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Riccitiello’s Nine Steps to Recovery
“Clear and simple, our titles did not perform to our expectations,” said John Riccitiello.
The EA CEO spoke at the publisher's 2009 earnings call just moments after the firm revealed its third quarter results, which “significantly missed its numbers” by some $150 million.
There was much gloom in the air at EA’s earning’s call, with Riccitiello not pulling any of his punches. He stated that EA had “significantly reduced” its financial outlook for the 2009 fiscal year, and demonstrated the numerous reasons for this in a seemingly unguarded manner.
“With the exception of FIFA, we did not deliver the blockbuster titles or the chart position we expected. Competitively, EA had only one of the top five titles in North America and Europe vs. typically two or more,” he said.
“We were depending on new IP in a year where consumers were even more cautious with their dollars. And, one of our anchor titles, Need for Speed, did not deliver fully on our expectations.”
But though he provided a clear and wide outlook on the extent of EA’s problems, Riccitiello was swift in addressing what needed to be done. During the course of the call, he mentioned nine different strategies for the future. Some were glanced at, others were elaborated on and discussed, yet each will be crucial to EA if it wants to achieve its goal of reclaiming the market share that’s slipping between its fingers.
1)Sequelise.
Within the space of a single sentence, Riccitiello went from discussing new IP to looking at future editions. “Last year we launched Dead Space, Spore, Warhammer Online, Mirror’s Edge and a number of Hasbro games,” he said, adding that “generally, games with a ‘2’ on them will sell better than the first version – and do so with a lower R&D budget.”EA has already announced a Wii version for Dead Space, and a sequel to Boom Blox.
2)Advertise.
Speaking of the economic climate that EA is struggling within, Riccitiello suggested that consumers will need more convincing before the release of its core titles: “Consumers have become more cautious and we need longer lead times on marketing,” he said.“In the case of The Sims 3, we’re moving this title to June 3 to give us additional time to build the worldwide marketing campaign a title like this deserves.”
3)Push Quality.
Riccitiello said he didn’t want to abandon EA’s refocus on quality. He said he planned to match strong advertising with valuable content, and spoke of how this distinguished EA from the pack: “Overall, we made significant strides in driving innovation and quality into our games. We had thirteen titles rated at 80 or above vs. seven last year – a statistic we are particularly proud of.” He added that this is 2-3 times that of other thirdparty publishers.
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Copyright 2006 - 2009 Future Publishing Limited, Beauford Court 30 Monmouth Street Bath, UK BA1 2BW
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I had no idea that EA were suffering this bad. They were too head strong with the release of thier new IP's. They definatley should have put them to market at top end prices (£44.99 on PS3 wasn't it?) instead what they should have done was simply bide their time.
[Blogs; Through the Looking Glass pt's 1&2. Give em a read and let me know what you think as I intend on making them a regular thing]
one more thing I would like to add. If a game bombs hard sell the engine to pc gamers they would more than love it. Ever sine gerry mods.
Actually, the lower production values wouldn't have to sacrifice graphics at ALL - just look at Banjo-Kazooie:N&B. That game is GORGEOUS, the worlds are fascinating to look at, and clever as hell. Plus, the almost ENDLESS customization the game provides is pretty wondrous. All for a lovely $40 - and if you're like ME and you pre-ordered, you got B-K1 for free! "By Grabthor's Hammer - what a savings."
You CAN'T tell me that B-K:N&B didn't make a profit. Was it a HUGE profit? Probably not. But I bet it was NICE!
