Riccitiello's presentation focused heavily on the profit potential of EA's existing franchise and upcoming titles. "What we're talking about with Electronic Arts is focusing and building the most profitable possible business out of (our) collection of properties," he explained, before going through a list of what the publisher is bringing to the table in fiscal year 2011, which starts on April 1st, 2010.

The recently-announced Medal of Honor and Dead Space 2 made the list of course, as did Crysis 2 and Skate 3, with Riccitiello expressing pride in taking the skate boarding video game segment from Activision's Tony Hawk franchise. EA Sports figured heavily in the list as well, with FIFA, Madden, and Tiger Woods golf joined by the mixed martial arts title MMA.

Big plans for existing franchises was another running theme during the presentation. Listing off games, Riccitiello included The Sims franchise, hinting at big announcements coming up in regards to bringing the franchise multiplatform. He also indicated big plans for EA Sports Active and the Need for Speed franchise, with new games coming from both franchises.

Some of the games listed weren't technically games at all. Paid downloadable content for Battlefield: Bad Company 2, Mass Effect 2, and Dragon Age: Origins were listed alongside the full titles, with the two BioWare RPGs inspiring the hope that one day, DLC sales would generate more income than the games themselves. "These are ongoing businesses. It wouldn't surprise me over time - it probably won't happen with these editions - to generate more in PDLC then in the package."

While we'll certainly see more from EA in the coming year, these would be the titles to watch. Be sure to bookmark this article, so if anything on the list tanks you can point and laugh.

Speaking with the Nightly Business Report, EA CEO John Riccitiello revealed that in this calendar year alone, "we've hosted over a billion online games, a billion online games. That's a staggering number."

Damn straight that's a staggering number.

[Nightly Business Report]

How?

By selling people who grab games digitally — without paying for them — post-release downloadable content.

"They can steal the disc, but they can't steal the DLC," he said.

The opportunity to discuss how one of the world's largest publishers might see software-pirating gamers as a potential revenue source emerged last week when Kotaku sat with Riccitiello for a wide-ranging interview about EA's games and future.

Riccitiello spoke energetically about the popularity of the company's downloadable content add-ons. Some of EA's DLC has been free, such as the launch-day offerings of a new town in The Sims 3 or a nudity option in The Saboteur. Others, such as the paid DLC for November's Dragon Age Origins, generated a million downloads in its first week, according to an EA spokesperson.

"The consumer seems to really like this idea that there is extra stuff," Riccitiello said, while expressing surprise that some of this DLC is downloaded so soon after people start playing the games. "The consumer wants more, and when you give them more or sell them more it seems to be extremely well received."

Some of the people buying this DLC are not people who bought the game in a new shrink-wrapped box. That could be seen as a dark cloud, a mass of gamers who play a game without contributing a penny to EA. But around that cloud Riccitiello identified a silver lining: "There's a sizable pirate market and a sizable second sale market and we want to try to generate revenue in that marketplace," he said, pointing to DLC as a way to do it.

The EA boss would prefer people bought their games, of course. "I don't think anybody should pirate anything," he said. "I believe in the artistry of the people who build [the games industry.] I profoundly believe that. And when you steal from us, you steal from them. Having said that, there's a lot of people who do." So encourage those pirates to pay for something, he figures. Riccitiello explained that EA's download services aren't perfect at distinguishing between used copies of games and pirated copies. As a result, he suggested, EA sells DLC to both communities of gamers. And that's how a pirate can turn into a paying customer.

Riccitiello also hopes some of those pirates will come around and become not just DLC purchasers, but game purchasers. He said the music industry erred in "demonizing" its consumers rather than reacting to them. He believes that EA has an obligation to make it enticing for people to play games legitimately. And he hopes that services such as EA Sports' community hub or the BioWare social site that hooks into Dragon Age will make it so alluring that it will be "increasingly less likely that people will pirate because there is so much value on the other side of the door."

Until the pirates are converted there's some DLC they can buy, if they want their game to be more fun and if they'd like to show the people who made the game a little more support.

NOTE: Several readers have commented that PC-based DLC is indeed pirated by some gamers. While this may be the case, I believe Riccitiello's statement that DLC can't be pirated may at least be accurate for console DLC (He hadn't specificed). As noted in the original story above, he hopes that post-release community and content incentivizes pirates to turn into legitimate consumers.

"We're building our games differently and we are building fewer of them," EA CEO John Riccitiello said in his interview with the site this week. He said that the publisher is declining its title count from 60-something games two years ago, to 50-something this year to about 40 next year. He said, there will be "no less emphasis on innovation. No less emphasis on quality. No fewer new IPs. But games that aren't finding a large enough audience, we're taking those resources and doubling down on larger games. That's what the market seems to want."

Riccitiello's comments echo those of his chief financial officer who recently told a group of financial analysts at a meeting that Kotaku attended that the very top games are garnering more sales than ever, making the top-20 far and away the largest hits, a shift from a few years ago when games in the top-40 could all boast grand sales figures.

