John Riccitiello out at EA
Exec stepping down as CEO and board member; Larry Probst named executive chairman to oversee search for new CEO [UPDATE: internal memo added]
John Riccitiello's second tenure with Electronic Arts is coming to an end. The publisher today announced that Riccitiello will step down as CEO and a member of the board of directors, effective March 30.
Additionally, the company has tapped former EA CEO and current chairman of the board Larry Probst to serve as executive chairman, effective immediately. Probst's role will be to ensure a smooth transition and provide the company with leadership while the board conducts a search for a new permanent CEO. EA has enlisted the aid of an executive search firm for that task, and will be considering internal as well as external candidates for the role. Probst ran EA as CEO from 1991 to 2007, and has been chairman of the board since 1994.
"We thank John for his contributions to EA since he was appointed CEO in 2007, especially the passion, dedication and energy he brought to the company every single day," Probst said in a statement. "John has worked hard to lead the company through challenging transitions in our industry, and was instrumental in driving our very significant growth in digital revenues. We appreciate John's leadership and the many important strategic initiatives he has driven for the company. We have mutually agreed that this is the right time for a leadership transition."
"This is a tough decision, but it all comes down to accountability."
Riccitiello, in his resignation letter
Riccitiello said it had been an honor to serve as CEO and added, "it is the right time for me pass the baton and let new leadership take the company into its next phase of innovation and growth."
In his previous stint at EA, Riccitiello rose to be president and COO before leaving in 2004 to work with Elevation Partners. He left that outfit to take the CEO position at EA in 2007. Later that same year, EA acquired BioWare-Pandemic from Elevation for $860 million.
EA also updated its outlook for the current fiscal year, cautioning investors that it expects to come in on the low end or slightly below its guidance from January. The company is set to announce its fourth quarter and year-end results on May 7.
Electronic Arts filed Riccitiello's resignation letter with the SEC. The full text follows:
Dear Larry,
I hereby offer my resignation as CEO of Electronic Arts effective with the end of our Fiscal Year 13 on March 30, 2013.
This is a tough decision, but it all comes down to accountability. The progress EA has made on transitioning to digital games and services is something I'm extremely proud of. However, it currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued in January, and we have fallen short of the internal operating plan we set one year ago. EA's shareholders and employees expect better and I am accountable for the miss.
I have been at the helm as EA's CEO for six years and served as COO for nearly seven years starting in 1997. I know this company well, and I care deeply about its future success. I leave knowing EA is a great company, with an enormously talented group of leaders and the strongest slate of games in the industry. I could not be more proud of our company's games, from Battlefield and FIFA, to The Simpsons: Tapped Out and Real Racing 3. We have built many great franchises that will serve the company well in FY14 and beyond. In particular, I am confident that the investments we have made in games for next-generation consoles will put EA in a strong leadership position for many years ahead.
In offering my resignation, my goal is to allow the talented leaders at EA a clean start on FY14. I look forward to working with you in the coming weeks on an effective leadership transition. I'm extremely honored to have led this company and proud to have worked with all the great people at Electronic Arts.
Sincerely,
/s/ John Riccitiello
Update: Thanks to The Wall Street Journal, we now have a copy of the internal memo that Riccitiello sent to EA employees today. It's posted in full below.
To Everyone at EA -
I am writing with some tough news. I have resigned my position as EA's CEO. I will be around for a couple of weeks, and I hope to have the chance to say goodbye to many of you. Larry Probst will be stepping in as Executive Chairman to help smooth the transition. Larry first hired me at EA in 1997 and he was an incredible leader for the company during the 16 years he served as CEO. While he will continue to be the Chairman of the US Olympic Committee, he will also provide leadership for EA until a permanent CEO is appointed.
My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year. It currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago. And for that, I am 100 percent accountable.
Personally, I think we've never been in a better position as a company. You have made enormous progress in improving product quality. You are now generating more revenue on fewer titles by making EA's games better and bigger. You've navigated a rapidly transforming industry to create a digital business that is now approximately $1.5 billion and growing fast. The big investments you've made in creating EA's own platform are now showing solid returns. I believe EA is alone in mastering the challenges of building a platform for our games and services - a platform that will provide a more direct relationship with our consumers. You are number one in the fastest growing segment, mobile, with incredible games like The Simpsons: Tapped Out, Real Racing 3, Bejeweled, SCRABBLE and Plants v. Zombies. You have worked to put EA in a position to capture industry leadership on the next generation of consoles; and I believe two of our titles - Battlefield and FIFA - will be among the top few franchises in the entire industry. And the industry's most talented management team - Frank, Rajat, Peter, Gaby, Andrew, Patrick, Blake, Joel and Jeff - are certain to lead the company to a successful future.
