Electronic Arts: At what price innovation?

Gamers tend to loudly demand better and more innovative video games. They throw down the guantlet for the industry - give us better quality video games. In recent years, industry giant Electronic Arts has responded to the challenge and picked up the guantlet - and it's about to cost the CEO his job.

Our story starts when exec John Riccitiello left Electronic Arts to form a game VC firm with Bono (yes, really). Then, he merged BioWare and Pandemic, got that company bought by EA and returned to head the whole she-bang. Since returning to EA, he’s been banging the drum of developing new IP. This is a concept the company paid lip service to for years – and then continued to churn out dubious licensed games.

And then, strangely, Riccitiello actually started doing something about it.

Army of Two, Mirror’s Edge, Deadspace, Dragon Age – these are all original IP that have various degrees of innovation. They may not be Bioshock or Assassin's Creed II but they're better than a lot of EA offerings. He’s rightly observed that licensed intellectual property doesn't build new businesses – to do that, a company needs to invest in new IP.

And the response from Wall Street? To hammer the company.

EA's stock value has dropped more than 70% since he took over. (And yes, I still retain some stock from tenure there - sadly!) The company’s games may get better metacritic scores – but they aren’t selling as well. Now, the economy plays a role in this. But there’s considerable pressure to just going back to sloughing second-rate Madden, Harry Potter and movie tie-in games onto the shelves. And to further complicate the situation, there’s fundamental changes happening in gaming landscape. Console development is plagued by skyrocketing budgets while attachment rates drop and online redefines the gaming space (whether it’s Zynga style games or massive multiplayer efforts like WoW). The company has made moves to adapt to these realities – but not fast enough in the opinion of many.

So now, it's a horse race to see whether EA has a break-out new IP smash - or Riccitiello is ousted and the company goes back to unremarkable shovelware.

No comments:

Post a Comment