The move toward fewer games is also a move toward better games, which Riccitiello believes is a deciding factor for a publisher having bigger-selling games.

"I'm a massive believer in quality and in innovation and we invest heavily in it," he said, in the midst of describing both long-term efforts to turn innovative games into blockbusters (see his discussion with Kotaku about the future of Mirror's Edge) and fundamentally changing established franchises for the modern era (see his discussion with Kotaku about Command & Conquer).

The emphasis on quality is earning EA money, Riccitiello believes. He cites an increase in EA games receiving 80-or-higher Metacritic scores from about five games two years ago to over what he expects will be 20 this year and says that coincides with higher revenues.

"So my quality is up. We're doing more original [intellectual property] than anyone else in the industry by a fairly wide margin and we're innovating sequels like we never did before. And in cases where we're on our back like with Need for Speed on quality, the quality is up some 20-odd points. So, quality and innovation, I can point to almost any corner in my business and show you where that's living. And one of the things, I'm pleased to say, in an industry that was down in the first half of this fiscal year… we were up 13% in revenue. It was the quality games that yielded more revenue."

Making fewer and fewer games could be problematic, of course. "There's a risk that if you follow this trend, you have one game when you're done. We're never going to go there. And you could end up cutting out innovation." He said that EA has games based on new intellectual properties scheduled for next year, including one from Dead Space and Dante's Inferno studio Visceral Games.

The push toward innovation in new content and sequels led Riccitiello to, of course, draws a contrast between today's EA and both the EA of old and unnamed competing publishers.

"I think a pattern EA went on and I think other companies are following right now is the trend of while you're milking your cash cows and nothing else, it's a very profitable business. While you're doing that it feels really good and [Wall] Street loves you. I think EA got into that position in the last cycle. I think other companies are in that position now. I've lived through both ends of that. And one of those reasons I spend so much time talking about quality and innovation is I don't think it's an end goal. I think it's a pursuit that doesn't stop. You will not see a year from EA where I'm not excited about two or three major intellectual properties the world has never heard of. And I won't go to Madden meetings or FIFA meetings or Need for Speed meetings without saying: What's different that totally excites me that we've never seen before? And you won't see us doing that and not asking the creative leaders in our building what excites them, because that's the beat of our business.

"I think I and others might have been lured into thinking it was something else once upon a time ago. And some people are currently hypnotized by that, who we compete with. They will learn the same lessons.

"This industry is ultimately a small group of people with a creative idea that are allowed to express that idea through video game software in a way that is high art or, sometimes high and crass exploitation that can be fun. But it's some combination of those things."

EA recently announced that it has cut a third of the projects in development in the studio. Riccitiello declined to describe any of them to Kotaku, but that cutting seems consistent with the better, fewer games philosophy which now seems to guide one of the biggest gaming publishers in the world.

Timing is never good for an action that lays off 200 employees and shutters a studio's offices. The Pandemic move shifts the brand into EA's Los Angeles office and retains only key senior employees.

But this timing was made all the more awkward last month due to the pending release of Pandemic's next game, The Saboteur, next week, as well as the fact that Pandemic was purchased, along with BioWare by Riccitiello's EA just two years ago for over $600 million. The studios were bought from Elevation Partners, an investment group Riccitiello had been a part of prior to returning to EA as its CEO.

So what happened?

Riccitiello focused on two factors for the shuttering of the studio's offices: Location and a surging move toward a digital games marketplace.

The EA boss described California as a "bloody expensive" place to employ workers, saying it costs the company two to three times more to employ developers in that state than it does in Montreal, the U.K., eastern Europe or China, all regions where EA has developers and artists at work. He blamed a combination of recent regulatory changes in California that he says are affecting all technology and entertainment companies as well as tax incentives in places like Montreal that subsidize publisher costs.

So, Kotaku asked, mindful that some recent Pandemic games, such as its Lord of the Rings title were not critically well-received, the studio's biggest fault was location, not game quality?

Putting it in the larger context of "facility consolidation," Riccitiello maintained that location was a significant factor. He expressed his sympathies for those who lost their jobs, but said it was nonetheless inconceivable that a business could justify, as he said was the case with Pandemic and EA LA, two development offices, located within 10 miles of each other, both two-thirds full in part because the offices were outsourcing work to the aforementioned regions.

"For good or for bad, we are taking down headcount in California because it is really expensive," he said.

But, Kotaku asked, wouldn't EA have known about some of these hazards just two years ago when it purchased Pandemic?

"The shift toward fewer titles and the acceleration towards digital is moving faster [than expected]," Riccitiello said. He expects digital gaming — everything from dowlnoaded titles to iphone to Facebook games to browser and micro-transaction games — to account for more than half of the game industry's revenue as soon as next year. "In a world that used to be all PC, then used to be all console, now it's neither. It's not a packaged goods business any more."

The broader context, Riccitiello said, is that EA is moving toward making fewer boxed games and more digitally-distributed ones, a shift for which he does not seem to think an independently-located Pandemic was ideal.