I remain an incredible fan of EA and everyone who works in our world - from Stockholm to Seoul, Orlando to Edmonton, Guildford, Geneva, Cologne, Lyon, Bucharest, Montreal, Austin, Salt Lake, LA and, of course, EARS. My hope is that my travels and yours allow us the opportunity to talk more in the months and years to come.
In a few weeks, I will be leaving EA physically. But I will never leave emotionally. I am so incredibly proud of all the great things you have done, and it has been my honor to lead this team these past six years. After March, I will be cheering wildly for EA from the sidelines.
Now bring Ray Muzyka in as CEO and let him clean house.
What Riccitiello did was bold with EA, and I think it represented a real potential historic fork in how a publisher could act while feeling responsible for the relationships it forged with its partners. The fact EAs image, profits and stock price didn't improve over this period makes me feel EA will now fall into line and follow Activision-Blizzards very profitable footsteps, and I think the industry will be worse off for it.
I really thought EA and the more positive approach Riccitiello was taking would of worked. Sadly I was mistaken.
I'm not saying Riccitiello deserves the ire he receives, but the legacy he leaves behind for the EA consumers is decidedly mixed.
Edited 1 times. Last edit by Nicholas Pantazis on 19th March 2013 2:34am
On the contrary. Activision controlled Blizzard is a world innovator in always on DRM let alone real money auction houses with a difficulty curve making them mandatory at harder levels. Clever. This was one of the five pillars Kotick highlighted as core to Activision.
Activision are the poster child for DLC in their titles, all publishers besides maybe Nintendo are pushing DLC pretty hard though, however I am in agreement with Cliff Bleszinski, that this isn't a bad trend. What *is* a negative trend is producing a monthly subscription for as many titles as possible like Activision is starting to with Call of Duty Elite. This is the only reason Kotick did not produce a similar plan to "Project $10", because elite paid for services are much more profitable, and Kotick has been pretty open with that.
Plus, I am not trying to turn this into a "EA is okay, because Activision is worse". What I am now trying to correct is the negative legacy Riccitiello supposedly leaves was created due to how honest Riccitiello was when communicating EA's vision. Other publishers have been less transparent with their plans so EA gets most of the negative press. Citing EA as the leaders in always online DRM is definitely exhibit A. I do believe EA will learn from this though and be much more subversive and less honest about its plans in the future like how Activision-Blizzard has been acting while also flying below the radar for years now.
I don't blame either of them. They are businesses, their goal is to make money. I just genuinely thought you could run a large publisher in a transparent and mostly positive way and remain popular and profitable. But all it did was invite more criticism and hurt EAs bottom line.
Edited 3 times. Last edit by Shane Sweeney on 19th March 2013 4:35am
If not then surely it is Peter Moore's.
Also if we're playing the blame game, then technically should we not blame ArenaNet and GuildWars 2 for the $60 + MTX combo? Just a thought ;)
@Shane: Spot on
Edited 2 times. Last edit by Adam Jordan on 19th March 2013 10:48am
Whilst it's all well-and-fine - and honourable - to say "I am 100 percent accountable", it's not entirely true. The massive PR storm of Sim City isn't all Riccitiello's fault, for example. Nor was the relative failure of the Star Wars MMO. Nor is Origin being... not so great. Now, obviously, yes, he could've positivly affected these things more. But, from the outside, EA comes across as a publisher beholden to Financial Results, and this is where Riccitiello's exit could be a blessing in disguise. Show the door to the people who actually make poor business decisions - Dragon Age 2 being hurried out for the Financial Year 2010/11; EA removing most games from Steam to try and gain more DLC sales - and focus more on the consumer. Look at the release date and state of Sim City, for instance. Doesn't it look like it was rushed out for this Financial Quarter? I mean, it's fairly damn obvious to me that it was. And look where it's gotten EA - more negative press than you could shake a stick at, which in turn negatively affects sales. Who, ultimately, was responsible for releasing it the way it was? Who saw that game running and thought "Let's release it now"? I'll eat my words if it was Riccitiello. The same with Origin. It's still lagging behind Steam in quality and number of games. Good god, hire Jason Holtman to consult on Origin - turn it into a true competitor to Steam, instead of something that turns people off buying games from EA.
