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EA management credibility is "nonexistent"

Thu 11 Feb 2010 9:31am GMT / 4:31am EST / 1:31am PST
BusinessPublishing

"We were in a 20-foot hole and we've climbed 14 feet out of it" - Riccitiello

Investors have no confidence in management at Electronic Arts, after the company lowered earnings expectations in January after posting losses for eleven consecutive quarters.

That's according to a report by Business Week, which pointed out that stock in the publisher has dropped 68 per cent over the period.

"Management's credibility is nonexistent right now," said Patrick Becker, chief investment officer of Becker Capital Management, which holds around 1 million shares in EA.

But CEO John Riccitiello is concentrating on turning a profit at the Madden and FIFA publisher, focusing on growth in digital markets as sales of traditional boxed product continue to fall.

"You see a six-foot hole that we're in," said Riccitiello. "I'm telling you that we were in a 20-foot hole and we've climbed 14 feet out of it."

New digital initiatives include "Project Ten Dollar", EA's attempt to tackle the second hand market. Consumers that buy new games are given a code to download additional content, but users who buy the game second hand will have to pay $10 to access the missing extras.

The company also bought social games company PlayFish for $300 million with the intention of migrating properties such as The Sims to platforms like Facebook.

However, Eric Goldberg, MD at Crossover Technologies and a previous consultant for Electronic Arts said the transition to digital isn't going to be easy.

"While it's possible EA can make the extremely difficult transition from providing a shiny disc in boxes to [leading] in digital, history suggests it's rather unlikely," he told Business Week.

18 Comments

Stephen Northcott Senior Consulting Engineer

76 0 0.0
"Project Ten Dollar" A: Sounds like a cheap whore & B: Smells almost the same as DRM.

EA has a long hard road ahead of it, and in a lot of ways whilst I don't wish pain on it's hard working creative types, the management have totally brought this on themselves.

Things will get worse before they get better IMO.

Posted:4 years ago

#1

Christopher Bowen Owner, Gaming Bus

118 0 0.0
Yet on the other hand, the quality of EA's product has gotten better since Richitiello took over, and by some accounts, working conditions have improved as well. If you're an investor, you hate this, but if you're a gamer, you like the direction that EA's taken, even if Project Ten Dollar is doing nothing but selling half a game to used purchasers while simultaneously pissing off Gamestop.

On the other side of this coin is Activision. Investors love them. Gamers who know what they're talking about hate them, as well they should.

I guess it's a question of who really runs the shots in the gaming industry. Hint: It's not the gamers.

Posted:4 years ago

#2

Tulay Tetiker Head of QA - BioWare Edmonton & Montreal, EA BioWare

10 0 0.0
Well said Christopher

Posted:4 years ago

#3

Nik Love-Gittins Senior Character Artist, FreeStyleGames

59 27 0.5
"And why is that?"
I was thinking the same thing.

Please elaborate Mr.Bowen.......

Posted:4 years ago

#4

Kyle Rowley Senior Gameplay Designer, Remedy Entertainment

26 17 0.7
Presume it's because of all the quotes Mr. Kotick keeps getting picked up on:

"[Activison won't make games that] don't have the potential to be exploited every year on every platform with clear sequel potential and have the potential to become $100 million franchises."
"If it was left to me, I would raise game prices even further."
"The goal that I had in bringing a lot of the packaged goods folks into Activision about 10 years ago was to take all the fun out of making video games."

They are probably taken out of context, but you know what gamers are like ;).

I've got no problem with Activision personally. They fund some great devs, who make some great games =).

Edited 1 times. Last edit by Kyle Rowley on 11th February 2010 12:07pm

Posted:4 years ago

#5

Simon Peter

9 0 0.0
"if you're a gamer, you like the direction that EA's taken"
"I guess it's a question of who really runs the shots in the gaming industry. Hint: It's not the gamers."



Gamers as in "real gamers", or gamers as in "people who play games, (a.k.a. the customers)"?

Every industry is controlled by its customers, they know what they like, and they vote with their dollars.
If their majority of people who play games likes a company, it is, by definition, a successful company

15 million GAMERS voted for Modern Warfare 2, and 2 million voted for Dead Space.

Curiously, a certain group of so-called "real gamers" clearly prefer the latter, and they happen to be the ones whose opinion dominates the gaming press, with its reviews, and ratings, but I think this is exactly the mistake what EA made: they just convinced themselves that a small niche of loyal fans, (who expect big budget games, but their numbers can't support the developments), are a viable audience on their own.

Posted:4 years ago

#6

Antony Cain Lecturer, Wakefield College

263 21 0.1
Student wisdom on display, nice one :)

Personally, Activision could shovel GH games at me twice a week for all I care... I'll buy as long as they're worthwhile.

Edited 2 times. Last edit by Antony Cain on 11th February 2010 1:31pm

Posted:4 years ago

#7

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
It does feel as if Ea and Activision switched places this generation.

EA game quality went up, Activision game quality went down.
EA is bringing out lots of new IP, Activision has severe sequelitis.


I myself have been very pleased with the efforts that Riccitiello has made at EA and can't help but wonder what is going through Kotick's head when he speaks.

And I don't think you can compare MW2 to Dead Space as a measure of corporate success. One's a new IP, the other the sequel to one fo the biggest games ever. One is a FPS with huge online multiplayer, the other a 3rd person action game for 1 player.

A better comparison would have been Guitar Hero 5 to Rock Band: Beatles.

Posted:4 years ago

#8

Matt Lowe Associate Producer, Splash Damage

6 0 0.0
I think FIFA 10, Mass Effect 2 and Bad Company 2 (albeit the demo) are all very good games. I'd agree with the comments above, EA seem to be trying much harder to do the right thing by gamers.