Pandemic as a brand and as a talent pool is not done, Riccitiello said. "We know the consumer likes the Mercenaries intellectual property, the Pandemic property, some of the key designers and their insights," he said, noting the recently-announced development of Mercs Inc. as a Pandemic-branded game through EA LA. "We're hoping they're going to want Saboteur. I think they will. Then we'll probably sequel that too. And I don't know if your readers will know whether we kept the lease in Westwood."

I noted that some of our readers would, as some had tipped us off to the changes at Pandemic.

"On the individual basis, like with this particular reader of yours, I feel sorry for them," he said. "One of the things I talk to with key people at Pandemic, EALA and [EA-run Dead Space development studio] Visceral [Games] — there's good and bad… If you're a capable art director, development director, game designer or producer you can multi-task and have a bigger job than you've ever had before, but you've got to have the skill of managing teams that are physically not in your neighborhood. You can get more done than you've ever done before."

Pandemic's last game developed out of its own offices, The Saboteur, ships next week.

During Kotaku's interview this week with EA CEO John Riccitiello we turned to recent news that hallowed PC real-time-strategy series Command & Conquer would be moving toward a digital model rather than a disc-based one after its next release. The series would be overseen by Might and Magic creator John Van Caneghem, who recently joined EA.

News of the transition was sending fears of a Facebook-ized, watered-down C&C among some series fans. But while not detailing exactly what the digital edition of the franchise would be like, Riccitiello was happy to explain to Kotaku the reason for the seemingly dramatic shift.

"[Van Ceneghem] and I have a shared vision that the RTS category is due for fundamental innovation and not just cooler graphics," Riccitiello said. "We've gotten to the point where you can see the particles around individual grenade explosions inside rooms where windows fall apart. That was never what made RTS good. That was just sort of eye candy on top of a very traditional game mechanic. From when Red Alert and Starcraft sort of defined the genre, it hasn't moved."

Riccitiello said he didn't want to be seen as designing the game in front of Kotaku — he's not a game designer he acknowledged — but he did offer some hints, saying. "I'm a believer that the RTS sector is more open to fundamental innovation at a metagame level than almost any genre."

Referencing EA's newly-acquired Facebook games developer Playfish, he added: "I actually think that some of what Playfish does, in terms of iterating games on a weekly basis, Some of what Facebook does, in terms of letting you collectively experience things, have not been stitched together by the game industry in terms of lessons learned there. You start applying that thinking to a C&C franchise you get something pretty special."

Riccitiello is not the first — and won't be the last — Kotaku interviewee who brings up the old saw that graphics aren't everything. But you can sometimes judge the depth of such a comment by the context in which it's provided. In the midst of talking about C&C, here's what Riccitiello said about graphical improvements and their relevance to game development and the notion of what constitutes "fundamental innovation":

"I grew up in the industry at a time when eye candy was the fundamental innovation. 1999 saw the first mass-sale of 3D games. Suddenly, you can do 3D when everything else was splines and isometric and all that stuff. We had three or four years where, ok, it was about eye candy. If all you had [before then] was 2d and scrollers, it lit us all up. And then we learned how to make 3D environments that were fun and interesting and different.

"I think now we're all at a place where we have high-definition TVs. We have PCs with staggering monitors. Everyone's mastered 3D. By and large we're choosing between 30 and 60 frames a second depending on how good we want the environment to be vs. how fluid we want. Clearly in the next set of processors we're going to get to both.

"But I could ask the question, who cares? To be honest with you, yes I do like watching sports in high def but it's not really more fun. I just like it because I spent six grand on my TV and I want a return on my investment. But it doesn't make the experience any better. And so you have to innovate in different ways."

So graphics as "fundamental innovation" in the RTS genre? In Command & Conquer? Not anymore, according to Riccitiello.

Time for something different. Something, he admitted, build on a path blazed by massively-multiplayer online games, connecting more players and doing it outside a fantasy universe.

Sounds like Command & Conquer has its marching orders.

"We're still working through things like how to best deal with Mirror's Edge 2," he said during a Wednesday morning interview in New York. "There are some things we learned about that [first] game. It was, I think, a massively innovative product. To be honest with you, I think it's a game that deserves to come back."

Riccitiello spent much of his interview with Kotaku affirming that his stated commitments to game quality and innovation made in 2008 were not shaken by relatively light holiday sales of original EA games such as Dead Space and Mirror's Edge last year. He considers both games, particuarly Dead Space, having set good foundations.

He also pointed to the company's 13% rise in revenues this year and said that it was directly attributable to efforts regarding quality and innovation.

Riccitiello is a gaming executive who believes not just in sequels — he was already saying, on the eve of EA's newest game, The Saboteur, that he's "hopeful for a sequel" — but is equally vocal about innovation and how the two so often go together.

Everything from recently improved EA FIFA games to some loved blockbusters of old, such as Grand Theft Auto IV, prove that successful sequels can and should house innovation. But, Riccitiello said, sometimes the sales success for an innovative game doesn't occur until a sequel or two, more polished than the predecessors, is released.

