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Riccitiello's EA Shifts From 'Defense' To 'Offense'
Riccitiello's EA Shifts From 'Defense' To 'Offense'
May 4, 2011 | By Kris Graft




In a Wednesday earnings call attended by Gamasutra, Electronic Arts CEO John Riccitiello said his company is shifting its defensive strategy and going into attack mode.

The exec said EA had its guard up when it was cutting costs, reducing title count and getting its digital business up and running in recent months and years.

"Our strategies could be defined as fundamentally 'defensive,'" he said. "Today, we are announcing a big shift to 'offense.'"

Riccitiello said EA, which became an industry leader thanks to its packaged goods business, will now completely adopt the "games as a service" model. "Over the coming years, we will transform EA from a packaged goods company to a fully integrated digital entertainment company," he explained.

That means focusing on three aggressive core strategies moving forward.

The first, he said, is pushing EA's stable of popular IP, including FIFA, Madden, Battlefield, Need for Speed, The Sims, Tetris, Dragon Age and other titles. The company will also leverage the popularity of labels such as EA Sports and its casual Pogo brand.

"We fully intend to make these properties into year-round businesses that lead their sectors across a range of platforms," Riccitiello said.

The exec also said EA will view itself as "a software platform every bit as much as we see ourselves as a content maker for other companies' platforms." He added EA already has seen major growth in its online "core registration system," which has grown to 112 million customers, up from 61 million a year prior.

"While we will continue to be a great partner to our best retail customers and first party partners, you will see the beginnings of a consumer game platform emerge at EA that complements and extends the console ecosystem and addresses the wider opportunity on other devices," he said.

The third part of Riccitiello and EA's "offensive" stance is a focus on talent acquisition. He said the publisher is integrating its development teams with marketing and monetization.

That's "a big change," he said. "As an investor, you can see this as a way to better manage our IP, and drive up the ARPU for our core properties. As a developer, you can see this as the reason EA will be the most interesting and satisfying place to work in the game industry."

In the call, the company discussed its fiscal 2011 results -- which Gamasutra has a full report on -- and which show strong growth in its digital business.


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Comments


John Woznack
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" The exec also said EA will view itself as "a software platform every bit as much as we see ourselves as a content maker for other companies’ platforms." "



What the heck does THAT mean?

Tim Carter
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But... entertainment isn't a service...



Getting your oil changed is a service.



Entertainment is about being astonished.

Bart Stewart
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The exec also said EA will view itself as "a software platform every bit as much as we see ourselves as a content maker for other companies' platforms." "While we will continue to be a great partner to our best retail customers and first party partners, you will see the beginnings of a consumer game platform emerge at EA that complements and extends the console ecosystem and addresses the wider opportunity on other devices."



I assume this translates to "Dear investors, please don't freak out because EA is behind the curve when it comes to owning our own digital storage and distribution infrastructure (and GameStop beat us to buying Impulse to compete over the short term with Steam). We're building our own cloud to stream live gameplay to the key platforms because we've finally seen that that's the customer control mechanism of the future."



Actually, EA's platform-related comments sound reasonable to me, if tardy. "Entertainment as a service" is just the trendy marketing-speak for "we want to sell direct to the gamer." As they say, they've got over 100 million customers in their online "core registration system"; they'd be crazy not to try to capture those gamers in their own digital distribution system. And whatever else EA may be, they're not crazy.

Dragos Inoan
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"Entertainment as a service" refers more to post launch support and monetization than to anything else. But as long as the EA store version of a game is a worse deal than the retail version they will not accomplish anything. It's like they took the stupid pill or something.

Mark Harris
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Digital vs. retail is still a pretty hairy proposition, especially for large volume traditional packaged goods companies.



The transition to digital isn't happening overnight, it's gradual, so you can't risk totally pissing off your large packaged goods retailers while you build your digital front.



That's one reason why digital versions of games aren't constantly undercutting their packaged counterparts at or near launch.

Frankie Kang
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I believe Wal-Mart controls around 20% of all packaged goods software sales in North America. Undercutting your biggest customer for your digital front will do nothing but hurt your traditional bread and butter. At least in the short term.

Leandro Pezzente
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I dont know the guy , but all his facial expression is telling me is "hey , you should all adore me !. I am the Coolest guy of the entire world". In other words ... i would never ever trust this guy.

Leandro Pezzente
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After i watched this http://www.gametrailers.com/video/e3-2011-electronic-arts/715151?
type=flv , i knew i was right. the guy is an arrogant prick right off the bat.

Alan Youngblood
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Like everyone else, I'm not sure I "get it" with the weird details he's saying but I totally stand by a switch from defensive to offensive strategy. The recession, which is really a depression, basically became an excuse for businesses to make stupid decisions. "Hey, we'll cut out what's making us money and lay off all those people that add value, because it looks good in the short run on the balance sheets." But that's not how you run a company. That's how you run a company into the ground.



In sports, offense wins the season and defense wins the tournament. In business, there is no tournament, everything is the regular season and you must always be re-investing in some way to keep your doors open.



That being said, I'm really curious if he means that they will be investing in retaining talent not just acquiring it. I'm wondering how they plan on doing that. Anyone can get developers by saying hey let's make a game together, but only good businesses know how to keep people at it, and happy. If the devs aren't happy, the business falls apart and no one is happy. EA has done things in wake of the EA-spouse story to create a better work environment, but from recent stories I hear, they still have a ways to go. In the spirit of good competition I wish them all luck in solving that problem.


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