I honestly do think EA need to reappraise their priorities. Not in their business models - if they can get F2P work, go them - but in how they approach the customer, which is the source of all the income. So many decisions - and so many press releases - speak to a arrogance towards the consumer, and that can only cost money. The people who make those decisions need to do what Riccitiello has done, or be fired. Sim City has sold 1.1m in two weeks. How many of those buyers are getting a free game - that costs actual money - because of EA's lack of vision when it comes to the consumer. (And, yes, I said vision).
Edited 1 times. Last edit by Morville O'Driscoll on 19th March 2013 6:45pm
But he is Just doing what CEOs do taking the fall and letting the company appear to be moving on.
There is no reason it should be WRONG for PC, even as an open platform, to have a closed and unified games service. Personally, I don't give nearly enough craps to deal with Origin to play EA games. I don't have any problem's with Steam's near-monopoly on PC gaming, because while of course Valve is out to make money they are also very consumer facing, running a business more akin to Amazon than EA's, well... Apple.
Are you advocating that CD Projekt should discontinue GOG (formally Good Old Games now a competitor to Steam) because we should just agree Valve Corporation Inc should take a privileged spot in the industry with a guaranteed ~15% cut of every video game sale made? Should Direct2Drive, Green Man Gaming all be shut down and Amazon be legislated out of the industry?
Where is your outrage that Blizzard games are exclusive to Battle.NET? I see no DIablo III on Steam? Activision will no doubt *eventually* start to move it's titles to a Battle.NET framework one day. It's inevitable to see a series of services and its even more inevitable for certain services to have "timed exclusive releases" (Amazon already does on Android platforms) let alone permanent exclusives especially when they are run with a lot of custom built online services. Your annoyed that EA is the first to *finally* get into the online space? Sure a decade late, but faster than almost all other players.
Valve started a long over due race to build an online game distribution platform, most of the industry was unable to enter such a race as Wallmart and other physical stores were strong arming publishers. What happens though in 10-20 years when the giant mega media companies finally decide to own the entire games industry like they have with film, music, books and television (they already do with Vivendi owned Activision and Sony). Valve will be bought by Warner, GE, Disney etc, will you trust them to be responsible for the entire industry? What we are building and working on now is setting up the frame work for how the video games industry will work online and it is insane to assume or even want only one single player in the market.
I am not here to hate on anyone, but don't forget your history, it has only been a decade since Gabe Newell was acting a power hungry brat all over town, maybe he was going through a difficult time but these were the facts. Going around playing mind games with international developers forcing them to pay their way to America only to be refused a meeting, or letting ATI rent out Alcatraz island for a launch event for Half-Life 2 (as it was being bundled with an ATI card) even though the title was delayed giving Gabe a free platform to promote Steam instead. Don't forget all the companies that Valve have caused the collapse of such as RPG company Troika going bankrupt as Vampire the Masquerade Bloodlines sat on the bench unable to launch due to the Source engine contracts preventing its release until the now 18 month delay of Half-Life 2 hit the shelves.
The secretive non disclosure friendly Valve, good or bad, can't be trusted. No single single company or entity should have that much power. And even if you trust them now, no entity stays the same for long.
Edited 2 times. Last edit by Shane Sweeney on 20th March 2013 12:43am
What's the difference between Diablo III and Simcity?
As for micro-transactions, what about World of Warcraft? Blizzard sell the game at retail, sell expansion packs for it every couple of years, charge you a monthly fee to play it past a certain point, sell premium pets and mounts for cash, and charge you for services like switching servers.
I'm not saying that's a bad thing. This is a business, after all. We all need to be paid. And enough people are happy enough to pay for those things that WoW is probably one of the world's most profitable games and still has an audience of several million people after a decade.
People complain about monopolies, but are somewhat ignorant of the wider issue. Monopolies can be both good and bad. What is needed is to look at things from a consumer perspective, critically.
/Off-topic