"Innovation doesn't mean it all works the first time," he said. "If it did everyone would do it."

And that kind of talk brought him back to Mirror's Edge and its future. He got specific about design decisions relevant to the original team at Mirror's Edge DICE and whoever is on the case — he didn't specify DICE or otherwise — who are pondering a sequel:

"I think Mirror's Edge was a fascinatingly original world.Fascinatingly original art direction. Music and sound design was great. I think the gameplay mechanic was a blast, but was intermittent and the levels didn't work. You found yourself scratching at walls at times, looking for what to do. Sometimes you had a roll going, downhill, slide, jump, slide, jump and then you just got stopped. It sort of got in the way of the fun.

"It was like we couldn't quite decide if we were building Portal or a runner. And I don't think the consumer was ready to switch it up quite that way. You could say it was a sharp and great innovation. I believe that it was. You have to figure out what to do from here if you want it to be a five million seller vs. a one-million unit seller.

"I've had several very lively debates with the dev team. And they are working on it. But there's a couple of different directions you could go.

"You could say: This thing needs to be more traditional. It's first-person game. There's a lot of successful FPS products out there that do really well. We could move in that direction.

"Or [you could say]: This was never about guns. It was about its stark originality. Maybe we can back away from some of those [older] things… and emphasize the smooth play and puzzles and move it toward, if you will, a Portal.

"And they're both valid. Innovation is a lot of times about getting so far, stepping back, assessing and then moving forward. And that's what I'm proud is happening at EA every day."

Potential fans of Mirror's Edge 2, you see the parameters of the design debate. Surely, you have some thoughts.

"I'm not saying it's going to happen tomorrow, but in the way that Activision sort of alternates sequels of Modern Warfare and Call of Duty and owns the leadership position in FPS [first-person-shooter], between Medal of Honor and Battlefield, I want it back," EA boss John Riccitiello said in a morning interview in New York. "And we're going to get there with innovation and quality."

EA's Medal Of Honor used to be the leading brand in military first-person shooters. Activision's rival brand, Call of Duty surpassed it and has now spawned a Modern Warfare 2 that sold nearly five million copies in its first day of release.

It's no wonder Riccitiello wants to turn that around. He thinks his franchises can get there.

The EA CEO didn't detail the strategy for the Medal of Honor series, which moves to modern Afghanistan after a legacy of World War II releases, but he did enthuse about the prospects of Battlefield Bad Company 2, the March console and PC shooter also coming from EA and its development studio DICE. (Read Kotaku's recent preview of the game.)

"The first [Bad Company] did very well in its first outing," he said. "The next one is a heck of a lot better and it looks like a worthy competitor to Modern Warfare."

Not only can the game compete, said Riccitiello, but he expects it to do one better than publisher Activision and development studio Infinity Ward's latest Modern Warfare game.

"We think we've got an advantage over Modern Warfare 2 with our multiplayer," he said. "The guys at DICE do that really, really well."

What kind of advantage could EA have, given MW2's legacy of fans?

"Frankly, once you get past, sort of, four people on a map, I think our gameplay is better," Riccitiello answered. "That is a legacy of DICE and where they came from. The original Battlefield PC was a 16-on-16 product and they've optimized. The other thing is, I think things like vehicles and destructible environments are a fresh innovation." [Note from Kotaku: The original Battlefield on PC actually supported up to 64-player matches.]

Riccitiello continued: "I think the Infinity Ward guys are great. It's not about them being bad for us having to be great too. I'm a fan of a lot of our competitors' products. But if you've played Modern Warfare, and you've played the first one — and you've played the last Call of Duty — it's sort of starting to feel like they're making the same game again. And I personally think being able to control your vehicle as opposed to being able to ride on one [is good]. And I think there's something a little bit cool about taking a building out and getting the six guys in it. Personally, I get sort of a silly amount of pleasure out of it."

EA once had the war-game dominance. Whether they can wrest it back — in terms of quality, if not immediately in sales — will be seen next year.

According to an internal communication intercepted by Bloomberg, Riccitiello appears disappointed that "one of our highest-rated and best-marketed ‘Madden' titles in years is facing strong headwinds" in its debut month. The NPD Group is expected to release its August sales figure estimates later today.

Riccitiello noted that Madden sales were down in line with the trend of declining game sales.

Last year, Madden NFL 09 sold well over 2.2 million copies in its first month on the market across the Xbox 360, PlayStation 3, PlayStation 2 and Wii platforms. EA Sports head honcho Peter Moore pegged sales of last year's edition at $133.5 million during its first month on the market, a 6% increase from the year prior.

As of October 30, 2008, Madden NFL 09 had sold 4.5 million copies, according to NPD data offered by EA.

While this year's edition of the football game appeared to have been doing well on the pre-order front, it's doubtful that Riccitiello would send such a memo if things were as positive on the actual sales front.

We've asked EA for comment and a copy of the memo from Riccitiello for better context, but reps did not respond to requests.

