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DICE Keynote: EA's Riccitiello On A New Future For Publishing
DICE Keynote: EA's Riccitiello On A New Future For Publishing
February 8, 2008 | By Christian Nutt, Brandon Boyer

February 8, 2008 | By Christian Nutt, Brandon Boyer
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More: Console/PC, Indie



At the DICE Summit, EA CEO John Riccitiello said the industry was in desperate need of a new publishing model, giving a starkly frank look at the successes and failures of the publisher, and predicting the garage studio model was dead and that by 2010, the publishing landscape would be radically smaller.

Riccitiello started by saying his session would cover "some very broad and important forces that I think influence how we live, work and play and how our careers develop and how our products launch and where they go."

As a short bit of background, Riccitiello said that though he did enjoy games, "deep down, probably more than anything else, I'm a business guy."

After joining EA in 1997 as its president, he started its EA Partners program, and then left to co-found Elevation Partners, saying of the latter, "I got the chance to go even deeper in the game business then I'd ever gone before," before rejoining EA as its CEO.

"I'm going to make simple points and I think to all of you these points are pretty darn obvious and pretty disturbing," he told the audience.

Big Money

"The first thing I want to talk about is the rising cost of development," he said. "It's putting pressure on everyone... It's also leading to industry consolidation. It's leading to developers being bought by publishers and publishers disappearing. It's leading to creative failure. The organizations are not coming together in a good way, and we're getting less creative, less innovative products."

While "our consumer has every right to believe that their 59 dollars is going to be well spent," said Riccitiello, the industry also needed "a new model for how publishers in the future can deal with these problems."

Riccitiello said he didn't believe it was possible to start up a new studio in your garage anymore, and said "the proliferation of platforms is a problem" -- from PlayStation, Nintendo 64 and PC ten years ago, to 12 now, and mobile platforms.

"I would posit that the number is in the 200 range for creating a triple-A franchise... you may say you do it with 100, but you are forgetting outsourced art, voice talent, or [licensing] Havok for your game engine," Riccitiello said. "If you really think about it you probably do fit this mold."

He continued, "If you're a small studio doing a title every year... you probably find yourself in a pretty dangerous situation, and it's got to be tough, and the cost of failure has got to be very high."

Big Consolidation

"Companies like Activision, EA, Sony, Microsoft, companies like this have the opportunity to invest, we can create the space," he explained, "we can create Spore because we've got that backdrop from the franchises we put out, like Need for Speed and Madden."

For the rest, he said, "all but the rarest of developers are on the edge. It's create a hit or else. This gives rise to consolidation."

"While I do think we have a healthy situation today ... I do think that there are things that are happening every day if you take a close look," he continued. "Large market share is consolidating to five big publishers, and small publishers are under enormous pressure and are becoming not viable."

"I think that there are going to be fewer major publishers in 2010 than today," he predicted, "and the second tier players are going to thin out pretty significantly. Marketshare controlled by those few publishers will increase in 2010 compared to today."

Big Creative Risks

Riccitiello next pointed to creative failure as "the top" of market risks. "Creative teams are flowers in a hothouse," he said. "Move the temp up or down a few degrees and the flowers can die. What that means is that the top talent chooses to leave."

"At Elevation Partners, the biggest fear was that the talent would leave, and I can tell you from my experience at EA that fear is exactly right," he offered.

Pulling up a slide with developers Bullfrog, Origin and Westwood listed, Riccitiello admitted "we've had our share of failures with acquisitions."

"These were great studios that created great products and yet these places no longer exist today," he said. "Something broke, it didn't happen as we or they dreamed it. I would state simply that we at EA blew it, and I was involved so I can say I blew it."

"What got us to failure was the fundamental belief at EA that we could be one big happy family, that one culture and management approach fits all," he admitted.

"We had a top down approach to creative development," he explained. "Creative decisions escalated to the top of the company... When I talk to creative leaders who populated these companies at the time they felt like they were buried under bureaucracy and couldn't get heard."

The publisher's acquisitions weren't all failures, though, said Riccitiello, pointing to both Test Drive creator Distinctive Software -- now known as EA Canada, and Maxis. "Will Wright went on to create The Sims and Spore," he pointed out, "and [Distinctive head] Don Mattrick has done well, and used EA as a platform to build his career."

So what was different with these two? "The creative leaders in those organizations took responsibility for themselves with regard to creativity and finance," he explained.

"EA did not meddle in the creative process there, and this is sort of subversive point," he said. "These two companies took over EA... They used EA as a stage for a larger play for their teams than they could have done on their own."

The Label Model

Riccitiello wrote a white paper about creative success while at Elevation, saying he was "inspired by my conversations with the owners of BioWare and Pandemic."

At EA, he said, there is a "simple concept of a city-state" with its studios -- "they're creatively responsible, they're financially responsible, and if they're taking anyone over it's them taking over us."

"It's a different model than in our company a decade ago," he admitted. "These citystates are more about who they are individually than they are part of EA... The heart and soul of what our company is with the developers who create the products because without that we are absolutely nothing."

Who's Getting It Right?

