The Horrible Things That Could Happen To EA

A recent Gamasutra story noted something interesting in Electronic Arts' financials filing. The company is extremely reliant on brick and mortar retailers like Wal-mart (which made up 12% of its net revenue) and Gamestop (about 15%). Simon Carless, writing at the GameSetWatch blog, takes that analysis one step further and postulates some of the horrible things that could happen to the software giant if the conditions were right. It's all meant tongue-in-cheek, of course, but it's an interesting discussion of how even large companies can be vulnerable to simple issues: "5. Wrong System, Wrong Time! 'Our business is highly dependent on the success and availability of video game hardware systems manufactured by third parties, as well as our ability to develop commercially successful products for these systems.' More specifically, as EA explains, this is the Wii/DS effect in action: 'A platform for which we are developing products may not succeed or may have a shorter life cycle than anticipated.'"

Comments

They Could. . .

[Apple Acolyte]

start pumping out repetitive franchise sports titles and make tons of money off of gullible people who blindly buy brand names. Oh, wait. . .

Re:They Could. . .

[MaineCoon]

If it funds games like Spore, are you still going to complain about it?

Re:They Could. . .

[MaineCoon]

You are putting words into my mouth. I have made no statement of expectations regarding Spore.

I am pointing out that it as a new brand it has significant risk associated with it, and that is obviously expensive to develop (given how long it has gone).

The guaranteed sellers like Madden and other sports titles bring in guaranteed profits. It makes taking risks with other games - which EA has been doing more of lately - easier to justify, and keeps the risks from folding the company. I've known a few development companies who took a single risk and it cost them everything, because they did not have anything to fall back on.

Re:They Could. . .

[arth1]

Absolutely. Remember that the EA way would be for spore critters to wear T-shirts with ads for Pepsi and Burger King.

I just participated in a survey (paid for by guess who) about in-game advertising. One of the questions was how much cheaper a $40 game would have to be for in-game advertising to be acceptable. My answer: $80. Yes, if I am to watch ads, I want to get paid. With twenty hours play time, $40 is only $2 per hour, and they surely get more than that from the advertisers.

In my opinion, EA no longer serves a useful purpose, and should go beer-belly up. Redoing the same game every year, with a darker and darker environment (so there will be less visible textures, and the crappier code won't be too slow on a graphics card that's merely twice as fast as last year's) isn't innovative. Especially not when it fetches ads over MY internet connection in the background, and sends personal and marketing information back to them, at my cost.

Regards,
--
*Art

Hardly a problem limited to EA

[onion2k]

5. Wrong System, Wrong Time! 'Our business is highly dependent on the success and availability of video game hardware systems manufactured by third parties, as well as our ability to develop commercially successful products for these systems.

That's true of all 3rd party software developers on all games consoles. And all operating systems in fact. And all products in fact, it's not limited to IT. A company that makes after-market parts for a Ford is relying on Ford not releasing a model that's a dismal failure.

Too many people think there's some mysterious difference between computers and everything else. There isn't.

Re:Hardly a problem limited to EA

[Alzheimers]

It wouldn't be the first time.

Re:Hardly a problem limited to EA

[Brian Gordon]

The current state of 3 competitors isn't stable- there's only room for 2, and once microsoft pulls out (though I think it's more likely that Sony will drop out) there's not going to be a power vacuum.

Bad things that could happen?

[faloi]

They sink a lot of time and effort into developing games for the Phantom platform.
They get purchase by SOE, and then have to try to sell games with both SOE and EA on the box.
The best and brightest decide to take their chances, jump ship and start their own company.
John Madden cancels the licensing agreement, and we have to have Marv Albert NFL.

Re:Bad things that could happen?

[jalefkowit]

John Madden cancels the licensing agreement, and we have to have Marv Albert NFL.

Boy, that would bite!

Is that a threat?

[moderatorrater]

Are they trying extortion now to get some originality in the sports titles?

"Sure is a nice game company you got there. It's be a shame if something happened to Gamestop, or WalMart. People forget, shipments don't get ordered, all sorts of things happen..."

horrible things happening to EA?

[phorm]

How about their customers quitting because of the poor games quality. When I got C&C3, I was very impressed. It ran great and rather bug-free (there was one mission that would lock up on completion, even after patching, but a reinstall fixed that so it could have been corrupt data on my network install).

Lately, however, I have been trying out online play. Bugs everywhere. If an opponent lags out, you can kick them, but then the whole game is frozen without resuming. It's so bad that while you can chat with other players still, you can't move units, and even the quit buttons etc cease to function (CTRL+ALT+DEL is needed). Numerous other netplay bugs have abounded, and overall the experience is tainted by nasty lag and general flakiness. Many people on there are extremely ticked with EA, and have stated that unless fixes are found soon they're not going to be buying any future products.

Re:horrible things happening to EA?

[analog_line]

Tiberium Wars uses the same basic engine (upgraded of course) as General, and the Battle For Middle Earth games. That includes the multiplayer, which is run by Gamespy, which is pretty much half the reason problems happen. In Generals you used to be able to do direct connect, but I think it's all Gamespy's crap now. It's not likely to get fixed up any time soon. Luckily for me, in all of these games (C&C3 included) I have plenty of fun playing single-player against the computer on skirmish maps and the like.

the fact that most people who play online seem to prefer the most craptastically small maps possible so the can rush.

Frankly, a "rush" is generally how things work out in most RTS multiplayer these days, at least on the high end. Not that games will necessarily be really short, some are quite long, but the Day of the Turtle is long past. Early harassment is the way things work in just about every RTS you'd care to mention. The best defense is a good offence, attack your enemy's resource generators and they can't hit you as hard. Turtle games are fun, but the only way you're ever likely to get one is to play with friends and agree to wait a certain period of time before a base invasion, or play the computer, which tends to cheat rush.

Misleading

[huckamania]

"More specifically, as EA explains, this is the Wii/DS effect in action: "A platform for which we are developing products may not succeed or may have a shorter life cycle than anticipated. If consumer demand for the systems for which we are developing products are lower than our expectations, our revenue will suffer, we may be unable to fully recover the investments we have made in developing our products, and our financial performance will be harmed. Alternatively, a system for which we have not devoted significant resources could be more successful than we had initially anticipated, causing us to miss out on meaningful revenue opportunities.""

Clearly the Wii/DS effect refers to the last part that was left out of the summary. If they were talking about products that may not succeed, that would be the Dreamcast effect.

Brick & Mortar in control?

[Aladrin]

If B&M are so in control of EA's sales, why do they constantly bitch about how little they make on new games? The truth is that Brick & Mortar is just the prefered route for many customers... If they couldn't drive to the store and get it, most of those customers would just order online somehow.

But even if GameSpot and Walmart suddenly stopped carrying ALL EA games, someone else would just pick them up and make a ton of money instead. Because even that little bit they complain about is still profit, and there's someone that will make sure they get that money. Best Buy and Circuit City would love it, for example. CC constantly runs amazing specials on new games (10-20% below retail AT LAUNCH) and Best Buy matches those specials. I can't believe they do that out of the goodness of their hearts, so I'm thinking they must be trying to attract game-buyers.

Nothing in this list is even remotely likely to happen to EA, or any other major game company. -yawn-

Re:Brick & Mortar in control?

[MaineCoon]

They may complain about it, but if I recall correctly the profit margin on video games is 40%-50%, which is comparable to a lot of other products. I think the issue comes when they have a lot of product that ends up not selling for whatever reason, and eats into the massive profits they can make on hot sellers. They don't like that part, and will whine about it, but thats just part of doing business.

Re: The Horrible Things That Could Happen To EA

[Huntr]

Horrible for EA
Good For gamers

PoTAYto
PoTAHto

More likely to be something else

[WillAffleckUW]

Like only shipping games for WinVista when most consumers are switching to Mac or Linux or BSD.

Or shipping games only for PS3 when most consumers are buying only PS2 versions or Wii or xBox360 and won't go near PS3.

I wouldn't worry about the retail outlets - there are a number to choose from and turnover is fairly fast.

This isn't newsworthy

[pixel_bc]

This is kind of moronic... these caveats are in just about all public game companies SEC filings.

The problem EA needs to deal with is....

[Targon]

EA is riding that fine line between stagnation and paranoia, and if things do not change, they will be killed by the realities of human interest.

How long can they sell the same sports titles before people get bored with them? There WILL come a point when those tired games will run out of steam.

The Sims and The Sims 2 have been doing very well because they do NOT focus on the 13-23 year old male obsession with violence in games. EA does not learn why things work and do not work, so we see less innovation as they lean more and more on sequels that are "more of the same".

EA just bought Bioware, probably in the hopes that Bioware will be able to break them free of the looming stagnation, but their bad habit of buying a company because "it is different" and then screwing it up and turning the newly purchased company into an extension of what is wrong with EA may kill the value.

The game industry needs to learn from the movie industry, where art and special effects need to be combined to produce a real hit. Games that are only about violence, or sex, or horror by themselves may cater to a niche market, but true blockbusters come from a combination of different elements. The industry in general does NOT use a combination of these elements, so does not cater to a broader audience.

There is also a basic concept that seems to have escaped most game developers, and that is the majority of game players are over the age of 18, yet most games target teenagers. This means that most games do not appeal to the older players, and over time sales will decline.

Yes

[GradiusCVK]

In short, yes, I would still complain. Spore is only being allowed to happen at all because Will Wright is one of the biggest names in the game industry, with proven commercial success and huge "brand recognition" (no longer really brand recognition since it's no longer Maxis, but more like genre recognition). Try to find a small development company who has ever pitched a good idea to EA as "radical" as Spore is who actually succeeded in getting the project funded.