Update: The Wall Street Journal has printed Riccitiello's memo in full.

Electronic Arts Says ‘Madden,' Industry Sales Drop (Update3) [Bloomberg]

The horror!

EA's John Riccitiello received US$6,365,823 in compensation during 2008. To recap: Bobby Kotick made over $14 million, while Riccitiello only made $6 million. Only.

So if you happen to see Riccitiello out on the town, do the man a favor and buy him a round or get him a sandwich. We worry about how he manages. Oh, right. The stock options he liquidated last year for $7 million, that's how.

John Riccitiello [Forbes via Spong via GoNintendo via VG247]

Riccitiello said the next Medal of Honor game is "somewhere out there," but that executives on the call were "not yet in a position to discuss specific plans but will do so in due course." A modern day update to the series was rumored last year, when an alleged survey for Medal of Honor: Operation Anacoda made the rounds.

Operation Anacoda was purported to take the series to modern day Afghanistan.

The most recent entries in the series, Medal of Honor: Airborne and Medal of Honor: Heroes 2, were released in late 2007. If EA does intend to put EA Los Angeles developers back onto the franchise, we're guessing an announcement would happen well after the competition releases its modern warfare shooter.

The previous chapter of this Chain Interview had concluded with a question EA Sports chief Peter Moore gave me during our Wednesday afternoon interview during E3 week in L.A.

[This post is the fourth in a series that recounts the chain of questions and answers I solicited from the people I interviewed during E3. I asked each of my interviewees to ask a question of the next one. Hence: Chain Interview.]

A mirthful Moore jokingly wanted to know why his boss, EA CEO John Riccitiello could buy en electric car just to guarantee himself one of the only two reserved parking spots at EA. Moore explained to me that these two spots were at a prime location at EA headquarters, marked for electric vehicles. I'm not a car person, so Moore had to explain me what a Tesla is, the brand of fancy electric car that Riccitiello owns.

The next morning, as Riccitiello and I wrapped our interview and the CEO told me he needed to get to his next thing, I asked him to answer Moore's query.

John Riccitiello responds: "The honest truth? I'll try the truth. I'm a gigantic believer in the environment. And I'm the CE of a pretty public company. And if everybody knows that I drive one of those things, it makes them think. And that's exactly why I did it. For good or for bad, that's why I did it. And I don't mind the parking space."

With Riccitiello's answer in, I thought I had just one more question to obtain. I needed the EA CEO to give me a question for the president of Nintendo of America. The chain was about to end close to where it began, back in Nintendo's E3 meeting area a few feet away from where Shigeru Miyamoto had started things.

Some context is needed for Riccitiello's question. Earlier in the week, Nintendo had hosted its annual E3 briefing. As is typical, Fils-Aime was one of the main speakers during the presentation. What was atypical was that many of the invited guests did not get to witness the presentation in person. The press did, inside L.A.'s Club Nokia, but developers, publishers, retailers and other business people had to watch the presentation via video at the nearby Nokia Theatre.

John Riccitiello asks Nintendo of America president Reggie Fils-Aime: "Why did you show the development community the video of your presentation but the press the live presentation? What were your considerations?"

I ferried this question to Fils-Aime, who tackled it at the conclusion of our half-hour interview. It should be noted that, by answering, Fils-Aime became the first repeat participant in my Chain Interviews. He was in the first one, too.

Reggie Fils-Aime responds: "Let me give a little bit of background. As we were prepping for this year's E3 and had the objective of a venue close by, to be convenient for all of the attendees, the options were quite limited. In the end, we chose Club Nokia with the expectation that a house of about 1200 people would be appropriate. Unfortunately, between the media, business partners and guests from around the world, our total invite acceptances ended up being over 3000. So that's what created the challenge of finding a second venue in very short order, which is why we did that supplemental experience in the Theater. So, we made a tough business decision that it was most important for the media to see it live, and we also made a decision that we would not make hierarchical decisions as to whether any business partners should view it in the Club.

"Said another way, I would have loved to have John in the Club. I would have loved to have had [Activision Blizzard chairman] Bobby [Kotick] in the Club. I would love to have [Activision Blizzard CEO] Mike [Griffiths] in the Club. Where do I draw the line? So we made the business decision to have all of our retailers, all of our other business partners, all of our publishers in Nokia Theatre."

And so the chain interview would have ended, because I had no one else to interview. But I suggested to Reggie that, if he was interested, we could extend the chain from him to Kotaku's readers. "I would love to ask the readers a question," he said."

OK then…

Reggie Fils-Aime asks Kotaku's readers: "In the same vein of Team Ninja working with Nintendo to re-imagine Metroid, what development group would your readers love to see partner and collaborate with Nintendo? And on what franchise?"

I warned Reggie that he'd be raising expectations with a question like that. He laughed. "Maybe it'll give us some further options on what to consider."

Please keep the chain going, Kotaku, by answering Reggie.

We hope you've enjoyed the Chain Interview.