Now, if you're going for ultra-realistic graphics, obviously some cuts will have to be made, so maybe the initial game isn't too long, maybe the cut-scenes don't have too many lines of dialog, so what? MOST original IPs start out pretty short - why not knock off $10 to get the curious to perk up their ears? I honestly believe that if Dead Space and Mirror's Edge had been sold at a lower price point, say $50, they would've sold much better, and EA would've taken a lower loss. Especially since, as Riccitiello said (and Hollywood has known for YEARS), titles featuring a "2" in them FAR outsell the original, and in the case of v-games, cost a whole HELL of a lot less to produce, considering they're just adding on to what they had before. Instead of spending a lot of money building/getting to know a new engine, money can be spent on making the sequel longer, the game world richer, the voice cast more extensive, etc. Ideas that had to be cut from the original production often end up in the sequels because more time and money can be spent focusing on them. This is why VG sequels are usually better than their predecessors, and why studios/publishers could get away with charging MORE for a product they spend LESS on, potentially making up for whatever "losses" they saw during production for the first.
As it is, I am thoroughly impressed that Riccitiello is still willing to back EA's new '08 IPs with sequels - Boom Blox and Mirror's Edge under-performed, yet they're STILL making sequels for them. That's just awesome.
I AM surprised (and a little apprehensive) this list only included 9 steps - what about "EA Partners"? The Orange Box and Rock Band were huge successes, and titles like Left 4 Dead and Crysis are making pretty good numbers. I think that the EA Partners program should be given more exposure and latitude, and that it's imperative the program should continue to grow. EA turned a LOT of heads with its release of TOB, these partnerships need to continue. While titles like Tim Schafer's Brütal Legend give us hope, the fact that Riccitiello didn't include EA Partners on this list gives me a little pause...
@Kim - not at all, new IP as new franchises rather than one offs, original games being loss leaders to more profitable sequels.EA decision to have a respected sim developer to work on the PS3/Xbo360 version of Need for Speed is a risk within an established IP, and one that has me interested in the series once again, the first time since its beginnings. It'll be interesting to see how they explain the differences in the games to a broader audience to avoid confusion, longer marketing time outlined in this article might help, but what about those Need for Speed fans who don't read up on games?
@toadwarrior, your own views which don't sit with the figures or the response by many to Fifa and other updates in the last couple years. Truth is that annual season games and sequels are an easier pitch than unknown quantities, you need only look at forums where people say "I'm interested in Dead Space, I'll buy it when its £20," how does that help game developers and publishers take risks? It doesn't, if we as so called core gamers are risk averse, we've only ourselves to blame for the titles now getting funded, especially in the current economic situation.
I'm stunned by some of the views here that are oblivious to the realities of expensive game development, though I like the first paragraph by dreamhunk about testing new IP in small to medium sized development from EA, rather than having people leave and do it alone (World of Goo anyone?) then increasing the budget if gamers step up support the new titles we keep asking for.
where people say "I'm interested in Dead Space, I'll buy it when its £20," how does that help game developers and publishers take risks?
This is the reasoning behind why publishers should release new IP at less than max MSRP. If Dead Space had come out at $40 new rather than $60, it probably would have competed better in the harsh holiday season and sold more copies. The same could be said for Mirrors Edge.
It is a risk for both publishers and customers to release new IP, but it is up to the publisher to lesson the impact of that risk for consumers. Consumers cannot afford to take the financial risk of buying every new IP that comes out. It would be detrimental to their ability to purchase games. If new IP were to be released cheaper, their financial risk would be lightened.
That would require much lower production values in order to make it financially viable, which would put people off (looks rubbish etc) new titles need assets, tech and testing while sequels can build upon what has already been created, and pick up more fans than the original, due to word of mouth and prolonged exposure (making it seem less risky when there's a 2 on the end). People seem to expect everything at once, original IP, expensive AAA production that runs into millions and lower prices, it isn't feasible.
I'd even go so far as to suggest that the financial risk would be increased rather than lightened but really I'm sure people in the industry go outline this, and indeed I think they should explain why what gamers are demanding isn't always possible.
