Designer's Notebook: Is It Time to Dump EA?
June 6, 2007 Page 3 of 4
I think for a long time the management assumed that EA’s “everybody gets a stock option” policy was enough to compensate for the long hours; if the company did well, it would be worth it in the end. And for a long time, it was. But with the stock price flat quarter after quarter after quarter, it doesn’t surprise me that a lot of the programmers and artists got fed up.
EA has now abandoned the option policy and has to pay cash on the barrel head for work done. That makes sense. With the development of large games becoming more and more assembly-line every day (an artist friend of mine once spent weeks doing nothing but drawing basketball players’ feet), you can’t count on passion alone to motivate people.
So that’s the past, and how EA got to where it is. What about the future – this sea-change that I see coming?
Some of it has to do with personalities. Company culture flows down from the top, and Larry was in charge for a long, long time. He was a known quantity. He could be ruthless, but he was both honest and judicious. I can’t say that I knew him well, but I knew what he was about. I knew what his priorities were and where his boundaries were – no excessive gore, nothing raunchy in the games, which helped keep EA’s name out of the headlines when Congress was investigating the industry.
Larry was a game guy – he came to EA from Activision. He got it. Riccitiello is a packaged-goods guy, not a game guy. He came to EA from being President and CEO of baked goods at Sara Lee. Before that he was at Wilson Sporting Goods, Haagen-Dazs, Pepsico, and Clorox. Does he get it? I don’t know yet. If he got it, why did he leave?
And games may be packaged goods now, but they’re not necessarily going to be packaged goods forever. Back in 1999, I predicted in a lecture at the Game Developers’ Conference that sometime in the next five to ten years, the industry would start moving to electronic distribution. I was right. Eight years later the retail model is still dominant, but thanks to the increased availability of broadband, electronic distribution is growing rapidly. Steam and Xbox Live are changing the rules.
There are still several good reasons to buy at retail – a fair number of game purchases are impulse buys – but game-only stores are under terrible pressure from discounters like Wal-Mart. That’s not a sector I would want to be in five years from now. EA never went into retail, which was wise, but if digital distribution really takes off, EA’s dominance of store shelves isn’t going to mean much.
A few years ago I heard a fascinating lecture by Jim TerKeurst, a research and business development manager at the IC CAVE at the University of Abertay Dundee. He said that at the moment the video game value chain runs: developer, publisher, distributor, retailer, consumer.
That’s a lot of middlemen. In the future it’ll be: developer, provider, consumer. The providers will be the people who own the cable that runs between the developer’s computer and the customer’s computer – or in the case of mobile entertainment, the people who own the cell-phone networks. The only publishers that will survive will be those who have development capacity. Everybody else is out of the picture, and that’s something that EA had better be planning for.
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