[This post is the fourth in a series that recounts the chain of questions and answers I solicited from the people I interviewed during E3. I asked each of my interviewees to ask a question of the next one. Hence: Chain Interview.]

Shane Kim, Microsoft corporate vice president for long-term strategy in the Xbox 360 group responds: "We're really pleased to have Take Two and EA doing well on our platform with their sports games. So sports as a gaming genre is obviously very important.

"The way I think about sports is in a broader context. Sports is something that hundreds of millions of people are super-passionate about. That's where I think the opportunity is for us to do really interesting things with Xbox 360 and Xbox Live. While you can pick a number from a hat – [there are] six or seven million people who play Madden, there are a 100 million people who watch the NFL during the season. That's a very interesting market. So can we create an experience on our platform for that a football enthusiast or a basketball enthusiast or a baseball enthusiast..."

[At this point Kim got up and directed my attention to an Xbox 360 that was running a demo of a new service which will show Premier League soccer matches in a window surrounded by an audience of Xbox Live avatars. In the margins there was room for trivia and metagame stats based on the number of fans logged in from each team.]

"That's not a soccer game," Kim added, "But that's Premier League live matches being broadcast on Xbox Live surrounded by our social entertainment experience…This is a much better video gaming experience to me than just watching the game."

Impressive, Shane, but did you have a question for your former Microsoft colleague Peter Moore, the head of EA Sports whom I would be interviewing next?

He did.

Shane Kim asks EA Sports chief Peter Moore : "What Microsoft executive do you miss the most from the Xbox group?"

I talked to Moore in one of EA's meeting areas. After our interview, I tested his wit by seeing how he could answer Kim's question.

Peter Moore responds: "Whilst that is like saying, which of my children do I love most, boy, it's got to be Master Chief. It's got to be."

I pointed out that Master Chief is not an executive. Laughing, Moore quickly replied: "He's responsible for more revenue than anybody else I left behind there."

Fair enough. And did he have a question for my next interviewee, his boss and EA CEO John Riccitiello?
He did. Some context: Most of the parking spots at EA's headquarters are not reserved. Moore told me only two are, for electric cars. So…

Peter Moore asks EA CEO John Riccitiello: "How can you live with yourself by deliberately buying an electric car so you can get a reserved parking spot at Electronic Arts?"

Please come back for the answer and the final key links in our Chain Interview.

During my interview with EA CEO John Riccitiello last week at E3, I asked if EA's two big racing brands, Need for Speed and Burnout, would be merging into one.

No, Riccitiello said, but the Burnout team at EA's Criterion Games, led by Alex Ward, are making the next Need for Speed. "Alex is one of the people in the industry I would analogize to the great filmmakers, etc.," Riccitiello said. "He is a true creative visionary. We had a great fight about what the next Need For Speed would be like. Of course, he gets to win because it's his call. It's not that I'm without an opinion on it."

That still sounded like a possible Burnout-NFS merger to me, so I pressed Riccitiello on whether Burnout would be folded into Need for Speed.

"I don't think you can fold Burnout into Need for Speed, because a lot of people like Burnout," he said. "We don't have a plan right now for a separate major launch on Burnout, because the team doing it is working on a revolutionary take on Need for Speed. I don't know, if Paramount, in addition to owning Star Trek owned Star Wars, which isn't the way it is, I don't think you'd merge them."

I pointed out that Star Trek Wars could be an interesting movie, one I'd watch. "Captain Kirk meets R2D2," laughed Riccitiello. "It'd have to be in a Spaceballs kind of way."

Riccitiello did not say when Criterion's Need for Speed would be released. Need for Speed Shift and Need for Speed Nitro, which, collectively, will be released for all major platforms this year, are up next.

As the head of EA, John Riccitiello can talk games better than most CEOs, and he can talk finances better than most gamers. Given the myriad tactics EA has been employing to sell its games and keep its games from being stolen lately, I had to talk to him last week at E3 for an update about the economics of playing.

I started with the most dramatic price-change EA may have ever made on a video game, the drop of real-time-card-battle game Battleforge from full-priced PC game when it launched in April of this year down to free in late May, supported by for-pay microtransactions. I asked him how that was working out. "Revenue's up," Riccitiello said, before gathering himself for a more thorough answer.

"I feel like you're sort of asking me how the party's going, but the party starts at nine and it's 10 to nine," he said. "I don't have enough good data to give you a great answer. I would say that, as a packaged goods product competing with high-end PC games, it's a highly-polished experience that provides really good core-gamer-satisfying experience. As an intellectual property, it has an exceptionally narrow audience of people willing to pay $49 for that. … It was a product that, if this was a model shop, it's the group that builds ships in a bottle. It's a really small audience, and we found them. Not that many of them. As a free to play game, it's got 25x the production values of anything out there that's comparable."

EA's hope is that games like Battleforge, which got solid reviews can thrive with the support of microtransactions, gamer-purchases for items and add-ons. Riccitiello said that EA's free-plus-microtransaction games, which also include the Korean version of FIFA, have shown the ability to generate more money per user than they'd get from those users had they been full-priced games. Of course, not every user buys items in those free games. But those who do, spend lots.

