Posts Tagged ‘john riccitiello’

GamersFirst calls 2011: Free-to-play to become dominant play form

Thursday, December 30th, 2010

The end of the year is a great time to look back at where we’ve been, but also a time to look forward. Yesterday we talked about Screen Digest’s predictions for Move and Kinect, and today free-to-play publisher GamersFirst has published their views on the upcoming state of play. They point to the success of the free-to-play industry, but also expect the format to overtake the status quo, and become the defacto form in 2011.

Looking at a DFC report, GamersFirst points to a 35% growth rate per annum in the free-to-play sector, resulting in a massive gain in free-to-play momentum. Based on these figures, and presumably a few of their own internals., GamersFirst is predicting that the free-to-play market will overtake traditional formats in 2011. They foresee a massive onslaught of free-to-play MMO’s, but also point to the potential headache for marketers everywhere who will be competing for gamers’ attention (and hard earned dollars).

More triple A in free-to-play. As we’ve seen with Turbine, converting your AAA title to free-to-play can have significant results. Based on this strategy, GamersFirst is calling 2011 to be the year of the AAA free-to-play. They see more competitive top shelf titles to engage with players via free-to-play, and that these gamers will eventually shift away from traditional subscription and box models in favor of online and free-to-play.

Digital distribution FTW! GamersFirst acknowledges the not-so-hot sales figures coming out of the traditional retail outlets (note: the depends on who’s figures you’re looking at), they’re calling 2011 to be the year of digital distribution. Based on previous and current digital distribution figures, this one isn’t that hard to swallow, as EA’s head John Riccitiello has even gone on record stating that the company will be scaling back on boxed options.

Rise of the Niche. Rounding out their predictions, GamersFirst recognizes the growing number of small(er) and independent gaming studios popping up around the globe. To this end, they see these indy developers as a driving force in 2011. Whether it comes to mobile gaming or desktop, these developers will be pushing out deeper and deeper niche games to the point where 2011 will see “something for everyone.”

 

Former EA exec calls company’s strategy “All wrong”. EA fires back.

Monday, January 18th, 2010

Late last week, former senior EA executive Mitch Lasky, who sold his Jamdat Mobile service to the company in 2005 for $680 million called EA’s current business model “wrong”. Lasky thinks that the EA’s move away from boxed titles to monetization via virtual goods and currency isn’t the wisest move for the games giant.

mitch-laskyOn his blog, titled Bizpunk, Lasky writes, “EA is in the wrong business, with the wrong cost structure and the wrong team, but somehow they seem to think that it is going to be a smooth, two-year transition from packaged goods to digital. Think again.”

Lasky’s comments aren’t just coming out of thin air. His article is a response to EA’s CFO Eric Brown announcement that 2010 will see revenues and earnings down (again for EA) from previous years (and quarters). This news comes just on the heels of EA laying off 1500 employees, a move that company CEO John Riccitiello expects to save costs. Riccitiello also points to the layoff as a way for EA to, “cut cost in targeted areas and invest[ing] more in our biggest games and digitial businesses.”

It’s fair to say that any large corporation has it’s fans and detractors. Those that are not happy with the way things are being run have every right to express their opinion, but it’s not to often that a major corporation will address such complaints, at least not publically. It seems as though Mr. Lasky’s opinion is one that EA will publically address. Lasky published his article at 8:41 PM (presumably PST) on Monday, January 11th. It took EA three days to decide to address the issue or not, and on Friday, they made a public statement.

Before we get to this statement, it’s important to consider where things are coming from. While Lasky was at EA, he had a very valid shot at becoming the next CEO after then man-in-charge Larry Probst stepped down. Instead of Lasky, Riccitiello got the job.

EA’s response to Lasky: “Mitch needs to try de-caf. It’s never easy being turned down for a job, but most people don’t spend three years obsessing about it. Since Mitch left EA, Apple invested the iPhone, Facebook evolved to include a gaming platform and EAMobile became a world leader.” Lasky, incidentally, points out in his article that it’s exactly thee years to date since Riccitiello assumed the reigns at EA.

Lasky continues his titrate on EA by pointing out that over the course of Riccitiello’s three year reign, the company has lost over $11 billion in market value, and now has a valuation below $4 billion. He argues that this value, combined with a myriad of what he sees as internal problems at EA makes them a target for potential acquisition. Specifically Lasky sites Disney as a potential buyer, as well as Chinese online service Tencent having the ability to “swallow EA whole.”

Mitch Lasky is a partner at Benchmark Capital. Investors include online properties such as Friendster, Gaia Interactive, and Riot Games. If only by association, Lasky isn’t opposed to the model, just the way EA is going about it.

 

EA chief Riccitiello – “Digital market will be bigger than consoles next year”

Thursday, December 3rd, 2009

In a recent interview with Reuters news service, Electronic Arts CEO John Riccitiello managed to put a positive spin on the relatively dreary Thanksgiving and Christmas season games sales thus far, and managed to drop a relative industry bombshell…all within the same interview.

RiccitielloWhat makes the statement remarkable, is that Riccitiello sits as the man in charge of the world’s largest video game developer – a firm that’s traditionally focused on pricey, glossy boxed, console focused games. However, Riccitiello took the interview time to point out that projects have been afoot at EA for a while now, almost predicting the coming tide.

“A couple of years ago EA embarked on a plan to really build itself up in this new frontier. In the last quarter alone we did $138 million in revenue and if EA’s digital business were a stand alone company it would be the darling of Wall Street,” Riccitiello said.

He also went on to tell Reuters that consumers often forget about online browser based games including social games often found on Facebook, as well as MMO’s such as Warhammer Online, subscription and microtransaction based games, and claimed that this sector is now, “almost half the industry now. It’s about 40-45 percent. Next year it’s likely to have a larger share in the entire industry, bigger than all the console games put together.”

And as we’ve previously speculated – EA’s recent acquisition of social gaming company Playfish is just a further move towards dominating the digital front, as it has done successfully with the brick and mortar storefront. “It’s an on-purpose transformation,” Riccitiello says. “We’re trying to become a company that looks more like a direct-to-consumer business.”

With this announcement, it might be easy to say, ‘but wait…what about console gamers – are they being abandoned?’ Not at all according to Riccitiello. He notes that his optimism towards new models should not be seen as pessimism towards existing models. “We intend to be the number one packaged goods publisher in the world,” he says.

 

The shakeup at EA – Acquisitions and Layoffs

Tuesday, November 10th, 2009

Yesterday was a landmark day for games publishing giant EA. Speculation had run wild regarding EA’s interest in acquiring social gaming company Playfish, and yesterday they made the official announcement. Congrats EA. However, within hours of the announcement, the hammer dropped, and EA then announced that it would be laying off 1500 employees.

The Acquisition

Electronic Arts Inc. made the official announcement on November 9 that they had in fact acquired social games maker Playfish for a cash payment of $275 million. EA even went one step further to sweeten the deal but offering an additional $100 million if certain performance benchmarks were met by years end. And….EA threw another $25 million at the deal in equity based agreements with Playfish employees in order to boost company retention. A quick look at the math puts the acquisition at $400 million. $100 million short of half a billion. That’s a lot of virtual goods valuations.

Admittedly, both EA and Playfish have been quite open about the deal, and Playfish is slated to find a new home under the EA interactive umbrella – EA’s branch focused primarily on web and mobile p[rojects.

“Social gaming, with its emphasis on friends and community, is seeing tremendous growth and this is the right time to invest to strengthen our participation in this space,” Barry Cottle, Senior Vice President and General Manager of EA Interactive said. Likewise, Playfish CEO and Co-Founder Kristian Segerstrale sees the deal as a win-win situation, “EA is the ideal opportunity for us to push forward our goals to lead in the social entertainment evolution on a faster and much larger scale.”

And in related news…..the layoffs

The phrase, “Strike the hammer, while the iron is hot” would certainly come to mind in this situation. Only hours after the announcement that EA had acquired Playfish, 1500 EA employees got the pink slip.

RedwoodShoresWhile EA posted record digital revenues of $138 million for Q2 2009 (a 23 percent increase, year-over-year), they’ve decided to batten down the hatches and consolidate their operations – as on the whole the company saw a net loss of $391 million in Q2 2009.

They layoffs will effect EA Redwood Shores (the company’s headquarters), Tiburon, Mythic, and Black Box. Black Box is the home of the Need for Speed development (one that just had great success with Need for Speed:Shift), and Skate titles.

MMO studio (Warhammer Online) Mythic is likely to be hardest hit by the cuts. In a tweet posted by Katherine Pitta, the studio has cut 80 employees, or 40 percent of their workforce.

Tiburon, also effected by the cuts, is primarily responsible for EA’s sports based titles, including Madden NFL.

In light of EA’s announcement of acquiring Playfish, as well as their recent launch of a Facebook version of Spore, it’s safe to say that EA has seriously taken the plunge into social gaming. Scaling back on Racing and Skate games almost makes sense (although I’m surprised EA’s not willing to take a look at the fourth best selling game of all time and taking a social gaming whack at it).

Similarly, Mythic is primarily responsible for the subscription based MMO Warhammer Online, one that’s had it’s own ups and downs over the years. With the current gaming climate making the migration to non-subscription based fees, it’s possible to see the EA logic in this one.

And now for the sports. This one is a bit of a head scratcher. Like them or not, microtransactions within EA’s popular sporting titles have been a success for the company. With Madden NFL continuing to have a fanatical following, and the Tiger Woods golf series expanding it’s catalogue of virtual goods sales, it’s a bit surprising to see a scaling back in this venue.

“EA is performing well, with quality, sales and segment share up so far this year,” said CEO John Riccitiello. “We are making tough calls to cut cost in targeted areas and investing more in our biggest games and digital businesses.”

 

EA reports (almost) positive cash earnings – sees dramatic rise in digital distribution and virtual goods sales

Wednesday, August 5th, 2009

Electronic Arts seems to have outwitted their critics and come very close to a break even, and almost, dare I say it, a positive cash flow. Posted yesterday, EA’s Q1 financial results demonstrate a dramatic improvement in the coffers, reporting a net loss of only $6 million. Granted, 6 million clams is nothing to jump for joy over, especially when it’s $6 million in the red, but when compared to year-over-year results, it’s more than enough to get excited about. Last years Q1 results showed EA with a $135 million loss. Keeping $129 million in the bank account is a tremendous success for the Redwood, California firm.

ea_logoEA’s first fiscal quarter revenues peaked at $816 million, a dramatic 34 percent increase of 2008’s $609 million. Industry analysts had projected a meager take of only $729.5 million. EA’s digital distribution and virtual goods sales are a major contributor to the over projected earnings take, bringing in approximately $124 million, a noteable 38 percent increase year-over-year.

Putting some wind in EA’s sales (literally) are a string of successful titles and their surrounding executions. Compared to the quarter ending in June 2008, in 2009 EA was the number one publisher in both North America and Europe, with four out of the top ten games. Four of EA’s titles won Best of E3 awards: Mass Effect 2 won best RPG, Fight Night Round 4 took the Best Sports Game award, Star Wars: The Old Republic snagged Best PC Game, and Left 4 Dead won Best Online Mulitplayer. Additionally, while a perennial favorite, and old standby, the Sims franchise was a major factor in EA’s revenue streams this year. Holding the top selling retail sales title in Europe and North America for this past quarter, the Sims 3 moved 3.7 million copies out the door. And last but certainly not least, EA Sports Active helped the company garner a 21 percent market share of the wii market in North America and 13 percent in Europe. Having sold over 1.8 million copies, EA Sports Active is now the company’s best selling wii title to date.

“Good execution delivered better-than-expected financial results in the first quarter,” said John Riccitiello, Chief Executive Officer. “We are very pleased with the success of both The Sims 3 and EA SPORTS Active.”

Looking ahead, briefly discussed the upcoming Tiger Woods PGA Tour title which seeks to drive revenues from the sale of game subscriptions and virtual goods sales, as opposed to the one-time-only-buy-it-in-a-box method. With that said, and keeping EA’s open experimentations with the free-to-play/microtransactions supported model (think Battlefield Heroes) in mind, company president John Riccitiello commented in an earnings call yesterday that EA’s not 100 percent onboard. “A lot of people believe that microtransactions is going to be the lead business model in the US. I’m not so sure about that. We are seeing good microtransaction results on Pogo, but I do think there is a difference between the way that consumers buy and consume content in Asia.”

 

EA furthers its commitment to browser based gaming. Free to play Tiger Woods?

Monday, June 1st, 2009

Late last week, EA furthered their commitment and interest in providing gamers with a ‘play anywhere, anytime’ experience by announcing that the newest installment in the Tiger Woods PGA Tour experience will forego the physical disk and instead be available through a browser.  Coming this Autumn, Tiger Woods PGA TOUR Online will feature all the goodies we’ve come to expect from this leading golf simulator, and will naturally zero installation time, zippo discs, no additional controllers, and be available anywhere you’ve got a browser and an internet connection (think home, office, or even the waiting lounge at busy airports).

picture-1

“Tiger Woods PGA TOUR Online is for anyone who loves golf and is on-the-go,” said Executive Producer Mike Taramykin. “Whether you have ten minutes on your PC in the office, or hours on your Mac at home, this is a golf game that makes time for you. With Tiger Woods PGA TOUR Online, golf lovers can satisfy their golf fix anytime.”

As CEO John Riccitiello recently told the WSJ, “The console business at best appeals to 100 million people,” this entry into the browser based gaming arena could just be what EA’s in need of to combat flailing game sales, quarterly losses, and subsequent staff layoffs.  Clearly, EA now has a much larger audience in it’s sights, and establishing a reoccurring revenue stream via subscriptions, possibly for premium members,  allows the gaming giants to forecast revenues long term, as opposed to projected one time sales numbers at $60 a pop.

tiger2With regards to the free-to-play model, the idle speculation chatter has been running wild with rumors pointing to a “multi-tiered” subscription model, thereby implying that some of the games features may be tucked away for premium customers.  It’s previously been reported that EA has flirted with a free-to-play version of Tiger Woods; could this be a confirmation of said reports?  The site’s closed beta signup landing page claims that the title is “Free to play during the beta period”, and who’s to say that this might not just carry over during the initial ‘try before you buy’ period?    I could imagine the front 9 at TPC Sawgrass being free, and anything there after would require a subscription.  While there’s no direct implication that the entry level play would be free-to-play, given the time line, and some of  EA’s other (Battlefield Heroes, anyone?) browser based, play anywhere, anytime games, the concept shouldn’t necessarily be ruled out.  If we take BFH as an example, one might even be able to go so far as to say that that Callaway cap that gives you a +1 power advantage, might not go for 100 EA points, or $1 or $2.

And while the vast majority of EA’s revenues are still derived from physical game disc sales, testing the online social networking waters with a title like Tiger Woods PGA Tour could open a whole new realm of possibilities for EA.  If the company were to try login information into something like Facebook Connect, whereby players could challenge facebook friends to a round at Pebble Beach, keep track of score cards (and appropriately be able to post them to their profile for bragging rights), and even run full blown Tour challenges, well then heck, I’ve already got an opera singer buddy that I’m ready to challenge.

tiger1But can’t I do all of this already?  Yes and No.  Granted, I’m not entirely certain that I personally am ready to give up my projector, 5.1 surround sound system, and comfy couch to enjoy one of my favorite games, but the play anywhere, anytime, and against my facebook friends browser based version does have a certain appeal.  And who’s to say that we can’t have the best of both worlds?  I’ll fully admit that each year when the new disc version of Tiger or Madden becomes available, I pre-order and generally have it sitting in my PS3 a day or two after it’s release.  I’ve already pre-ordered Tiger 10, and the demo has been played many a night.  If EA’s smart (and I have no doubt they are), I’d figure that they’d be working on a fair and balanced way to cross promote the two games.  Meaning, perhaps I can carry over my golfer’s attributes from my console to the browser version, or maybe I earn some extra spending points for the console version from my long drive score at Sehshan.

I certainly don’t see EA abandoning the physical disc/console experience anytime soon, but rather, see this move towards browser based gaming as an entirely new division/direction for the company.  The way I see it, EA is taking more and more bold steps in this direction, and really leading the pack in experimentation.  Battlefield Heroes is the casual shooter experiment, and Tiger Woods is the anytime, anywhere sports simulator experiment.  Both are being used as measuring sticks, and will determine the amount of resources that will be dedicated to future projects/titles.  Madden 11 Online?  We’ll see…..