Former Exec Says Electronic Arts "Is In the Wrong Business"

Mitch Lasky was the executive vice president of Mobile and Online at Electronic Arts until leaving the publisher to work at an investment firm. He now has some harsh things to say about how EA has been run over the past several years, in particular criticizing the decisions of CEO John Riccitiello. Quoting: "EA is in the wrong business, with the wrong cost structure and the wrong team, but somehow they seem to think that it is going to be a smooth, two-year transition from packaged goods to digital. Think again. ... by far the greatest failure of Riccitiello's strategy has been the EA Games division. JR bet his tenure on EA's ability to 'grow their way through the transition' to digital/online with hit packaged goods titles. They honestly believed that they had a decade to make this transition (I think it's more like 2-3 years). Since the recurring-revenue sports titles were already 'booked' (i.e., fully accounted for in the Wall Street estimates) it fell to EA Games to make hits that could move the needle. It's been a very ugly scene, indeed. From Spore, to Dead Space, to Mirror's Edge, to Need for Speed: Undercover, it's been one expensive commercial disappointment for EA Games after another. Not to mention the shut-down of Pandemic, half of the justification for EA's $850MM acquisition of Bioware-Pandemic. And don't think that Dante's Inferno, or Knights of the Old Republic, is going to make it all better. It's a bankrupt strategy."

Comments

Times have changed

[sopssa]

This is a business person commenting harshly mostly about how EA is financially ran, and that they haven't been able to grow as fast as Activision Blizzard (which was a one giant merker - like Microsoft and Google getting together). His bashing about the games isn't about gameplay, their originality, or how fun they are for players - it's just seems to be about business. "Hit" would be a game that makes lots of money, not how good it is.

I actually like the way EA has been taking. They're doing a lot more original, new IP and games than some years ago - last year notably Dead Space, Mirror's Edge, Dragon Age Origins.

The thing is that Activision Blizzard has grown in to a huge competitor with their World of Warcraft franchise, Modern Warfare 2, and Guitar Hero series. All of them, btw, series that have 6+ released games. Every year a new one. And the cash cow that World of Warcraft is.

It seems he was more happy when EA was the company that didn't create much of new IP or games, but just milked the old ones every year with new versions. Now EA has changed it's route a bit and releasing such new kind of games than Mirror's Edge, and such legends than Bioware's roleplaying games. They don't probably hold such a mass appeal, but they're great games and something new.

So is Activision Blizzard now the ones that are mostly after money, and EA trying to do something new?

Re:Times have changed

[Anonymous Coward]

This is actually close to the problem EA currently has, when people like him were in control of it all they did was dish out the same game every year with name changes on the models and perhaps a new colour scheme. This was a great way to keep a steady income but has 0 room to expand and increase profits and a good chance of starting to lose them as you get outbid for the contracts by upstart companies that can take risks.

Now the new team have spotted this and have started to branch out but its having to fight the old EA to get it done the games he mentions as disasters really weren't, and pandemic was never really a reason to buy pandemic-bioware seriously it was maybe 200mill of that price which they recouped almost instantly.

The Old Republic (note the lack of the word KNIGHTS) already has enough interest to be classed as a major hit for EA seriously its a SW MMO aslong as they avoid the problems people had with galaxies its gonna be a cash cow with extra cash on the side!

Activision-Blizzard has a problem lack of new properties and Blizzards own self confesed inability to come up with new game ideas and universes (seriously they became famous for games that were quick renames of Games Workshop games with game play ideas stolen from dune 2!)

If players ever start to leave WoW for other games in increasing numbers i can see their income dropping like a rock

Re:Times have changed

[pmfa]

It seems he was more happy when EA was the company that didn't create much of new IP or games, but just milked the old ones every year with new versions.

You completely missed the point of the article. Maybe you're a fan of some of the games and you feel that the guy is attacking those, but he doesn't have a word to say about game quality. His main concern is EA's failure to adapt to digital distribution, and the reshaping of a game as we imagine it. In fact a lot a people are failing to see the point, that's the reason there is a follow up post named Packaged Goods to explain game unbundling. It's all about choice. Nowadays instead of spending 60$ on a box and get 40 hours of gameplay, we the gamers, want to select our experience. If I only play on my iPhone during my daily commute I can spend a buck once in a while and I'm happy. The freaks that spend their every waking hour in some corner of a virtual world can pay a monthly subscription and be happy.

Re:Times have changed

[plover]

because video games should not be about pleasing shareholders, but pleasing gamers. If you please the gamers, you will mechanically make money.

That's not necessarily true at all. It's way more complicated than that. A complex game with all the development, artwork, mechanics, music, actors, promotion and packaging can easily cost over $50,000,000 to produce. At those costs you have to please a million gamers before you make your first dime.

That's a huge risk. You don't know it in advance, and there are no guarantees. When some guy comes in and says "I've got this great idea for a game. We'll have these soldiers who ..." you have no way of knowing if he's pitching the next WoW or the next Daikatana until you build it.