Free-to-play games present an economic model for games that Riccitiello said EA can't miss, despite its challenges: "There's probably no harder platform to build and deploy for than free-to-play," he said, noting that there's far less structure for that market than there is for the full-priced console gaming. "You don't know what device [gamers are] going to play on and how they're going to want to participate. If you don't refresh the community, the pricing, the assets on a daily basis, they're going to get bored. It's a complicated process, but it's good. ... I think ultimately we can't get in the way of what the consumer wants, because the consumer wants different business models."

On the other side of things, EA has shifted from the pricing experiment of offering downloadable content for the early 2008 racing game Burnout Paradise from free to for-money. The game was launched in a January and, in April, July and Septemberhad, had free DLC consisting of new multiplayer modes and the ability to race motorcycles, among other things. The game's next major update, released 13 months after the game's launch, was the first one that EA charged for: a new Party Mode re-mix of the game,. Subsequent DLC packs, including a new island which was priced just this week, have been for pay.

Riccitiello says EA learned that that roll-out plan for Burnout's DLC was not ideal. Knowing what the company knows now, he said, "that heavy-duty downloadable content would have been available shortly after launch and would have bridged the original purchase of the game to downloadable content, some free, some pay from the outset. We essentially didn't do that. We went dark on the consumer and then came back, which is probably not the smartest way of keeping the community together. Going back to that party, we sort of turned the lights off and threw them out and then we started the punch bowl. Some of them came back. And then more of them came back and then a lot of them came back. People who pirated the game came back. I think this is an area where we're all really learning."

And speaking of pirates, no matter what EA charges for a game, there will be people who want to make EA's games free-to-play on their own terms. That's the nice way of saying what happened to The Sims 3 recently. "We got pirated three weeks before the game launched," Riccitiello said. "And we were really quite nervous about it. We had a lot of telemetry about what the pirates were doing because the launcher was in the version of the disc [that got out.]… There's a lot of Chinese and Polish among those consumers. We know what they're doing. And we finally concluded that we were very happy that almost a million people downloaded the Fight Night demo in the first couple of days we put it out. And in a weird sort of way, the behavior we're starting to see based on sell-through and registration [with the Sims 3] is that we really might have just put out a really good demo."

Riccitiello laughed at his own remark, because he doesn't quite mean it seriously. I pointed out that he might not want to hold his breath waiting for all those Sims 3 pirates to convert to paying customers. "I don't think they will, based on their geography," he said. The point he was making, he said, is that EA's concern over being pirated gave way to a new, more constructive thought: "We were like, 'I think they've demoed the game.' That's probably good. We probably should have posted it on our website."

What the Sims 3 pirates got — what all consumers of The Sims 3, in fact, are getting — is a game disc that doesn't include all the game's features. Only activating the game online gives players access to the game's second town and most of the community features vital to the franchise's vibrant community of content creators and sharers. That stuff, Riccitiello said, is the kind of approach he's happier to take than to load a game up with Digital Rights Management restrictions, as EA had done with Spore. "To quote [Valve founder] Gabe Newell badly, DRM won't work unless you add value."

What this all adds up to, according to Riccitiello, is an EA that is changing its fundamental nature and the manner with which its products connect to consumers. "I often described EA as a packaged goods company," he said. "In Fiscal 10 [EA's financial year, ending March 2010], we're still a packaged goods company that connects to a lot of online services and features. But it's still a packaged good at its core. I think while we'll have big packaged goods sales in Fiscal 11 and 12 — they'll be larger in this year and continue to grow — we're going to feel more like an online services company, with a disc as an enabler of service."

That, he said, is exactly what EA executed with The Sims 3. Get the game and watch it expand. In Riccitiello's terms — well actually one he got from his daughter, he said, — the game, once launched should feel connected and "alive."

That's where all this should lead, however we all pay for it.

On the final morning of E3, I sat at a closed bar with EA CEO John Riccitiello and learned that the renowned publisher of Madden, Rock Band and dozens of other hits had a shot at being the creator of Microsoft's Project Natal controller-free motion-gaming system.

But the Xbox 360-maker beat EA to it.

"We almost invested to create a platform extension like that for some of the games we're working on," Riccitiello said. "We're very pleased, frankly, that it showed up at Microsoft, because I'd rather them pay for that. They can leverage it better, and we can build software. But I felt the market wanted that technology and I'm glad it's coming."

Riccitiello was at ease during our interview with discussing both Natal and Sony's still-unnamed motion controller that also had its debut at E3 2009. Both projects involve technology EA has already touched.

Regarding Natal: "We were looking at a camera system. In fact we were looking at the camera system they ended up going with. That technology's pretty compelling. I don't think it applies to all genres of games. We thought packing it with some things we're working on in our studios, maybe sports and music, made a lot of sense."

