Designer's Notebook: Is It Time to Dump EA?
June 6, 2007 Page 1 of 4
This column is a little out of the norm for The Designer’s Notebook, because it’s mostly about business rather than design issues. Still, it reflects some of my thoughts about where the industry is going, so I think it’s within my charter.
Electronic Arts’ stock has been in the doldrums for about three years now, and every gain seems to be followed by a setback. A few weeks ago, Larry Probst, Electronic Arts’ longtime CEO, announced that he was retiring in favor of John Riccitiello, a former Chief Operating Officer who left for a few years to work in venture capital, and has now returned to take over the helm. Then a few days ago Reuters reported that “managerial changes” were in the offing, which is code for “somebody’s going to get fired” and that Riccitiello is looking for ways to “improve efficiency,” which is code for “a smaller number of people will have to do the same amount of work.”
There’s a shift in the wind; I can feel it coming. I’m not just talking about a few layoffs here. The world’s largest independent video game publisher is changing course. I worked there for eight and a half years, and in that time I accumulated a little stock myself. Most of that time it was a great earner, but lately I’ve begun to wonder: is it time to dump it? What’s next for EA?
I’ve been watching Electronic Arts for a long time. The company first came to my attention when I spotted a copy of Dr. J. and Larry Bird Go One-on-One for the Commodore 64 in about 1984. At the time, I thought, “A sports-themed video game? With licensed, big-name athletes? Weird. I wonder if there’s any future in such a genre.” (There was.) It was the first indication I had seen that video games could be big business. If a game could make enough money to pay royalties to two of basketball’s most famous players, the industry had definitely moved beyond Space Invaders.
When EA was founded, it adopted several innovative principles. One was that it would treat developers like rock stars, featuring them on the covers of all the games. This worked as long as the dev teams were about the size of rock bands, but when they got up to 15 or 20 people it began to look ridiculous, and EA quietly dropped it as a marketing technique.
Another was that every full-time employee in the company, top to bottom, would get a stock option. Everybody could share in EA’s success. The company also had generous benefits and, once it went public, an employee stock purchase plan that let people buy at a 15% discount. If you promptly re-sold the stock at the market price, it was free money. That, combined with the stock’s excellent performance, bred a lot of loyalty.
By many accounts, however, EA wasn’t a very nice place to work in its early years. There was an aggressive, macho culture; shouting and pounding on tables in meetings was commonplace; employees who weren’t used to this kind of abuse were sometimes reduced to tears. EA also gained an unsavory reputation for taking advantage of developer naivety in business negotiations – nothing illegal or fraudulent, mind you, but they played hardball. Most game developers at the time were little more than kids, bedroom coders with no experience of negotiating contracts and, rightly or wrongly, some of them felt they got taken to the cleaners.
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