So who within this citystate model is doing well? Riccitiello first brought up Battlefield anad Mirror's Edge creators DICE, which he called "an amazingly well managed studio."

He called out Criterion as well, saying that "while there are frustrations working with a large company they know they can make the payroll and when they make the best game it will be in the store shelves in every country," as the studio has recently done with Burnout Paradise.

Bioware he called a "truly gifted studio," saying that "while interested in getting value for shareholders, their primary concern is placed correctly on creative growth for them and their teams," as well as Pandemic.

Riccitiello mentioned studios beyond EA's stable, as well, saying Grand Theft Auto creators Rockstar were the "best example of citystates so far," that Valve "is very independent and they will always be Valve," and Blizzard, who "make some of my favorite games, and I don't think frankly they are affected one way or another by who owns them."

"The command and direct model doesn't work," Riccitiello concluded. "If you think you want to buy a developer and put your name on the door... it's not going to work. If you think you are going to creative direct their teams and take away their autonomy, you are making a grave mistake."

"If you are a developer, I would argue that it's got to be tempting if you're looking at a transaction to look for the biggest dollar sign, but I can assure it's not the best idea," he said. "Look for someone who adds value in the process... Frankly, I would encourage you to really find someone you trust no matter the partnership."

What Of Renderware?

Riccitiello then turned over the floor to questions, where he was asked about the current state of Renderware, the middleware it received after acquiring Criterion.

"What are we doing with it? Not a lot," he admitted. "Mike King and his team who built it are still intact and building a lot of tools... Renderware is one I sort of missed because it took place after I left... I do know the team is still alive and well building physics engines."

Can Independent Original IP Survive?

Asked what he thought of the future of original IP, and whether it was economically viable for independent developers, and what role big publishers might have, Riccitiello said "I'm enormously passionate about IP innovation," but added, "it's incumbent on all of us to make sequels as fresh and innovative as new IP."

"When we get it right it's just as sweet as new IP, and it's frankly one of the toughest creative challenges in the industry," he said, saying that now that he's back at EA, "I am delighted by the opportunity to bring new IP to the industry."

"We are driving so much new and I'm pleased to see a number of our competitors doing the same thing, he continued. "These new, more accessible, interesting, story driven IP are going to raise the profile of this industry to a higher place than it's been before."

"Now if you're an independent developer... I think that's tough," he warned. "Not impossible but tough... As much as I would try to inspire you to believe that the garage model might work, I think it's hard."

What Of Casual And Mobile?

Next, Riccitiello was asked about the casual and mobile industries -- how they fit in as an entry point, and how consolidation might affect them. "I really like them. It's bringing in a new audience," he said, noting "Sims is well over a 60 percent female audience."

"One of the things I really love about casual is that you can iterate faster and in the process take more risks and experiment more," he continued.

He added, though, "We're all hung up on Metacritic... It makes sense for Orange Box or Madden, but when you're looking at Shrek or Harry Potter, the guys who write those articles who are even geekier than us are missing the point. The first Harry Potter game we put out ten years ago, my kids loved it, it was fantastic, sold 11 million copies. It got a 54."

Convincing Investors That Labels Work

Finally, an audience member noted that this new structure was "a huge sea change for EA" and wondered how the company convinced the financial community why you EA wasn't reducing costs by centralizing its development.

"By and large," Riccitiello responded, "high scale central platform investment, driving savings, is an illusion... Where our industry has made mistake after mistake is forcing those technologies down the throats of development teams who know what works."

"If you listen and you talk about your shared goals based on their input and ideas," he said, "they will deliver... I am not saying you toss out all centralized tech, but it's not as big as it once was... You tailor them to the individual products."

"If we had not done this," he concluded, "Bioware and Pandemic would not have joined us... The 10-12 new IPs we are going to launch in 2008 would not be there... and we would be underserving our shareholders."


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Comments


Allen Varney
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Riccitiello presents Don Mattrick's EA Canada as an example of EA's proper handling of acquisitions, in contrast to the bungle at Origin. Origin survivors may find this a too-sharp irony. While I was researching my 2004 Escapist article "The Conquest of Origin," more than a few Origin employees told me (though not for attribution) they believed Mattrick, as president of EA Worldwide Studios, undermined Origin because it competed for resources with Mattrick's own EA Canada. The article URL:



http://www.escapistmagazine.com/articles/view/issues/issue_14/87-
The-Conquest-of-Origin

Anonymous
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It's funny how he pretends that the criticism of the Harry Potter game was invalid, and cites that it sold a bunch of copies and his kids liked it. He blames the reviewers for being "too geeky," kind of like Kevin Smith making a bad film and then saying "well, it's not FOR critics." But in a way, that's exactly true; it's not intended for an audience that knows what a good game is, it's intended for children who will enjoy anything whatsoever as long as it's stamped with some IP that they already like. A few paragraphs up, he's talking about wanting to raise the bar in terms of quality and innovation and all that, then he says that a bad game that sells well to an audience who can't recognize quality is a success. So, what, you care about game quality one minute, but then the next minute, "number of units sold" overrides that concern? I'm fine with a business man being interested in profit, but a little consistency would be cool.


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