Electronic Arts Won't Run From Risk

Illustration for article titled Electronic Arts Won't Run From Risk

Despite the cuts, despite the layoffs, despite the economic apocalypse, Electronic Arts will continue to take chances with its upcoming games.


That was the message Electronic Arts CEO John Riccitiello delivered to the more than 9,000 employees earlier this week at the company's annual town hall meeting.

The company-wide meeting came just a day after Riccitiello walked investors through his company's last bad news of high losses and more layoffs and closures.

Officially, Riccitiello's talk was about the long haul, the tough road ahead, but he was also making it clear that despite the hard times, EA wasn't going to become a shadow of itself.

"We can take risks because we are pretty sure our blockbusters are going to generate good revenue that allow us some cushion," Jeff Brown Vice President of Communications Electronic Arts, told me. "So we're not living hand to mouth."

Companies like Electronic Arts and Activision, he said, can really afford to take on more risk than small studios.


That's good to hear. This blow to Electronic Arts' bottom line comes at a time when the publisher seemed to be entering a sort of renaissance, refocusing its efforts more on original and innovative ideas and less on sequels.

And there are still plenty of new concepts, new games hidden away inside the company that have yet to see the light of day. Like a rumors of a new mixed martial arts game or of a innovative new shooter. Those cuts, Brown says, doesn't mean they will be dead.


"At any given moment, in an operation as big as EA worldwide, there are a whole lot of people with a whole lot of ideas and they are given a bit of money to flesh them out," Brown said. "Some will work, some won't. There will be projects that will be killed no matter the economy."


Wedbush Morgan Securities analyst Michael Pachter isn't so optimistic.

Developers "can't afford to take risks," Pachter said. "If you take too many in a row you end up with no money and no franchises. Even EA got in trouble last year doing way too much. "


"The right idea is to have your core franchises and then take measured risks."

THQ, which announced this week that they would be laying off 600 people or nearly a quarter of its workforce, seems to have essentially curled back into itself, betting its future on the few new games that were nearly finished and a slew of sequels.


"It's sad," Pachter said. "It's easier to sell a (bad) Iron Man game or a 50 Cent game with the right license and it's hard to create a new Dead Space. The cost of potential failure (on a new idea) is too high."


"I think you're going to see moving forward one new game a year from a publisher, not five."

But EA's Brown says that this year's EA line-up will be just as innovative and include just as many new titles.


"We are working on Dante's Inferno, Dragon Age, things like that, new games, either announced or about to be announced," he said. "You will not be able to see a dramatic drop off original IP."

Instead what we might see is another consolidation of sorts, perhaps more independent developers signing on with Electronic Arts Partners to get their games out.


Well Played is a weekly column about the big news of the week in the gaming industry and its bigger impact on things to come. Feel free to join in the discussion.


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"Companies like Electronic Arts and Activision, he said, can really afford to take on more risk than small studios."

That's the best thing I've ever heard from any big corporation, specifically a CEO. It almost brings a tear to my eye. I kind of want... to support them now... my god what have I become?