It's risk all along. Anything can kill the game's appeal. Unrealistic mechanics, incomprehensible controls, too easy, too hard, ugly scenery, short levels, long levels, inappropriate music, bugs, etc. The whole time you're pumping tons of money into production, hoping that when it comes out the other side that you can sell at least a million copies to cover expenses. And for every problem you encounter in its production, you have to decide "do I trash it or fix it?" Smart companies have learned to do the smallest investments up front, saving the big costs of things like artwork for the very end. That way if they kill it they've wasted less money.

Once it leaves the factory, it's in the hands of some barely rational people who are not in your employ. Games sell based on their reviews -- nobody will buy a one star game. A bad review by a well respected reviewer can wreck your $50,000,000 investment with the click of a mouse.

Even assuming Wall Street was behaving rationally and not just playing some derivatives market, your company takes a hell of a risk every time they do anything, or nothing. It's impossible to say that games based on "fun" are simply automatic money makers.

Re:Times have changed

[cgenman]

Also, once you've milked a single franchise for too long, you can no longer get guaranteed profits from it. Player interest starts to die out, and you start getting smaller and smaller returns from each iteration.

EA's current administration recognized that problem. NFS's underperformance isn't a reflection of a failure of planning, but rather that the series has been milked to death for far too long. The sales curve for NFS had plummeted already, and was arguably long past the possibility of a yearly iteration remaining relevant or salable at previous levels. in 2006, they had pushed so few new IP's that when Medal of Honor started to fade they really had little to bring up in its place.

Of course, with any new series or universe in the gaming world generally speaking the second iteration sells better than the first. You really do build up a lot of awareness and interest on the first go. Mass Effect 2 (one of the new post 2006 worlds they specifically created) looks posed to be one of next year's biggest games. Army of Two 2 is looking to make up ground. Skate has basically stolen "Best Skater Game" from the now officially flopped over Tony Hawk. Even Dante's Inferno has a surprising amount of player awareness at this point. That's a lot of profit potential that they wouldn't have just grinding out Need for Speed sequels twice a year.

Re:Times have changed

[ZachPruckowski]

Don't forget that like half of those 12 million players are in China, where the pay structure is different - they pay by the hour, and it's handled by a licensee, not directly by Blizzard. They probably only have 5-6 million on the $12-$15 monthly plans.

And don't forget that WoW China has been offline a bit recently due to government issues.

It's life Jim, but not as we know it.

[GuyFawkes]

The only thing that I can remember about EA games is the logo and the girl whispering "EA Games", I can't remember what games had that "loading screen", actually the other thing I can remember about EA Games is most gamers seem to hate them.

While the marketing / advertising / PR types will probably point at my memory of the corporate logo and say "See, branding works!" the fact is that it doesn't, because the memory that I have is not a positive one.

I remember 3dRealms for Duke, I remember Raven for SoF, I remember Cavedog for TA, and those are all positive memories associated with good games.

I can't think of a single game that EA released, I can probably sit here and recite 50+ game titles, many of which may have been released by EA, but that's not the point.

Frankly the ex-exec is as out of touch as the CEO, if you are going to measure anything by my experience, but of course they don't do that do they, they measure stuff by the closed feedback loops of market researchers, also employed by EA, drinking their own kool aid.

The problem with EA is that unlike 3dRealms, Raven, Cavedog et al, they tried to make the "house" bigger than the "game", and I suspect that if you dig down to the level of the actual game workers, you will find that same corporate branding ethos at work, sure, you're all working on "Aliens vs Mario 7", but you're all working for EA first and foremost, you're all able to be switched around within EA, to "Mario vs Jar Jar Binks 3" at the whim of a manager.

Re:EA is a battery hen publisher

[Bieeanda]

Every last Bioware RPG has played straight to cliches. EA may be a bastard to work with (and they certainly are), but put the blame for paint-by-numbers plot writing where it belongs.

Re:MOD PARENT UP

[Anonymous Coward]

Thanks to skyrocketing inflation, no one has the option to invest in 1% growth stocks.
If you do inflation kills your nest egg incredibly quickly.

Re:MOD PARENT UP

[NeutronCowboy]

One particularly unhelpful wrinkle of the U.S. version of capitalism + culture has been investors' singular motivation to hit it big and rake in the bucks and a general social unwillingness (management, the population, investors, regulators) to believe there is any social good in any business that does not generate massive returns and growth on a quarter after quarter basis.

This really hits the nail on the head. I visited my sister in Germany recently. She lives in an apartment that is owned by a guy who runs a custom boot shop. Complete with wooden boots for fitting, etc. So far, not that interesting. Until you realize that that shop has been a family business for over 400 years. It has been in existence longer than the entire US. It still is a single shop. And probably will be until someone decides not to do it anymore. Compare that with the US, where a decision would have been made to franchise the business, get investors on board, and then sell it for a couple of millions before it gets run into the ground by people with unrealistic quarterly expectations.

There's something to be said to be happy with 0% growth.