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EA CEO: "Mobile games are not going to wipe out the console business"

EA CEO: "Mobile games are not going to wipe out the console business"

Wed 09 May 2012 5:22pm GMT / 1:22pm EDT / 10:22am PDT
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John Riccitiello outlines his four major rules for the mobile games market

EA chief executive John Riccitiello was a keynote speaker today at CTIA Wireless in New Orleans, where he outlined the future of the mobile landscape as he sees it and how game publishers and mobile firms will become great partners in the years ahead.

"Games, more than any other type of application or function, are driving dramatic growth in the mobile industry. Mobile games will co-exist and even interoperate with games on consoles, PCs, and cable television," he began.

Riccitiello noted that 67 percent of all revenue generated on the App Store comes from games. He added that there are ten times the number of mobile devices as there are game consoles, and so "the inescapable conclusion is that mobile has become a game platform - it's a peer to PlayStation, Xbox and Nintendo systems."

The thrust of Riccitiello's presentation was an overview of his four major insights or "rules" about the evolving mobile games industry.

"What's interesting is that precious few of these games are ever played, and fewer still generate revenue. We call many of these 'lunch boxes' - colorful graphics that sit on top of a poor application"

John Riccitiello

Rule #1 - "When a CPU is introduced to a consumer electronics device, gaming quickly becomes the dominant application."

Riccitiello stressed that games were never projected to be the number one sales generator on iPhone but that consumers spoke with their wallets. "History shows that whether it's a PC or a tablet or a phone, when people are allowed to choose their preferred content, games win," he said.

Although this doesn't apply directly to mobile, he said the rule easily translates to television. Riccitiello anticipates big things for IPTV and gaming.

"You're about to see what happens again, this time on television. IPTV holds tremendous promise and some very unique opportunities for our combined industries. I'm biased but I'm betting that when cable consumers have the option to play games, TV will become less popular and gaming will go through the roof," he said, which is an interesting comment in light of our recent op-ed from Mark Sorrell. "The point is games win every time."

Rule #2 - "This is a branded world."

Riccitiello pointed out that out of the many hundreds of thousands of apps on the App Store, about 75,000 are games. The sad fact for many game creators, though, is that most of these don't make money. Riccitiello says that's due to game quality and brand recognition.

"What's interesting is that precious few of these games are ever played, and fewer still generate revenue. We call many of these 'lunch boxes' - colorful graphics that sit on top of a poor application. What's inside is often a disappointment," Riccitiello observed. "But gamers are very smart consumers... they gravitate towards games with the best reputation and highest quality."

He noted that dramatic improvements in mobile technology and top developers flocking to mobile platforms, with many creating versions of core IPs that are as good or better than what's on a PS2. "You're going to see the game brands known for quality rising up in the charts," he said, reflecting on the success of EA's own Dead Space for iOS.

"This is a historic opportunity - it's bigger than movies, bigger than radio or TV. This is the partnership that will create entertainment for an audience as big as this planet"

John Riccitiello

26 of the top 100 games on App Store are brands that come from other media. The bottom line, according to the EA boss, is that mobile gamers are actually willing to pay if the content is very good. "Consumers want and expect to pay for quality; they really expect to pay." He noted that there will always be room for quirky independents with breakout hits, but "the trend is going to benefit publishers with globally recognized brands - some will be new like Angry Birds and some will have been tested by time like The Sims and Plants vs. Zombies."

Rule #3 - "The platform wars won't be an A or B or C, it's going to be A and B and C."

For Riccitiello, all the talk of mobile and social gaming ruining the hardcore console business is hogwash. He sees all the platforms ultimately widening the audience and complementing one another.

"Frankly, I compare this to predictions in the 1950s when people said television was going to destroy motion pictures... TV didn't destroy movie box office, YouTube didn't destroy TV and mobile games are not going to wipe out the console business; quite the opposite," he said.

He pointed to the success of FIFA 12, growing "rapidly" on all platforms. "Our data is clear, it's not cannibalizing... if you're wondering about which platform is going to win the game wars, it's not A vs. B, but the answer is actually all of the above," he continued. "Games are going to live everywhere - small screens, medium screens, big screens. Mobile and social don't erode the core business on big games and big screens, they add to it."

1

Rule #4 - "Games and players are forming ecosystems, which will increasingly be played out cross-platform and cross-device."

The fourth rule is something that all publishers are starting to pay attention to, and EA has certainly been pushing this with its IP as it goes in a more digital direction. Catering to players living in game ecosystems will be key for game makers going forward.

"They will access their games, their friends, and their achievements through their smartphones, social networks, their PC and their console - sometimes all of them. Across all of these platforms, consumers will get and use the same friends list, benefit from cross-platform progression and cross-platform loyalty schemes. These schemes will not be just inside the domain of one hardware company. None of us is really locked in as a customer of a single manufacturer of a platform provider," Riccitiello commented.