Regarding the Sony tech, Riccitiello said, "I've been playing with that and it is cool. And we saw that two years ago. In fact, I think we introduced Sony to it."

Riccitiello, who is proud of EA's aggressive support of the Wii motion controller — and the MotionPlus add-on that debuts this week and is packaged with, not a Nintendo game but an EA one — is a believer in motion control. He embraces it but recognizes its limits.

"My guess is that where this ends up is: motion controllers end up with half the market. And the other half still ends up with a more traditional game controller."

Traditional controllers won't become extinct, he said. "I really don't know if you're going to want to play FIFA with a motion control device. First off, a 75-minute session would be frigging tiring, jumping all over the place. And frankly the traditional controller is pretty fun. I don't know where, for example, shooters end up, but the camera and/or infra-red reception doesn't give you the precision for a shooter that you get out of a traditional controller. While you can certainly look at Natal and say, yes I can have a gun and do this with it, I don't know that that's necessarily how I want to play."

The EA CEO characterizes the Sony and Microsoft technologies as "good stuff," devices that further the Nintendo Wii's emphasis on game accessibility and the joy of motion-based play.

What Riccitiello sees coming out of this isn't just a market half-full of motion games and half of traditional-controller games. He sees a new platform split resulting from the style of motion controllers each of the big three console-makers now boast:

"The industry, up until the Wii was introduced, was [such] that all genres worked on all platforms in sort of equal balance. There wasn't much difference. My suspicion is that what we're going to find is that different platforms will work better or worse — will get marketed better or worse — for a particular enterprise.

"I could make an argument that fitness will do really well for Natal.

"I could make an argument that 3D movement in space looks like it might be best done on the new Sony system. That brings to mind any number of interesting duck and cover game mechanics that could be fun. For what it's worth I'm not sure that anybody wants to play Splinter Cell and actually duck-and-cover as much as is involved in Splinter Cell, because it'd be like doing 700 squats."

Riccitiello said EA is working with dev kits and ready to move ahead. Specifically of the familiar Natal tech, he said, "We've been working on this kind of stuff before Microsoft had a commitment to this kind of stuff… we're relatively far down the path of understanding how the technology works."

EA's ready for a lot more motion gaming, recognizing its opportunities and where to draw the line.

While Wii sales have dipped in recent months, to the point where the more expensive PlayStation 3 is overtaking the console on weekly and monthly bases, Riccitiello says that the Japanese demographic "is very different."

"I don't think we're seeing Japan as a good bellwether indicator," Riccitiello noted in an Electronic Arts earnings call, pointing to still strong sales in the United States and European territories as better examples of continued Nintendo dominance. "I'm not suggesting there can't ever be a negative or a hiccup in NA, [but] I think the Wii is still strong."

Clearly. EA has shifted much of its development priorities to Nintendo's platform.

"I'm particularly bullish on EA Sports Active," Riccitiello said of the company's more Western-style fitness product. "It has the potential to be a long established franchise for years to come."

That's a very good thing for the company, which has hitched its development wagon to the Wii. The company is planning Wii versions of many of its titles and, in some cases, leading with Wii development, according to EA CEO John Riccitiello.

It's also leading the Wii MotionPlus support parade, with EA Sports' Tiger Woods PGA Tour 10 and Grand Slam Tennis each getting hardware-software bundles. How does EA's CEO feel about that?

"It's emblematic of a strong partnership between EA and Nintendo," Riccitiello said during an earnings call.

"I don't think it's [going to have] any real material impact on our profitability," he cautioned, possibly to caution against Wii Play-caliber sales expectations, adding that Wii MotionPlus bundles "can help us on sales."

Riccitiello believes that the "new sensor is going to be in high demand," and that the currently offered EA bundles will be snapped up by consumers.

The impact of the cratering global economy on the game industry is not a bad thing necessarily says Riccitiello. It is a "blessing." Hard times means we'll see less "junk" on the store shelves.

"A lot of the riff-raff is going to go bankrupt," he said. "Our company was too big for the current economic environment," he also stated, "and it was probably slowing us down."

He also went on to talk how sequels can be innovative, the viability of PC gaming and outsourcing. More in the links below.

DICE 09: Electronic Arts' Tactics For Tough Times [Gamasutra]
EA CEO: Recession Is a 'Blessing' For Game Biz [Game|Life]
Live Blog: DICE 2009 - John Riccitiello, Electronic Arts [G4tv] [Pic]

Why? EA's John Riccitiello says that its moving to Q1 of the company's 2010 fiscal year, which runs April to June, to give The Godfather II "a better launch window and more time for longer lead marketing."

More specifically, Riccitiello voiced his concerns during today's conference call that the game would be launching into a "a very cluttered, price reduced, excess inventory channel both in North America and Europe in a heavily competitive environment."

He wants consumers to have the opportunity to get more "excited" about the title.

John and company are probably right, considering The Godfather II was, until today, planned to hit stores within spitting distance of Killzone 2, Halo Wars, Street Fighter IV and Grand Theft Auto IV: The Lost and Damned.