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The Myth of Metacritocracy

10 Years Ago This Month: EA learns a costly lesson about striving for excellence and Take-Two tells it to take a hike

The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past. So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz runs this monthly feature highlighting happenings in gaming from exactly a decade ago.

"Good Enough" is Just Great

Like any business, game publishers have always loved metrics. After all, metrics tend to be exact measurements, concrete facts that assess past performance and give them a foundation upon which future forecasts and strategies can be built. The problem is that any assessment of performance for game publishers must take into account the quality of the games they release, and quality in a creative medium is at its core a mercurial and subjective trait.

About a decade ago, many publishers were convinced they had a "good enough" way to determine quality in the form of Metacritic, a review aggregator that compiled scores from a slew of top publications (and some not-quite-as-top publications) and averaged them out into a single, all-encompassing Metascore on a scale of 1 to 100. It wasn't perfect, obviously, but it was close enough to use as a key metric, as Electronic Arts CEO John Riccitiello did 10 years ago this month when he told investors on a post-earnings conference call that he was not happy with EA's recent efforts.

Unfortunately for Riccitiello, those high Metascores didn't translate into success for EA

"While we are the third-party quality leader we are not satisfied with where we are," Riccitiello said. "We did not have any internally developed breakaway titles and no one of EA's internally developed titles reached a Metacritc rating of 90 or greater... When I came back to EA, I made a commitment to investing in quality, both because I think it's the right decision for the long-term financial health of the company and because it is what our consumers have a right to expect."

Part of that investment in quality was a willingness to delay titles in order to give them more polish, reasoning that such a strategy "will build a better consumer experience and thereby maximise our economics." Riccitiello made that statement in regards to the delays of Battlefield Bad Company and Mercenaries 2: World in Flames. While neither game came especially close to the 90 threshold he set as a goal, Riccitiello's tenure with the company was marked by numerous titles that did. In the five years following that conference call, EA released 15 games that received 90+ Metascores, including Mass Effect 2 and 3, and certain platform versions of FIFA 10, 12, and 13, Dragon Age: Origins, and Dead Space 2.

Unfortunately for Riccitiello, those high Metascores didn't translate into success for EA. During his tenure, EA's share price sank from $52 to about $19. Citing a need for accountability after falling short of the company's financial expectations, Riccitiello resigned on March 18 of 2013. The PlayStation 3 version of Mass Effect 3's Citadel downloadable content saw release less than two weeks prior to Riccitiello's departure, and remains to this day the last EA release to maintain a 90+ Metascore. The company may not put out critically acclaimed hits like it did under Riccitiello, but it has done much better business. EA shares closed yesterday's trading at $126.96, a record high for the company.

Let's contrast EA's attitude under Riccitiello with that of Activision. The week after Riccitiello emphasized EA's investment in quality, Activision's executive VP of publishing Robin Kaminsky was taking the opposite approach in her talk at the 2008 DICE Summit.

"At one time, Activision thought it was sufficient just to make great games," she said. "But a great game doesn't guarantee sales success."

Kaminsky pointed out that of the 18 titles to receive a ranking of more than 90 per cent in the previous year, seven of them sold less than a million units and two-thirds of that group were looking at lifetime sales under 2 million units.

Incidentally, here is a complete list of Activision's 90+ rated Metacritic titles in the last decade: Geometry Wars 3: Dimensions (94 Metascore, iOS, 2015), Skylanders Trap Team (90 Metascore, iOS, 2014), Call of Duty: Modern Warfare 2 (94 each for the Xbox 360 and PlayStation 3 versions, 2009). At the time of Kaminsky's presentation, Activision's shares were trading for about $13. Today they're also in record territory for the company, closing yesterday's trading at $74.13.

The Take-Two Takeover That Wasn't

Quality wasn't the only thing Riccitiello's stint as EA CEO will be remembered for. He oversaw the company's pivot to the games-as-a-service approach (even if he didn't stick around long enough to see those efforts pay off in proper), as well as a number of significant acquisitions. Under Riccitiello, EA gobbled up BioWare-Pandemic, Playfish, Chillingo, and PopCap. That's an impressive catch, but for Riccitiello's EA, Take-Two Interactive will always be "the one that got away."

In February of 2008, EA went public with an offer it made to buy Take-Two for about $2 billion, which would have represented a 64% premium on the Grand Theft Auto publisher's share price. Take-Two leadership turned the offer down, calling it "inadequate" and "opportunistic," an attempt to pick the publisher up for a discount before the launch of Grand Theft Auto IV pushes its stock price through the roof.

Take-Two said it was willing to negotiate with EA once the game was out, but EA had other ideas, taking its offer directly to shareholders in an attempted hostile takeover. Much to EA's disappointment, not enough shareholders took the company up on its offer, and the company gave up its efforts to acquire Take-Two after about eight months.

At the time EA made its offer public, Take-Two shares had been trading a little over $17. As of yesterday's close of trading, Take-Two shares were going for $126.67. For those who like to spot patterns, this is also a record high for the company.

On Second Thought...

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