for the trader masses, inflating market prices beyond any conceivable value leaving a nice little margin in there for those that know.

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cmblasko

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Edited By cmblasko

@tcsajax: That's how I see it. Guess video games started with the PS1.

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Voladric

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Edited By Voladric

@AiurFlux said:

  • 11 million users are currently using Origin, and the service generated $150 million in 10 months.

You people make me sick. In fact I make me sick. Fucking EA.

Eh, I'd say those numbers go to show people aren't really using origin. I mean the average selling price would be less than $14 if every user had even bought a single game. Since the majority of that is probably BF3/TOR/ME3, it means around 3/4ths of that 11 million haven't bought anything. (150/60=2.5.......2.5/11=23% [assuming every game sold on origin was at $60 and no person bought more than one game. Obviously it gets fuzzier since some people would have bought cheap stuff, some $80 deluxe editions, some DLC, etc.]) Maybe even less if they are counting Old Republic 60 day time codes bought through origin.

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leem101

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Edited By leem101

wasn't there talk about the next space being a prequel and a first person shooter, at least EA or someone was mumbling about it

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Edited By outerabiz

@insanejedi said:

@Korolev said:

They've made some serious money, but they have to restructure? Did they also make serious losses? Or do CEOs and business folk just fire people because it's something they do?

Office Drone 11715:"uh sir... we, uh, made money this year".

CEO: "What? Oh, uh good".

Office Drone 11715:"So.... what do we do now?"

CEO: "Uh... I dunno. Fire some guys? That sounds like a business thing that business guys like us do. Maybe it'll make things more efficient? Somehow? Bring me my big board of disposable-employees and some darts and we'll figure out what to do now. Oh and... uh, start some projects and then cancel them inexplicably, as well as close down a studio or two. Got to make it look like we're doing work here. You know, recontextualizing the market paradigm in line with, uh.... stock price floating index joint....stock.... crap. Look just fire some guys so we look like we know what we're doing, and to strike some fear of CEO into those nerds".

Office Drone 11715: "Durrr. I swallowed my own tongue"

Translation: I have never worked in a business.

yea... your characters are way too moronic, and not evil enough... add some evil laugther breaks in there.

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insanejedi

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Edited By insanejedi

@Korolev said:

They've made some serious money, but they have to restructure? Did they also make serious losses? Or do CEOs and business folk just fire people because it's something they do?

Office Drone 11715:"uh sir... we, uh, made money this year".

CEO: "What? Oh, uh good".

Office Drone 11715:"So.... what do we do now?"

CEO: "Uh... I dunno. Fire some guys? That sounds like a business thing that business guys like us do. Maybe it'll make things more efficient? Somehow? Bring me my big board of disposable-employees and some darts and we'll figure out what to do now. Oh and... uh, start some projects and then cancel them inexplicably, as well as close down a studio or two. Got to make it look like we're doing work here. You know, recontextualizing the market paradigm in line with, uh.... stock price floating index joint....stock.... crap. Look just fire some guys so we look like we know what we're doing, and to strike some fear of CEO into those nerds".

Office Drone 11715: "Durrr. I swallowed my own tongue"

Translation: I have never worked in a business.

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EXTomar

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Edited By EXTomar

@Robot_Moses said:

The notion that losing 400,000 players is within EA's expectations makes me wonder if they've always had some sort of free-to-play contingency plan if the game ceased to be profitable with a paid model.

Their last chance to salvage their subscription business plan was in 1.2 and they sort of ruined that. Given the current state of the game with the missteps and sudden pulling of features I'm unsure how their long term plan is anything but Free-To-Play.

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Edited By Robot_Moses

The notion that losing 400,000 players is within EA's expectations makes me wonder if they've always had some sort of free-to-play contingency plan if the game ceased to be profitable with a paid model.

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kindgineer

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Edited By kindgineer

So, typical fiscal business stuff?

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DoctorWelch

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Edited By DoctorWelch

Wow, three spam comments in a row? Relax guys, I only need to hear your sales pitch about making $80 a month once before I'm in, where can I sign up. :D

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EXTomar

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Edited By EXTomar

From my "back of the envelop" math, Star Wars The Old Republic has lost about 25% of its subscribers since March. I'm not saying they are DOOOOOOMED but they aren't flying high either.

And that also reminds me that this the game where the producers boldly stated they weren't going to settle for a distant second place.

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L44

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Edited By L44

Peggle 2 was the only reason I was genuinely interested in this fiscal stuff.

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outerabiz

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Edited By outerabiz

@Incapability said:

Also, I'm surprised to see that 11 million people decided to use Origin - I wonder what that number would have looked like, if games were not exclusively sold through there. I also wonder what the sales would have looked like.

And by that, I mean that Steam currently has over 40 million active accounts - imagine if Battlefield 3 was made available to 40 million potential customers, rather than 11 million. But they have to peddle their delivery software somehow.

my thoughts exactly. I wonder what Bf3 and Mass Effects pc sales would have been if they had been on steam.

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Incapability

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Edited By Incapability

In this case, "in line with expectations" means "we totally expected our stock value to drop 10%, that was our plan all along."

Also, I'm surprised to see that 11 million people decided to use Origin - I wonder what that number would have looked like, if games were not exclusively sold through there. I also wonder what the sales would have looked like.

And by that, I mean that Steam currently has over 40 million active accounts - imagine if Battlefield 3 was made available to 40 million potential customers, rather than 11 million. But they have to peddle their delivery software somehow.

