Smaller companies may not survive next hardware transition, says EA chief exec

Electronic Arts' chief executive Larry Probst has told GamesIndustry.biz that he believes that some of the company's competitors will not manage the next console hardware transition - leading to significant industry consolidation.

However, Probst claimed that the steep learning curve for the new technology will not present much difficulty to EA, and he remains confident that his company will emerge from the transition with an even larger share of the growing interactive entertainment market.

"Our technologists tell me that this is a more formidable technology transition than the last one," Probst told gi.biz in an exclusive interview, "but I think that plays to our strengths. I'm sure that we will successfully navigate that transition."

"I'm not so sure about some of our competitors and some of the smaller companies that aren't as well resourced in the industry," he continued, sounding a warning note over the coming transition period - which will once again raise the bar in terms of the technology and development resources required to build videogames.

"I think you're going to see consolidation in the next three to five years, where there are fewer competitors to us in five years than there are today," Probst explained. "And I think the next generation technology transition is going to drive some of that because I think it's going to be very difficult and very challenging for some of those companies to make that transition successfully."

However, Probst doesn't believe that this consolidation is necessarily an unhealthy thing for the industry.

"I don't think it'd be a good thing if there was just a handful of companies in the industry - but if one or two or three companies aren't here in five years from now, I don't think that's a terrible thing," he said.

He also predicted that the industry would continue to consolidate to the point where only a few major companies remained. "I can imagine in the longer term a movie industry model were there are seven or eight companies that matter," he told us.

Our full interview with Larry Probst - including his take on the new handheld platforms, Xbox Live, Nintendo's place in the industry and his ambitions for the future of Electronic Arts - will be available on GamesIndustry.biz tomorrow.