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EA's Riccitiello Sees Pause In Console 'Arms Race,' Prepared For 'Very Extended' Console Cycle
by Leigh Alexander
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May 6, 2009
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Electronic Arts is prepared for a "very extended" current console cycle, CEO John Riccitiello said today.
On the company's quarterly results call to investors, Lazard Capital Markets analyst Colin Sebastian asked Riccitiello, via indirect reference, to weigh in on recent comments made by Ubisoft CEO Yves Guillemot warning publishers to start investing in future platforms or risk being left behind.
"I think there's always going to be new aspects.. new handhelds, new peripherals, new things coming out that invite investment from companies like ours," Riccitiello conceded. "[There is an] increased rate of change provided for by the first parties... look at the iPhone... [it's] a new platform in the handheld industry."
"If you're looking for good solid reasons for investing in R&D against new platforms, the market is providing us that," he said.
But to Riccitiello, that doesn't mean a new console cycle in the traditional sense is imminent. "However, I would point out that what traditionally is viewed as a new platform is when the industry steps forward with... more processing power traditionally married to different choices [of] media... cartridge, CD, or DVD," the CEO said.
"Those big changes are not something we're seeing the need for in the immediate term, and nor do we expect that in the medium term," he added.
"I think that arms race... I can never say that it's done, but the relevance of doing that faster and faster... seems to have subsided. We're projecting, relative to the core tech we develop, for [this] to be a very extended cycle."
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If this turns out to be true that's great.
Also the Wii, while already a phenomenal success, is just not as powerful as the other two consoles and will begin to show age faster. Also both Microsoft and Sony will be wanting to capture some of Nintendo's success with a new found emphasis on gameplay and control input innovation over horsepower and that new model will require a new console to be built around it with complete market saturation (vs. just a peripheral with marginal penetration and support).
Finally, digital distribution is quickly becoming a mainstream delivery model and currently only Microsoft has a strong toe hold in that realm. Sony has potential in DD but poor infrastructure, while Nintendo is heavily limited on the Wii. As DD becomes increasingly important Nintendo will have an incentive to release a new console to cater to that delivery model.
I give the current gen 3 1/2 more years before we see a new console released for Holiday 2012. I give current odds for a Sony console to be the first out the door at 62%, a Nintendo release to be first maybe 33% and Microsoft only 5% (only if their current advantages in DD and development ease are somehow heavily eroded). There is 0% chance IMO that any of the consoles last 7 more years until PS3/Wii turn 10.
At launch Sony touted the horsepower of the PS3 as being sufficient to sustain the h/w cycle as the main platform for longer than the PS2 and quoted 10 years+. And I think it is clear that the PS3 will never have the success and longevity of the PS2. Sony and the publishers clearly have a vested interest in continuing to make lofty claims as to the longevity of the h/w; the longer the cycle, the less frequent they have to invest hefty R&D costs to ramp up for a new generation of consoles.