Video Game Company: Electronic Arts (ERTS)

Formerly the number one computer game company, EA is a name that divides gaming fans. On the one hand, your average consumer knows EA almost entirely thanks to their top-selling sports franchises. "It's in the game" is the closet thing the industry has to Nike's "Just Do It". But that success at marketing is also at the heart of the hatred of EA. Perceived as a heartless corporate juggernaut more concerned with churning out licensed shovelware than creating excellent games. They are in many ways the Inverse Blizzard.

In recent years though, the company has fallen on hard times. Earnings have been decimated by changes to the industry. Rising product costs combined with the fact that its been a long time since EA had a runaway hit have undermined their core AAA console title business. Their retail channel dominance is threatened by alternate distribution channels and the used game market. Mobile, online and social gaming have shifted the industry landscape and EA's track record in responding have been mixed. The Sims is a lifeline that brings steady cash into EA without the high costs associated with licensed products but the company needs to find new revenue streams. High profile projects like Spore and Warhammer have underwhelmed.

Key Strengths:
  • Marketing savvy
  • Retail channel strength
  • Industry clout
Key Weaknesses:
  • Inability to capitalize on online space
  • New IP development
  • Managing the culture of acquired companies
Key Franchises:
  • The Sims
  • Madden
  • FIFA
  • Need for Speed
Strategic Moves:
  • Playfish acquisition: for about $300 million EA has bought a place in the social gaming space. 
  • Attempt to acquire Take Two: attempted to purchase the GTA IP but the deal fell apart and hasn't been re-visited (with both stocks at lows)
  • Pandemic and Bioware acquisition: part of the push to turn EA into a respected center of game innovation. 
Looking to the Future:
  • Knights of the Old Republic: the MMO that has the potential to be what Star Wars Galaxies should have been.
  • Deadspace 2: the original underwhelmed but it's been growing a fanbase and the company is looking to turn a basehit into a home run. 
  • Dante's Inferno: the company's simultaneous entry into the crowded God of War knock-off market and the GTA stir up controversy market. 
  • Army of Two 2: first person shooters sell and the co-op play has a lot of potential that was just scratched with the original. 
  • Medal of Honor: with Modern Warfare becoming a billion dollar franchise, suddenly there's great interest in re-booting EA's almost-dead WWII franchise. 

Image by psd used under creative commons license 

1 comment: