[faith plummets]I ultimately followed Electronic Arts more closely than any other company this year. Part of this is due to their media strategy -- most publishers of their tier don't tend to do biz interviews with the games press as often. It's also because I was personally interested in the story there, as I think a lot of people were this year -- this publisher we were so accustomed to villainizing seemed, to all appearances, to be not only gaining a soul, but to be aiming to make amends.
Obviously, business is business, and I am imposing a "personal narrative," as CEO John Riccitiello said people liked to do around the EA-Take-Two saga, which I also covered quite closely.
Still, as we watched EA this year make what appeared to be a genuine attempt to raise its quality bar, diversify its portfolio with what Riccitiello called "creative risks" and talk a lot about investing in new ideas and new IP at the expense of short-term profitability, it was a heartening narrative for anyone who's a fan of games, especially alongside comments from EA's peer companies about eliminating "franchises that don’t have the potential to be exploited every year across every platform."
"I can't believe EA is actually the one to be doing things right," one of my colleagues said to me at some point during this year, probably around the time the company scored a partnership with Goichi Suda and his renowned Grasshopper Manufacture, a move that surprised everyone -- and delighted many.
"Whoever simultaneously publishes id and Valve games has my vote," a Kotaku commenter wrote on my E3 interview with Riccitiello. "EA's definitely won me back over," agreed another.
I think that everyone agrees that even if Mirror's Edge, for example, was not executed well, the effort itself was appreciated, and surprising from EA. All in all, it's a happy narrative for the company this year -- the problem is, it didn't work.
You probably already heard yesterday's news -- EA said its holiday portfolio just didn't sell as well as it needed to, and that coupled with other economic factors, like cautious retailers keeping smaller inventories, the company won't make its numbers. Analysts came down on it hard.
A kinder, more creative EA does not make money.
Now, to get profitability back up, it'll have to cull some of those creative risks from its portfolio next year and focus more on maximizing the proven hits. They plan to move further into online business models, like subscriptions and microtransactions, too, which will of course prompt the internet community to harsh on them.
There's no "close but no cigar" award in enterprise; investors don't buy stock for any other reason besides profitability, and a company is a business entity, not an identity with a moral mandate, although most, including EA, are successful at marketing themselves that way.
What's disappointing to me is that I agreed with my colleague -- DRM scandals aside, EA did seem to be doing everything "right," according to the things that gamers as a community say they value. The company's goals were inspiring, and whether or not you liked its games this year, whether or not they had design problems and whether or not they were reviewed well, that in and of itself was respectable.
And it's perplexing to me that the things we respect are not the things we reward with purchases. Of course, that's been the story of the games business for many years. We've seen excellent games go unrewarded, we've seen talented studios go bankrupt, and we've seen beloved online games close because the numbers just weren't there.
"You don't make games profitable on purpose," Riccitiello told me this year. "You make great games first, and then they are profitable."
"I think that trips up a lot of companies... even EA, at different times, when a company is seeking to make purely a profitable game. Frankly, even when EA was at its peak at the last cycle, we didn't talk a lot about profitability as a goal," Riccitiello said. Apparently, EA is going to need to start talking about it again.
Yet how do you explain the quantifiable measure that Riccitiello offered yesterday as evidence that indeed, most of them are? 17 of the company's titles scored 80 or above on Metacritic this year, as opposed to 7 of the same last year. To be fair, EA did release more games this year than last (I'm unsure off the top of my head how many more), but nonetheless -- 17 titles score over 80, and you can't score strong sales? Do we not want the things we say we want?
This means that either Metacritic is useless as a measure of quality and product desirability (if so, then what's it for?), or that consumers don't care as much about quality as EA thought they did. Theoretically, the consumer that doesn't demand technical excellence would buy on innovation instead -- but if that consumer was dominant in the market, Mirror's Edge would have done just fine.
Either way, the failure of EA's portfolio this year doesn't make a good deal of sense at face value, and what EA learns from its road back from this stumble will be educational to all of us, I'm sure. The pessimist can predict the lesson that the rest of the industry will take from this is that "new IP doesn't sell" and "gamers don't want innovation," but I hope that's not the case.
As a journalist I obviously don't professionally prefer one company over another. But as someone who loves video games, I just wish this personal narrative had come to a happy ending.
[Incidentally, those of you who leave comments on Gamasutra or anywhere else like "OWNED!" "haw haw EA" and things to that effect, please recall that, regardless of how you feel about a company, people who never did anything to you get fired when things like this happen. Grow up and show some class.]
31 comments:
We call this "The Nickelback Paradox."
I wonder if this has to do with what you were mentioning earlier -- that we, as a community that likes to think about games, etc, are not at all representative -- and the actual majority of gamers really just want more Madden.
This has to be my #1 industry-related disappointment of the year. I wonder how this would have turned out differently if Mirror's Edge and Dead Space had come out at a different time of year? Both excellent games, but I wonder if they got trampled by Gears 2, Fallout 3 et al. Especially as new IPs in one of the most cutthroat Christmas seasons gaming has ever known.
Also, thanks for going to bat for the laid off workers. 600 people trying to make an honest living losing their jobs is never a good thing. These 14-year-old forum posters just don't get it yet.
I think Chesh has the right of it: "we" don't matter, and by "we" I mean Gamers with a capital G. Those of us interested enough to read Sexy Videogameland and other gaming blogs.
Its the people who happen to play games that matter, and they just buy the same old same old.
And they don't buy a dozen games a year, so yeah, coming out when everyone is anxious for Gears of War 2 probably isn't helping...
A damned shame though.
Julian -- unfortunately it's going to be more than 600, almost certainly, as these new restructuring efforts will go beyond what they've already done.
Two things:
First, I think we need to consider further the possibility that Metacritic scores might loosely correlate to sales potential, but still aren't the greatest predictor. We see this problem with a lot of standardized metrics (and it certainly can't help that Metacritic has rabid fans gaming the system one way or the other).
Second, I wonder how much of EA's disappointing showing is just a matter of bad timing, not a matter of failed techniques.
Sure, there's always a rush of major games in time for the holidays, but this October/November saw a glut of particularly highly anticipated titles, including a sequel to one of the biggest Xbox franchises, really expensive music games, and "hardcore"-oriented games making their way from PCs into the console world (Fallout 3, Left 4 Dead, etc.).
The other major timing issue, as mentioned in this post, has to do with economic conditions. I'm curious to see how EA's performance this year stands up industry-wide. If everybody's hurting roughly the same, might that indicate that it had nothing to do with how EA in particular managed things? Still, we'd hope that there would be some payoff for being more creatively daring, not just "hurting as bad as everybody else." EA should be applauded for taking chances with new IP, but is it possible that this was just a rough year to do that?
Yeah, I never actually got where that hate for EA was from. A company... trying to make money... LET'S POST MY ANGER ON A FORUM!! It's pretty stupid. EA did come out with a pretty solid catalogue this year but I guess some people just have their head too far up their ass with the EA hating to care and just nitpick every little things about their games. EA made huge effort to grow closer to the community and I respect that. Then there's the recession too. Times are going to be hard for everyone.
Like others have already touched on, I think a big part of this phenomenon is that our little "Gamer" community that reads gaming blogs, reviews, etc on a regular basis really isn't representative of the game-buying public as a whole. Most people don't care who makes what game for what reason; for the most part they just buy the familiar, the games with the most mainstream media saturation (see Halo or Wii media blitz).
It's very similar to what you see in the largely indie-centric music bloggers' world. Critical praise for relatively small or unknown bands very rarely translates into big sales, no matter how much of an indie darling they are.
I think part of it is that EA wasn't really committed to marketing their new IP properly. I've seen ads on TV for something like NHL09, maybe the latest Need for Speed (which, let's face it, are the franchises which have been around forever and most everyone already knows about) but not a one for Mirror's Edge. There didn't seem to be much effort to get the word out on their new IP to people who don't get their game info somewhere other than the web.
The question is are how realistic were the projections to begin with? What was Boom Blox supposed to do?
Though we may be seeing a breakdown of the relationship between quality and sales. Unlike music or even movies, there has a been a strong correlation between critic approval and sales. Yes this is hard and fast other wise we'd have a Psychonauts 2 and not a 50 Cent 2. But the quality and sales link might be breaking down now as the market for games expands and we start seeing what Nintendo allowed to happen in the GBA/DS market infiltrate the Wii.
Oh, and yeah Fuck the Yankees for signing Sabathia.
Thank You.
A kinder, more creative EA does not make money.
Yes. But: we need to unpack that a bit, specifically, "making money".
In terms of making great games, EA has done very well this year; in terms of making money it has done less well. But "making money" comes down to both costs and revenue. If it cost less to be EA, they would be more profitable on the same amount of revenue.
And the kind of games they like making, if their new franchises are anything to go by - Dead Space, Mirror's Edge - are not cheap games to make. Big, next-gen blockbusters need big teams and a lot of development resource.
But that doesn't mean there aren't ways to economise. I don't know the ins and outs of EA's business practices, but the goal to me seems not to be "make more popular games next year" because they made some damn popular games this year, and of those that weren't sa popular, some were good/interesting/important nontheless. The goal really ought to be "make being EA cost less without impacting the quality and quantity of output".
I'm disappointed in some of their comments, but quietly reassured that they're not taking the new franchises out the back and shooting them. This is what taking risks in the holiday season looks like, to be honest.
So maybe it's not just about the games the made - and the games they'll make; maybe it's also about how they make them. That might be management structure; it might be as simple as altering release schedules, staggering obvious crowdpleasers - Madden, FIFA - against more edgy/niche fair like Mirror's Edge, or new franchises like Boom Blox.
I totally agree with the disappointment, but I'm going to wait to see how this all plays out in 2009. The saddest thing is likely to be the inevitable redundancies.
For what it's worth, I think you (and a number of people) are dancing around some of the bigger issues, here. It's easy to look at one or two statistics (profitability) draw a correlation between that and creative risk and go "aha! causality!" Unfortunately, that couldn't be the whole picture, and from where I'm sitting certainly doesn't seem to be even the biggest part. The list of companies that are seeing financial difficulties in the games industry right now is very large, and growing daily. The games blogs like kotaku and joystiq are regularly peppered with news items about layoffs at promising houses. To discuss an issue like this, a financial issue, without discussing the economic climate in the US and its effect on the industry as a whole is rather myopic.
This is not to say that EA's success or failure was the result of larger industry-wide trends regardless of their individual performance, of course. In fact, what bothers me most about this blog entry is that it dismisses almost off-hand the poor quality of their riskier games, as though it were a symptom of the "creative risk" problem, rather than the problem that "creative risk" was suffering from. To clarify, if Mirror's Edge had had the gameplay backbone that it's excellent concept and control mechanic required, it wouldn't have been a critical and commercial problem title. If Army of Two had had a better story and a game mechanic that functioned as tightly as Gears of War's does, it too could easily have been a bigger success. Dead Space, though excellent overall, likewise suffered from some simple gameplay issues that were harped on by reviewers and gamers alike. That games with flaws suffer in sales is a given. That no one has made a bigger deal out of this is puzzling to me.
What was EA's problem this year? Maybe it's that they took creative risks. Hollywood and the Music Industry have taught us that the vast majority of consumers in this country will spend money on terrible product marketed properly and will especially do so on tried and true franchises. It would be a mistake to underestimate the stupidity and foolishness of any consumer base.
But is that EA's problem? Did they make games that were TOO good? Obviously not, since their riskier games are getting poorer reviews than some of the season's most successful.
I think we've reached a breaking point in the industry, where we can no longer put off thinking about the perennial problem of holiday rushes. Every year it comes up, every year the big companies admit it happens and then dismiss the problem. Every year the reviewers, and especially the gamers, lament the problem of having too much material to buy at one end of the year while the rest of the time suffering from a dearth of good product. Once upon a time this was a problem you could push aside because the simple fact was that games were bought at christmas time by family members for children who asked for them. If the past few years have shown us anything, though, it's that gamers are no longer just kids waiting for video games under the tree. They're consumers in their own right making purchases for themselves, and budgeting themselves to afford what they're most interested in.
If you look at EA's lineup this year, to a game their most exciting offerings were released for this time of year. Meanwhile, kids across the country (who had been suffering from WoW fatigue for almost a year now) are launching themselves once more into Azeroth to disappear for months. And that's not even considering the considerable offerings from other smaller houses this season. To have put all of their eggs in the holiday basket as EA has, when there was such demand for good product earlier in the year (and will be again early next year) was beyond foolish. And they're not the only ones making this move, either.
We don't wait till christmas for games, anymore. Shoving product into the holiday buying time like this is hitting us in our wallets, and that will and has transformed into a hit in EA's - and other companies' - bottom line.
The problem isn't that EA did everything right. EA did ONE thing right, they diversified their titles. They did many many other things wrong, including poor QA, poor gameplay development, and poor launch timing.
These things have something in common: a failure to understand your userbase. Rather than see a group of adults looking to spend frugally in tough economic times, they saw a group of kids looking for "the next big thing" at any cost because the parents were buying. So instead of the horde of slavering fetishists for shiny new parcour gameplay, they had a userbase of cautious consumers who liked the game mechanic but didn't think the purchase was worth their dollars at a time like this.
Sorry about the comment length. My name is Adam and sometimes I get riled up.
Hi Adam, it's great to get riled up, and you're right.
I wrote at length about the extenuating economic circumstances in the Gamasutra coverage I've done around this issue, so I didn't really feel like I wanted to hammer it home here. It was ill timing for creative risks, and maybe in a fatter climate, it would have paid off.
But the games industry is still enjoying close-to-baseline performance fundamentally, and so while the macroeconomic environment does play a role, it didn't necessarily need to hinder EA from having a profitable holiday portfolio.
I'm also quite sad that this direction hasn't paid off for EA. I think the world of the new direction they were trying, and seeing it go away is a little dispiriting.
My only comfort is that I'm pretty sure the Rock Band franchise has worked very well for them, so it's likely to continue. Of course, I'm also a huge fan of DLC and microstransactions as game models, so I'm happy to hear about that as a new direction.
Still, there's a hell of a lot of good work that went unrewarded. As others have said above, what we say we want is not a strong indicator of what will be sold. We need to remember that we capital-G Gamers are a small, but overwhelmingly vocal minority compared to the game-buying public as a whole.
I wish I had a solution for that dilemma, but if we knew how to make sure that quality media was always rewarded, Firefly would still be on the air, and we wouldn't be an unending stream of Saw movies.
I have to agree with Adam. I think that the reason for EA's less than great financial performance is a combination of a number of factors.
We had all these big titles all released within such a short time frame. Add to that the state of the economy. Yes, the games industry is still enjoying close-to-baseline performance, but it's possible that consumers are less willing to take risks with their $60. So they purchase games from franchise names they are familiar with.
And to echo an even earlier commenter, did you see any advertising for Mirror's Edge? I saw ads for Dead Space and Rock Band 2, but outside of the internet I didn't see a single ad for Mirror's Edge.
I can't stand it when companies make these new, innovative games and then fail to give it the proper advertising support. I was really happy when Capcom brought Okami to the Wii, but then they didn't do anything to support it. There was no chance Okami was going to make decent sales through word-of-mouth. They were basically setting it up for failure.
The same scenario is applicable here.
well, here I am with my new job at EA, started this september, hoping for a contract extension so I can keep working.
as of now, my contract ends in 2 weeks, so you can only imagine how bad these news are to me.
"I think part of it is that EA wasn't really committed to marketing their new IP properly."
Mirror's Edge and Dead Space had extensive TV marketing campaigns. Do you watch The Daily Show? They appeared every night for at least a couple of weeks before launch.
"But the games industry is still enjoying close-to-baseline performance fundamentally, and so while the macroeconomic environment does play a role, it didn't necessarily need to hinder EA from having a profitable holiday portfolio."
I couldn't agree more. In my original comment, I had said "This is not to say that EA's success or failure was the result of larger industry-wide trends regardless of their individual performance, of course," specifically because I don't think it needed to impact their performance.
This is why I think the larger problem is EA, and other companies misreading their audience. As I said, they're piling too much material into too small a release schedule because they still seem to see the industry as supported by the parents of children, rather than by mature consumers in their own right. And I think this also helps explain the problems with Mirror's Edge, which suffers from having a shiny new mechanic at the expense of a developed storyline and gameplay backbone.
If I were to pick one or two takeaway statements from my larger original comment, they'd be "EA thinks its audience is still kids having games given to them as xmas presents when we're not," and "The games weren't financially successful because they were fundamentally flawed games, not because they were risky creatively."
All of which might have been forgivable in a healthier economic climate, of course, but all of which are problems no matter what the economy is like.
Hi,
Although the financial outcome for EA from the holidays is undeniably bad, I think I disagree with the implicit argument that this necessarily resulted from its approach to risk or innovation, as well as the assumption that it will change this approach as a result.
I go into more detail on my own site, but to sum up:
- 2/3 of the games cited positively by EA were new properties, while 2/3 of the disappointments came from franchises
- I would expect companies to cut risky properties, because risky properties are by definition likelier to fail - but also likelier to have bigger final payoffs. Risk management is required to manage these issues, but execution (not ideation) seems to be where EA failed. If it had failed earlier, and cut the projects sooner, it wouldn't face as big of a problem.
- 1 year is an awfully short time period in which to judge a "long-term strategy", and EA seems to be taking a longer view of this
Sometimes bad things just happen to good people, but that doesn't mean it's an effective strategy for the good people to become bad as a result.
I agree that this is the result of many different factors rather than a simple case of "risky/creative titles don't sell." But I do think one of the biggest factors was the saturation of titles on the market (a.k.a. the "holiday glut").
Even if EA had 17 titles with good Metacritic scores, that's still 17 titles that were competing with one another and, more importantly, with a huge number of other games. Pinning your success on the holiday season can be very risky, even more so in this current season.
It seems to me like you touched on the heart of the matter in "I Gamer" -- there is a disconnect between the enthusiast press (the people that contribute to Metacritic) and the raw numbers actually buying games.
The sad truth is that we, as enthusiasts and bloggers, are a vocal minority, a lesson EA has learned the hard way.
Of course, it's important to draw a distinction between "what people want" and "what people will pay money for". It's probably true that "we" don't always want the same thing as "them", but that's hardly the whole story. A lot of the time "they" just don't know what they want, and franchises make for comfortable purchases.
Insight and compassion like this are what I've been looking for for a long time in this community. Thanks for humanizing the game industry instead of painting it as some kind of evil conglomerate. The idea that people lost their jobs over creative risks such as Mirror's Edge really brings a damper on the whole subject. Couple this with the fact that you have a mutinous, hypocritical, schizophrenic community that at one time praises and demands innovation, but then goes and buys the next madden, and you have one of the most unpredictable markets out there. Then again, maybe Mirror's Edge is just a title that was simply at the wrong place, at the wrong time. Or maybe its as Chesh said above me, that we as gaming enthusiasts are the minority, and don't really have too much influence. Whats it they say about the minority? Something about them screaming the loudest?
There's nothing "kinder" or "more creative" about their DRM fiasco. I would happily have bought several of their new titles had they not insisted on bundling them with Computer Herpes.
@Mitch - is that because we all hate them but still they seem to be efective (in sales and big concerts)
According to Wikipedia:
Boom Blox sold 60,000 copies during its first month of availability in the United States, according to the NPD Group. EA CEO John Riccitiello says that the game met internal expectations, though certain analysts assert that they expected the game to sell more. EA revealed that Boom Blox sold over 450,000 copies during their first fiscal quarter and "continues to sell well".
It strikes me that this blogger and her readers are very sophisticated consumers of games, and that the "average gamer" is less and less like those of us who talk and write about the medium at length.
To make money, EA and other companies have to get that "average gamer."
This isn't reason to despair. We just need to look to film to see how this will play out. Hollywood has to make money, but industry is so big that it can accommodate innovative and intriguing films in the mix, along with the tired old blockbusters.
On the list of things I'd like to see that will probably never happen, one would be a cultural trust or patronage system for high-brow games and risky properties, similar to what is done for the fine arts. Symphonies and plays and art exhibitions are funded this way, rather than by investors and returns on profit, so the minority crowd that enjoys those kinds of things can find a place for them and the rest of the world can watch Epic Movie and listen to Nickelback, or whatever they listen to now.
That's not to say that large publishers like EA can't put out artful games, or that artful games can't be successful in the mainstream, but if some games are recognised as being an enriching element of culture, then there should be a way for them to be made without the pressure of satisfying a bottom line. Doing this would ensure that even a minority audience, the game connoisseur, can enjoy what might otherwise have been missed opportunities.
To his credit, Riccitello doesn't appear to be falling into the trap of making the causal link between EA's recent attempts at improving quality and the rough time they are currently having - like Geoff commented, the amount of data available (a few games over a couple of quarters) doesn't support the idea that riskier games got them in this mess. In fact, one of the reasons for trying to innovate more was due to falling sales of their core IPs. The poor sales and critical response of NFS for the last couple of years is an example of this.
I would imagine that a much bigger effect on their bottom line has been the problems with the Casual studios and lack of a Harry Potter release this year - I bet they are looking forward to next year when they can ship Half Blood Prince and Sims 3.
Making cuts across the board makes sense, but is totally crap for the EAers who have just weathered the most recent layoffs. More to cherry pick for the glut of open positions near the Guildford/UK studio though.
Wait a second here... EA is a good company now? Because their CEO spouts nonsense that their company doesn't really back up?
For instance, John R. claims that he hates DRM and then he releases DRM heavy games leading to them being the most pirated games since people started tracking it.
Or what about Dead Space and Mirror's Edge, the two games that people claim should have sold more. What if instead of working on a mess of micro transaction horse armor for Dead Space, they spent that time making the game better? What if instead of forcing Mirror's Edge to release when it did, they gave it a couple months more to get the combat system worked out and the rest of the game more fluid?
EA isn't some white knight here. They rushed games out, worked on horse armor in place of game development, and talked a lot.
Don't get me wrong, they aren't Sony or Epic Games, but they made a lot poor choices in how they diversified and tried to be a "good company".
And how long did they give it a go? About 8 months or so of them talking...
M
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