Edited 1 times. Last edit by Matt Lowe on 11th February 2010 9:04pm

Posted:4 years ago

#9

Samuel Chay Mottershaw Studying Scriptwriting, Staffordshire University

10 0 0.0
I still find it unsual that EA changed it's way of business. When since has a large organisation like EA been more concerned about quality of it's products than the revenue they bring in?
Or was EA revenue in decline around the time Riccitiello made the switch?

Posted:4 years ago

#10

Private VIdeo Games

103 14 0.1
"On the other side of this coin is Activision. Investors love them. Gamers who know what they're talking about hate them, as well they should. "

Bizarre comment that...

Want to elaborate on what you exactly mean? I think I know what I'm talking about after playing games for over 20 years and I can't say I have any hate towards Activision at all..



Posted:4 years ago

#11

Alex Wright-Manning Talent Officer, Playground Games

172 2 0.0
I don't think it's a case of hating Activision at all. It's just Kotick that inspires hatred. It's his desire for self promotion and a flagrant disregard for upsetting his customer base that rankles. You'll see other rants of mine on this little homunculous elsewhere.

I agree with Jimmy that EA and Acti's roles have been very much reversed. Hopefully it'll pay off in the long run for EA, they're responsible for so much in the games industry that we take for granted now, and it does seem like they're cleaning up their act both in regards to product and staff welfare.

I still get a buzz when I think about hearing the sampled 'EA Sports' tagline for the first time on Madden on the Megadrive all those years ago....... ah, young love.

Edited 1 times. Last edit by Alex Wright-Manning on 12th February 2010 11:52am

Posted:4 years ago

#12

Nik Love-Gittins Senior Character Artist, FreeStyleGames

59 27 0.5
"I don't think it's a case of hating Activision at all. It's just Kotick that inspires hatred. It's his desire for self promotion and a flagrant disregard for upsetting his customer base that rankles. You'll see other rants of mine on this little homunculous elsewhere. "

A bit harsh, isn't it ? Do I take it then, that you never try to place anyone into positions at Activision ? Or are your moral standards different when it comes to taking money off them ?

Posted:4 years ago

#13

Alex Wright-Manning Talent Officer, Playground Games

172 2 0.0
Hey Nik. I wasn't stating my feelings here, merely trying to explain the ill feeling that exists towards Acti, groundless as it may be; so I don't think I'm being harsh. I'm not a big fan of Kotick as I believe his regular outbursts are distasteful and rather counter-productive, but I've not voiced them here at all in the interests of impartiality and to avoid bias. Speaking of which, isn't FreeStyle a wholly owned subsidiary of Acti these days? ;)

I work with a number of Activision owned and financed studios and have nothing but the utmost respect for the lovely people that make those studios great places to work and the fantastic product they invariably turn out. As for my morals, I'm sure you know as a recruiter I have none. ;)

Seriously though, I believe Bobby K does his company a disservice at times with his ill advised statements, which are obviously designed solely to currie favour with shareholders and the wider business and financial community, not those of us in games. Being made up of predominately creative individuals it's unsettling for an industry to hear the leader of one if it's biggest and most successful companies talk about the industry in terms of mere dollar value. Ultimately he's done exactly what he says on the tin as far as the publishing side is concerned; made lots and lots of cash for the company and its shareholders. He just hasn't made many friends with his methods.

Posted:4 years ago

#14

Nik Love-Gittins Senior Character Artist, FreeStyleGames

59 27 0.5
Yes, we are part of Activsion.
As far as I can tell ( so far at least ) it's a very good company to be a part of. So as someone on the inside, as it were, I find it difficult to work out how people can dislike 'us' when they don't know anything about us ( as a company ) apart from the odd out of context quote here and there and evidence that it's being run as a company ( as in, to turn a profit.... )
It's strange and unsettling ( a bit.. ) being part of something that so much unfounded and uneducated vitriol is thrown at.

Posted:4 years ago

#15

Alex Wright-Manning Talent Officer, Playground Games

172 2 0.0
I was kidding Nik, of course I know.

Very true, I've heard nothing but good things from the vast majority of current and past employees. In these troubling times it's enormously reassuring to have a cash rich publishing giant backing you. Although it doesn't preclude you from suffering, just ask staff at Neversoft, Radical, Luxoflux and Underground.

As the public face of Activision, Kotick's soundbites do create ill feeling towards the company he represents. For many this is enough to level their sights at Activision, regardless of the sterling work they do from a development perspective or the fantastic people that work there. I love Activision's stuff, am a huge fan of DJ Hero, have many friends who work for them in some capacity, while away many hours 'owning suckas' on Modern Warfare, but I'm not a fan of Bobby K. I don't think that's being harsh, I don't like Gordon Brown either but that doesn't mean...er... ok bad example.

Posted:4 years ago

#16

Nik Love-Gittins Senior Character Artist, FreeStyleGames

59 27 0.5
Fair enough dude.

Posted:4 years ago

#17
EA is putting better game sout but its business model is turning south or eas as in South Korea with their 10 dollars project and pricing of DLC for their newest games. The value of DLC compared to original games (DA:O and ME2) is extremely low and they try to substitute content with "uber" items and in the case of Dantes inferno direct upgraded to on's character. And while I love Dragon Age and appreciate Dantes inferno, i simply loath what they are trying to do revenue wise and I think this is going to bite them in the arse.

And whats even worse - this attitude may very well ignite more piracy of their products because as you know with warez there is no need to pay 10 bucks to enjoy the game as previous owner and no need to pay for DLC

Posted:4 years ago

#18

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