He pointed out that FIFA is made for 13 different platforms, but building an ecosystem isn't about just putting it out on all sorts of platforms, "it's about connecting all the experiences and millions of users into one vibrant community, and to do that you need a service."

Riccitiello closed his speech by stressing the importance of game publishers working in partnership with the big mobile firms. This will ensure the biggest global audience possible.

"By 2015, you will all join Sony, Microsoft and Nintendo as seeing game publishers as your best and most important partners," he said to the audience.

"Games became the booster rocket that moved consoles from hobby niche to mainstream entertainment, adding millions of consumers with each generation. Today's game developers are presented with a much bigger opportunity, an audience we never could have fathomed five years ago - a platform with an installed base approaching two billion people. This is a historic opportunity - it's bigger than movies, bigger than radio or TV. This is the partnership that will create entertainment for an audience as big as this planet... together we can show them that the thing in their pocket or purse is much more than a phone."

8 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
He does seem to be flying against the facts on the ground.

The problem with consoles is that each new model is a billion dollar gamble. To recoup the initial cost requires that the device goes mass market, and even then it may not get the investment back. Is the PS3 in the black yet? People forget that the main purpose of a console is to act as an anti piracy dongle. This is why consoles destroyed the Atari ST and Commodore Amiga in the market in the first place, despite being otherwise inferior devices.

Increasingly consoles have drifted away from being mass market products. They are becoming niche products for core gamers to play complex games. The rest of humanity is getting its gaming fix elsewhere.

And for core gamers there is an alternative, it is called the PC. And for them it is in many ways a better platform than a console.

What justified the existence of consoles in the first place, defeating piracy, has now become possible by a range of different business models, as we are seeing with MMOs, apps, Steam etc. So what is the purpose of a console now? It seems that their existence is largely a function of inertia.

Posted:2 years ago

#1

Felix Leyendecker
Senior 3D Artist

181 200 1.1
Consoles are more than just anti-piracy dongles. Their main advantages are convenience, standardized, high-performance hardware, cost, input, and services. All this lead to the rise of high-profile IP from first parties, which becomes another advantage to add to this list.

I'd wager that even disregarding piracy, consoles would have eventually won the upper hand against the PC, the theoretically superior gaming platform. They just have inherent perks that can't be easily competed with.

Posted:2 years ago

#2

Dave Herod
Senior Programmer

521 749 1.4
"People forget that the main purpose of a console is to act as an anti piracy dongle."

People aren't forgetting anything Bruce, because that's absolute garbage. The purpose of consoles is to get most of the benefits of owning a gaming PC while eliminating the things that put people off, i.e. the price, the physical size, having to update drivers, reading minimum specs for every game you play, fear of opening up the internals to upgrade, maintenance, etc. Even at launch of a new generation, a low spec PC will cost more money than a game console. Then there's the risk of viruses, maintenance, and various other complexity that plenty of people are scared of.

Posted:2 years ago

#3

Morville O'Driscoll
Games Blogger & Journalist

1,520 1,315 0.9
Increasingly consoles have drifted away from being mass market products. They are becoming niche products for core gamers to play complex games. The rest of humanity is getting its gaming fix elsewhere.
That's so laughable, it's untrue. There's a vast number of non-complex games on consoles, and they have the ability to produce complex games as well. The main reason mobiles have the upper-hand is because almost everyone between the ages of 10 and 60 has a smartphone. Console-makers could only dream about having a mass-produced mobile platform that's in that many hands; and the only reason that works is because they're phones. The economic downturn means that luxury gaming goods take second-place to items that are pretty-much a necessity.

Honestly, Bruce - at least try to be impartial, otherwise your analysis isn't worth reading.

Posted:2 years ago

#4

Robin Clarke
Producer

300 684 2.3

Posted:2 years ago

#5

Nick Ferguson
Senior Producer

49 11 0.2
I'd say the (spectacular) success of Minecraft on XBLA over the last 24 hours supports argument 3) above (and, to a lesser extent, 2 and 4).

Posted:2 years ago

#6

Sam Maxted
Journalist / Community / Support

155 65 0.4
A few years ago, everyone was saying how the PC was dead or dying as a games format.

Consoles are no more going to die out now than the PC was back then.

Posted:2 years ago

#7

James Gallagher
Marketing Planner

27 12 0.4
Honestly Bruce, I used to enjoy reading your blog, but using the comments of every article as your personal soapbox is getting tiresome.

As head of EA, Riccitiello is better placed than you to comment on the future of consoles and mobile. He also has a lot more riding on it. Maybe you should listen to what the man says?

Posted:2 years ago

#8

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