How Can Riccitiello Get EA Back On Top?

John

It looks like some of EA's investors are gunning for the head of top dog, John Riccitiello despite a general rise in the quality of EA's titles. This has to lead any gamers interested in the business side of gaming to ask- Just why is EA seeing a dip in profits while they are actually making better games than they were were they were highly profitable?

If you are one of those gamers then I have a supposition for you...

EA's biggest problem is that, while they have a great stable of good titles, they simply do not have the biggest hit makers at the moment. Games like Dead Space, Battlefield, and Left 4 Dead are awesome, but EA's biggest cash-cow (Madden) is not as hot as it used to be, and I don't see the heat coming back unless something drastic is done to make it seem like a must-buy every year.

Madden sales are not completely down in the dumps, but it is also not nearly the huge seller it used to be.

People are asking why they should by this year's version when last years still plays fine, and they have learned that the bullet points EA Sports advertises for their sports titles are never as good in reality as they sound on paper.

Working game retail, which I thankfully no longer am, I learned that Madden was going down in reserves and sales every year despite a large push for reserves on this title by every store. Even if you did well on reserves, simply having pre-orders on it did not mean those reserve customers would show up to buy the game. Ask any GameStop worker that is willing to talk about their stores reserves and they will tell you that they have at least 15 to 20 pre-orders for each year of Madden still sitting in their computer system.

The excitement and revenue also took a hit because of the price battles over Madden. While people waiting for the day before the game to find out what chain will have the best sales sounds like a great way to drive sales, it actually seemed to have the reverse effect. Instead of people being in game stores for midnight launches and bringing their friends, they just waited till the next day when they knew who had it cheapest and went there... if it happened to be on the way.

This dip in sales has continued each year, and many customers that got out of the yearly Madden grind found that they were fine, and were less likely to rejoin the grind.

To make a long post short- EA needs to find a way to get EA Sports' games to feel like a must buy. Either by dropping the price to lower people's need and desire to wait for price drops, or they need to offer more content to people who buy the game in the first month that will not be in the game otherwise. Simply claiming that next year's version will be 'innovative' is not enough to get Madden fans in stores again... just ask Tony Hawk how that can bite you in the ass.

P.S.- EA might want to ask Valve if they plan on getting a Half-Life sequel out any time in the next century... They might just make a little money off that as well!

(3)

Demian Linn

January 13, 2010

You might want to read this blog post by a former EA exec and current venture capital guy:
http://bizpunk.blogspot.com/2010/01/after-bell-today-ea-announced-massive.html

Frank Anderson

Awesome link, Thanks Demian!

I do think this poster might be ignoring the power of a potential hit in The Old Republic, and I think a hit on the level of Modern Warfare is exactly the type of thing that could turn things around for EA in a second, even with a bad strategy. I mean, look at how Kotick is getting away with significant blunders just because of MW2 sales.

Still, this poster obviously knows a world more than I do, so I would not doubt his argument at all.

I have my fingers crossed for Riccitiello, I think he is one of better stewards of the games industry out there... I do have to doubt if he is the best leader for the games business, though.

Sure, one may be indivisible from the other, but I love that he pursued quality games while not ignoring past hits. It is just too bad the sales did not match up to expectations.

Here is an active link for any lazy readers- http://bizpunk.blogspot.com/2010/01/after-bell-today-ea-announced-massive.html

Thanks again, Demian!

Spencer Gregory

January 14, 2010

Though I can't foresee how successful this might be, an alternative for the Madden franchise is to evolve it into an online "platform" like RockBand. If the developers can't properly update the franchise on a yearly schedule, they can do one of two things: think of better ideas each year, or transform the game so as to facilitate updates on shorter time spans. The latter option would be easier, from what I can see.

Imagine the Madden franchise stops trying to create new gimmicks for their games (first person mode, management mode, play a star mode), and instead focuses on an online subscription based program. The team stops making a new title each year, and instead releases the home platform for Madden just once. Then, players can pay a small subscription fee ($10 a year, lets say) for the game to automatically update rosters and individual player stats. This makes the Madden universe a living, changing equivalent to the real sport. After that, they could add other subscription services. Things like entry fees for a competitive online league, bonus content, interviews with players...there's a ton of things they could charge for and make available only on the Madden "platform."

That way, their development costs are focused on improving the online aspect, and it brings their sports franchises into the "collection of digital assets" the business guy mentions. This might not be the immediate solution, since so many 360 users are still offline, but it's something to look towards as a possibility in the future.

WHAT THE HECK IS A BITMOB?