You wouldn't have to sacrifice production value in order to lower the price. But it does help. But a lower cost of development does not mean that the game will look like crap. You can make a great looking and fun game with less than 50 people. It is not impossible.
in order to push nintendo, they will have to divert resources from ps3 and/or xbox and/or pc, you wonder which will lose the most support
EA had the right idea they just went the wrong way of doing it. New IP's is healthy thing, but it also has to be done right. Doing new console IP's with high production costs is just risky. Your better of with supporting a small team of game devs or indie game devs or even moders. If their games sell well on a small scale give those game devs a bigger buget.
EA also needs a good mmo or company like blizzard. They also have some good Ip's that will sell if worse comes to worst. That being said they do have bio-ware, crytek and vavle.
They need to be following pc gamers and have better relationship with pc gamers. They need to be watching hardware companies.
If there is no new IP's people will get bored. One of of the reasons nintendo had a game crash was because there was no new Ip's. Also nintendo fill the stores with alot of garbage games at the time too as well.
Serria has some Ip's pc gamers would love, last time I check serria was being sold off.
Oh one more thing their war MMO is too pvp fucased you need to fucas more on pve and rpg. Anet tryed to do that with guild wars but some of us pc gamers helped anet with that.
Pvp mmo's don't do very well on their own. It is also the reason Blizzard knows to out look for guildwars 2 and knights of the old republic MMO's. I am pretty sure when blizzard saw war hammer they knew it was something not worry about.
a good IP's from serria would predictor vs aliens get crytek to make that. Ceaser 3 will wright would be perfect for that.
Consumers need more convincing because sequels are just the same old rubbush. The only addition recently has been bugs that need patching. If you give gamers rubbish they won't value it.
Hypocrite
Seriously, listen to what this guy is saying:
1. "Let's make new IP franchises"
2. "Let's make sequels to existing IP franchises."
3. "Let's make new stuff AND sequels, even though we are laying off employees."
...EA needs to hire a new boss.
If dice is smart they would make battle field 3. I think dice is taking another huge risk with production costs on consoles. Dice's core fanbase is not on console but on the pc. AMD and IBM are not looking to healthy for hardware companies these days. I wouldn't tust too much in nintendo, hardware companies could really break down in this ression.Not only that some retailers may go bankuprt or reduce on self space, as well as cut down on price of games. If this ression lasts along time people will get bored, But for now it's a good income.
If I was EA I would invest in small companies and game devs because it's less of a resk for new titles. In fact take a look at the best indie game devs and pc moders games. hunt for those types of games devs. slowly back them if their games are popular or sell well.
Trust comapnies such as vavle and bio-ware they know what they are doing. Even more so in a ression.
Improve on your currnet mmo war hammer online.
Need of speed open up forums for pc gamers to help you give ideas. Oh max out the tech on the pc like crysis for need for speed. push cutting edge gaming and go back to your roots for need for speed.
lastly push free online games! Have a good repuation with your fan base. Take a good look at companies such as blizzard,vavle,anet and bio-ware.
Oh one more thing for bio-ware never make promise that you can't keep. I am talking about your dead line on the pc verion. Next time don't give out a dead line date for when the game should be made.
as a consumer of video games, I disagree almost completely with this list. It worked as a strategy to gain marketshare, but we now live in a world that is saturated with annual sports franchise back catalogue. Why should I buy NHL or Golf whatever '09, when I can pick up '08, 07, or '06 for the price of a burger? The entire idea has run it's course. Furthermore this list represents the status quo. There needs to be a change of leadership at EA, not a repackaging of the same ideas that got them to the top but have little power to keep them there beyond a 5 year run. They need to go back to the development companies they bought, and reinvigorate the IP concepts that made those companies famous in the first place, and do it fast. The second half of the current gen of consoles will see winners emerge who offer diversity and new IP. It is no coincidence that Gears of War claimed so much ground from sports franchises. It is not a lust for guns, it is a craving for fresh art, direction and perspective.
3)Push Quality.
Well, i'd like to think so. It wasn't so long ago i held EA in the same league as THQ in terms of quality.