As well as managing the EA Games label, Frank Gibeau has a good overview of the entire Electronic Arts business, from free-to-play and casual to console blockbusters and digital distribution. At E3 earlier this month, GamesIndustry.biz sat down with Gibeau to discuss long term strategies at the publisher - the Origin distribution service, the reduction of console and growth in free-to-play games, reaching new markets like Russia and Brazil and new technology opportunities.
Q: John Riccitiello was on stage at Nintendo's E3 conference earlier this month, the first time he's been on stage with the company before. EA is obviously betting big on the Wii U.
Frank Gibeau: We were really blown away by the unique innovation that Nintendo brings with the Wii U controller on a high performance machine. The ability to do HD graphics and access game experiences in a completely novel way and a way that's never been seen before, it really struck our fancy. We were excited by what Nintendo presented to us, we thought about it and it fits well with what we're trying to do with our franchises like FIFA and Madden and Battlefield. There's great horsepower there, great innovation and Nintendo's got fantastic branding. We're platform agnostic as a company so if we find something we believe will have success commercially and critically, and has a business model that works for us, we're in.
Q: How long have you been working with Nintendo behind the scenes on that?
Frank Gibeau: We've had it for a little while, I can't really go into the details of it. We've had machines and we've been working on games. At the E3 press conference what was really important for us was to establish the relationship and talk about a few things, what we're thinking about and excited about, and we'll show games when they're looking ready, when they're looking tight.
With the Wii U it's important for us to get there on day one so we can get in and build as big an audience as possible
Q: It's still important for EA to get in there and grab the first mover advantage on new hardware?
Frank Gibeau: Absolutely. It served us well on PlayStation 2 and PlayStation 3. Getting in early is partly about being a successful transition company and figuring out where the hardware is going to go. With the Wii U it's important for us to get there on day one so we can get in and build as big an audience as possible.
Q: The risk is that if it's doesn't have the impact you'd expect, it's a big gamble
Frank Gibeau: We've been doing this for 25 years and trying to pick platforms and more often than not we get it right. I hope we have this one right. That's the gamble.
Q: You've recently announced Origin to bring digital downloads in-house more and sell games directly to consumers. How is that transition to service provider coming along for EA?
Frank Gibeau: It's something we've been doing at EA for three years now. Really transforming EA from a fire and forget packaged goods business to an online services company and Origin is the next iteration of that strategy or the next milestone in that strategy. Prior to that we created a technology called Nucleus that enabled us to have a single sign-on registration. We've been changing the way we develop games so that we can have them on Smartphone, tablets, in addition to console and PC. It's all part of the digital transition that we're going through and Origin is the platform on which we'll be able to publish and service customers on mobile as well as PC platforms. And then link to the consoles in unique ways as they develop.
For us it's really about, we're the worldwide leader in packaged goods publishing, we'd like to be the worldwide leader in digital publishing. And we think that EA has unique strengths there related to what we can do with our content, because we're a content creator as well as a retailer in this business. But in general it's not just a retail site, it's a community, it's a platform, it has traits much like you see with Steam or PSN or Xbox Live, but it's unique to EA.
Q: Star Wars: The Old Republic is a digital exclusive to Origin - should we expect more PC digital titles to be exclusive to Origin?
Frank Gibeau: It depends on the title and what we're trying to do. In the case of Star Wars we're trying to build an audience for Origin. And it's also an opportunity for us to better manage the downloads and how we bring people over from the beta and that sort of thing. For a lot of reasons it made sense for an MMO, which is a highly complex deployment. I think long-term you'll see we believe in reach so we will have other digital retailers for out products because we want to reach as many audiences as possible. But at the same time if we can use exclusive content or other ideas to help grow our audience then we're going to do that because we're growing a platform.
Q: But it's more than exclusive content, it's an entirely new game based on one of the biggest entertainment franchises ever. Is there a danger of alienating your retail partners by only releasing it digitally via Origin?
Frank Gibeau: For us it made sense to make this move and grow the platform this way. We are going to continue to be great partners for our retail channel partners and as they evolve their business models to account for digital. But at the same time you talk about platform exclusives like Halo or Uncharted, EA's going to have some of our own platform exclusives.
