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EA Talks 'Fewer, Better, Bigger' Titles, NFL Strike Ramifications
EA Talks 'Fewer, Better, Bigger' Titles, NFL Strike Ramifications
February 1, 2011 | By Kyle Orland

February 1, 2011 | By Kyle Orland
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More: Console/PC



On its post-results earning call, EA execs discussed its mantra of "fewer, better, bigger" titles, also touching on NFL strike ramifications for the Madden series and why the "connected game" is more important than 3D stereoscopic games.

Discussing its overall statistics during its Gamasutra-attended earnings call, Electronic Arts employed 7,742 employees at the end of 2010, down 9.3 percent from the year before.

Multiple executives stressed that the firm continues to focus on releasing fewer titles that individually make more money, with both CEO John Riccitiello and COO John Schappert repeating the "fewer, better, bigger" retail games business objective during the call.

The smaller staff led to a seven percent reduction in operating expenses in the first three quarters of the fiscal year, according to the call accompanying the company's third quarter earnings report.

Yet despite the smaller size, revenues per title were up 25 percent for the last three quarters of calendar 2010, and recent release Dead Space 2 is approaching two million units shipped to retailers, a rate double that of the original game.

EA showed confidence in the performance of its new, leaner form today by announcing a $600 million stock buyback over the next 18 months, which EA CFO Scott Brown said was indicative of a "strong cash position" and an improving earnings model with more focus on digital revenues.

EA also said an expected NFL strike in the coming year could have an effect on the company's bottom line, due to the signature Madden NFL American football game franchise, and that this effect has already been factored into its financial expectations.

"We, like you, are looking forward to the NFL and the [players] resolving their differences and starting the season on time this year," said EA COO John Schappert, "but in terms of a planning assumption ... we've baked in the most conservative assumption, meaning no season. We're optimistic it can be better than that, so there's an upside."

Responding to a question about the impact of stereoscopic 3D on the market, Schappert said he actually thought other technologies were more important to EA and the industry's bottom line.

"My personal view is the larger idea, at least for the present, would be the connected game," he said. "I'm more in the camp that IPTV is a bigger idea for gaming, at least in the near term, than 3D is. It just provides a better social experience and you know that consumers playing with one another is a very positive and powerful motivator."

"While there's no doubt that our industry will have its 'Avatar', where 3D is a defining aspect of the game ... I'm mostly interested, with all the mobile devices that are coming out, in how they're being connected to one another and how the same IP is shared over the top," he continued. "I think that's actually a bigger driver for EA and the industry in the near term."

EA used today's conference call to again emphasize that lower reported retail game sales in 2010 ignores industry strength in digital and in subsegments like software on HD systems, which grew over 22 percent in the last year.

"Today, we estimate that digital sales represent roughly 30 percent of revenue in Western markets and roughly 45 percent worldwide – sales not captured in the retail tracking data," Schappert said.


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Comments


Fiore Iantosca
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I haven't bought Madden NEW for about 5 years. It's a complete insult what EA has done to that series. Yet the lemmings across the country continue to purchase that garbage year in and year out. I also think 2009 was the last good Madden. Madden 11 is complete rubbish.



They need to change their business model for these sports games. Good luck EA.

NICK LAING
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Change the business model to what?

A W
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EA seems to still be fishing around for its second break out title after all these years of developing games. Games that are kinda like Call of Duty, kinda like God of War, kinda like Re 4/5, or kinda like Grand Torismo. All good attempts, non good successes.

Brandon Karratti
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Whether you like it or not, EA is a business, and the fact that Madden comes out every year and sells an almost predictable amount each time it's released means that they come to depend on that revenue. You shouldn't fault a company for selling a product that's slightly improved each year as long as people keep buying it. (After all, automotive manufacturers do it all the time.)



While I would be happy to see Madden take a break to every other year or so, there's just too much money at stake to do something like that. What would be more beneficial to both the consumer and the developer? Why not rotate between NCAA and Madden every other year, and have the two teams collaborate? That way, you have fresh eyes looking at each product, and hopefully gain some innovations to both series with the extra time and manpower.



But that's just an idea. There's got to be a way. Seems a little ignorant to just say "EA is evil" and leave it at that.

Todd Boyd
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Analogy fail. Cars break down, need repairs, etc... it would be more like having them take your old car, put new quarter-panels on it, and charge you $18,000 like it was brand new.

Cody Scott
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the difference is though people generally dont run to walmart or bestbuy (or car dealership since we are talking about cars) and spend $18,000 once a year, people do however spend $60 on a game whenever they see one they want because most people have at least $60 to spend every now and then.

Hugo Morales
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As a former EA employee...twice...believe me when I say that you can't trust anything they say. I understand it may be a dream job for many, it was mine until I got to know how they really work. After being overworked and unappreciated to the point of almost loosing my family...twice...my comment is by far ignorant although I can understand how it seemed at first sight. I have few ways to show my complete disgust at EA...this is one of them...and it will never feel good.

EA is not for everyone...I have alot of friends that are happy there. In my case, I lived a nightmare twice.


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