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Edited By ptys

I consider myself a Dead Space fan, but in no way am I ready for a third installment. I still need to play through the second game again, so this is actually kind of disappointing to hear unless they make it something really special! A new protagonist would be interesting, and perhaps a more engrossing story this time round?

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Edited By Zaxex

@EXTomar: I quite liked Dead Space 2's multiplayer, I was a little disappointed that there were no achievements associated with it.

I love both the Dead Space games, but I can only clearly remember parts, not much story. There was significant story in DLC? I doubt it was as significant as crawling inside the dark machine.

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scraz

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Edited By scraz

@Jedted said:

Fuck Yeah More Dead Space!

I recently bought DS1 and 2 on steam but i'm thinking of buying em for xbox since the PC versions don't have DLC.

I own that DLC.Trust me just watch that shit on youtube.

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Jedted

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Edited By Jedted

Fuck Yeah More Dead Space!

I recently bought DS1 and 2 on steam but i'm thinking of buying em for xbox since the PC versions don't have DLC.

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SagaciousJones

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Edited By SagaciousJones

Didn't Old Republic sell over 2.3 million copies? So they've actually lost over 1 million subscribers in the first six months?

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Edited By korolev

They've made some serious money, but they have to restructure? Did they also make serious losses? Or do CEOs and business folk just fire people because it's something they do?

Office Drone 11715:"uh sir... we, uh, made money this year".

CEO: "What? Oh, uh good".

Office Drone 11715:"So.... what do we do now?"

CEO: "Uh... I dunno. Fire some guys? That sounds like a business thing that business guys like us do. Maybe it'll make things more efficient? Somehow? Bring me my big board of disposable-employees and some darts and we'll figure out what to do now. Oh and... uh, start some projects and then cancel them inexplicably, as well as close down a studio or two. Got to make it look like we're doing work here. You know, recontextualizing the market paradigm in line with, uh.... stock price floating index joint....stock.... crap. Look just fire some guys so we look like we know what we're doing, and to strike some fear of CEO into those nerds".

Office Drone 11715: "Durrr. I swallowed my own tongue"

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Smokey_Earhole

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Edited By Smokey_Earhole
@Mr_Skeleton

@Rolyatkcinmai said:

@Mr_Skeleton said:

If TOR cost $200,000,000

We know at least 1.7 million bought the game for $60 = 1.7(m)*60= 102,000,000

Another 1.3 million paid $15 so 1.3(m)*15=195,000,000

Seems like within a month it will be very profitable or is there something wrong with my math.

Do you not see what's wrong with your math?

1.7x60=102, but 1.3x15=195.

Explain.

I might have been drinking before I wrote that.

Edit: those are in million, but the second calculation is wrong.

Oh reeeaally? :)

Also, you don't understand how game business economics work.
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EXTomar

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Edited By EXTomar

I hate to be cynical but I fully expect a new Dead Space to have an online pass for an online mode no one really wants as well as DLC that features an important character with important scenes that has important details and information.

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Edited By viking_funeral

@Brendan said:

Also, is it just me or have there been layoffs almost every quarter for EA for, like, years now?

Probably because they keep buying up smaller companies. Buy a company, attain their gaming IPs, layoff employees, repeat.

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mewarmo990

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Edited By mewarmo990

Implementation is horrible, but I guess I'm an active Origin user because of Battlefield and Mass Effect 3. I just wish Origin actually added something meaningful to either game -- Battlelog does all the heavy lifting for BF3 (with almost no Origin social integration aside from friend import) and it's totally superfluous in ME3. When will they learn from Steam?

Just thinking back to EA's early days. From Wikipedia:

"A novel approach to giving credit to its developers was one of EA's trademarks in its early days. This characterization was even further reinforced with EA's packaging of most of their games in the "album cover" pioneered by EA because Hawkins thought that a record album style would both save costs and convey an artistic feeling. EA routinely referred to their developers as "artists" and gave them photo credits in their games and numerous full-page magazine ads. EA also shared lavish profits with their developers, which added to their industry appeal. Because of this novel treatment, EA was able to easily attract the best developers."

sigh. Is this so hard? I think you can give off an image of attracting and encouraging great talent without hemorrhaging profits.

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Paindamnation

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Edited By Paindamnation

@cancerdancer said:

Patrick, fucking proof read your shit dude. You get PAID to do this kind of crap.

Do you get paid to be a troll? Or do you have to pay the troll toll?

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kollay

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Edited By kollay

No Peggle 2? I guess I won't be giving Jeff Green my money any time soon.

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EJ

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Edited By EJ

@Napalm said:

@BeachThunder said:

YESMOREDEADSPACEIFUCKINGLOVEDEADSPACE:D

I agree good sirs.

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akzo

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Edited By akzo

They need to revive the Cut & Paste franchise.

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Dad_Is_A_Zombie

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Edited By Dad_Is_A_Zombie

Blah, blah, blah, more Dead Space is coming. In short, an excellent investor's call.

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napalm

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Edited By napalm

@BeachThunder said:

YESMOREDEADSPACEIFUCKINGLOVEDEADSPACE:D

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Monkeyman04

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Edited By Monkeyman04

I need more Dead Space. If the new one is with snow, that would a twist. I just hope that they introduce a new character I feel like Issac's story was finished at the end of 2.

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wintermute

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Edited By wintermute

I would pay actual money for more Peggle.