Q: Speaking of Star Wars, there has been a lot of speculation on the game in terms of the cost, and EA has said itself that its one of the most expensive projects its ever been involved in. Can you clear up any of the chatter that suggests you've over spent on the game?
It's going to be a tough place for a lot of publishers. It's going to increasingly become like theatrical movies.
Frank Gibeau: I don't pay much attention to that talk, I get a lot of questions from analysts and press about it. What I try and concentrate on is, is it a good game and is it ready to go? You look at a game that has 200 hours of gameplay for each of the six classes, and that doesn't include the crafting, the raids, the multiplayer. It's vast. It's a gigantic game. And that costs money. But when you get one of these launched they persist for a long period of time. Ultima is on its first decade and it still has tens of thousands of subscribers and is widely profitable for us. It's just the nature of the beast that you have to build this amount of content. Do I wish it wasn't this expensive? Absolutely, but I think everybody does. At the same time it doesn't really do us much good to comment on how much it costs. Ultimately what matters is whether it's a good service and do people really like the game?
Q: It's also an ongoing cost that requires spend as the game remains live.
Frank Gibeau: Yes, but you meter it up and meter it down based on how the user base is growing and the profits of that.
Q: Triple-A budget titles are growing across the board though, right? Are they getting out of control?
Frank Gibeau: It depends on whether it's a first version of a game or second, where the technology is at. For the most part EA is comfortable with the budgets for our blockbusters right now. We've gone from a place, where I was running the Games label about three years ago, we had 20 titles released a year. Now we're down to six. We've taken our development titles down accordingly, but at the same time it's been really important for us to do a few games great as opposed to a bunch of games above average. It costs money but at the same time there's new ways to monetise those online, through DLC, bringing assets over to other platforms. We're pretty comfortable with where we're at, and it does cost money to compete and we do agree that this is a top twenty market. If you're outside the top twenty it's exceedingly difficult unless you're at scale or have some low cost centres. It's going to be a tough place for a lot of publishers that don't have the scale of Electronic Arts or our breadth and depth to compete. It's going to increasingly become like theatrical movies.
But at the same time we're aggressively investing in things that are very low cost like free-to-play. The free-to-play group inside of EA Games is growing extremely fast - we've got 17 million users, 4-5 services stood up right now. And if you get a couple of those to scale they're as profitable as a console game. What we're trying to do is really prosecute the high-end strategy of a few big theatrical style releases, top 20 games - which for us this year are Battlefield, Need for Speed, Mass Effect 3. Launch some new services like Star Wars that are unique, and in addition to that do a bunch of free-to-play businesses, that frankly when they get to scale, have huge audiences, are very profitable, they're not cannibalising the main games and they actually reach markets that we're not currently serving. With Need for Speed World, Russia and Brazil are number one and two - the Ukraine is in there. I can't sell packaged goods in those territories. But I'm reaching an audience with Need for Speed content. It's an engine that's not as advanced as Frostbite 2 but it's certainly got great production values and great game designs, and it's free-to-play with micro transactions. It's a very exciting time from our perspective because it's not all about consoles. It's about smartphones, tablets, free-to-play, browser, social.
Q: Interesting that you point out Russia, the Ukraine and Brazil. Are there any markets that are still proving elusive?
Frank Gibeau: We're in a lot of different things. There's new emerging technologies that we're always interested in. Exotic stuff like smart televisions, where you get the full chipset and push the game directly to them. That's right on the horizon and could be a very disruptive technology for the console manufacturers. But not for us because we'd be perfectly happy to do that. We wish we had a bigger business in Asia but we're working very aggressively to do that. It would be interesting to see how India evolves as a gaming market as the middle class grows and purchasing power and broadband expands in that economy. Right now it's fairly limited but something we're interested in.
Q: EA seems to be in a strong position - from console to social to free-to-play and digital distribution. But is there a danger of overstretching the business to cover too much?
Frank Gibeau: Sure, there's always that. But we have a disciplined management team that looks at prioritisation and understands that we came from a place three years ago where we were doing way too many things not very well to a place now where we've really scoped it out. We think about in these case of specialising around IPs and being able to put them out across platforms as opposed to having too many IPs trying to do too many things. It's a lot easier to figure out how to get FIFA to work across console, smartphone, tablets, mobile and grow that. Focusing on a few of the great and reaching more audiences through multiple platforms seems to be a formula that's working for us.