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Stockholders May Not Appreciate EA's New Creativity

Business is business. Creativity isn't always good for business, though; in fact, it usually translates to risk.

Electronic Arts CEO John Riccitiello came to the top of the company with new ideas: he wanted to develop AAA new IPs, because his goal was to focus on quality rather than quantity. And so, in following that plan, EA launched several fresh names this generation, including Mirror's Edge, Dragon Age and Dead Space. But it's not like he completely ignored the established franchises; we continue to see new Need for Speed iterations, for instance. But even so, some analysts think that Riccitiello's bold emphasis on creativity may not go over well with the stockholders, who really only care about short-term profits. In speaking to Edge about the subject at hand, video game business author and blogger Nicholas Lovell had this to say:

"My number one fear is that EA's shareholders will lose patience with John Riccitiello's strategy. He is trying to turn a supertanker. Public market shareholders are generally short-termist, and I fear that they will not have the patience to see it through."

That's one way to look at it. But even the biggest blockbuster franchises began as new IPs at some point, right? Besides, with the exception of Mirror's Edge, the other big IPs launched by EA are getting sequels. They may not have sold as much as a Call of Duty but gamers and critics have been happy with EA products as of late. Maybe we shouldn't rock the boat too much early on, and just let the quality continue to arrive... We'll see what's what at a later date. Have patience, stockholders.

Tags: ea, electronic arts, ea ceo, ea stock, game industry

10/15/2010 10:22:19 AM Ben Dutka

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Comments (26 posts)

Qubex
Friday, October 15, 2010 @ 10:46:20 AM
Reply

This typically illustrates what I hate about modern economics... this culture of boom and bust; go for short term profit, whatever the cost, and end up in a bust when companies do not have sustainable profit models with a solid product line up that have taken time to develop and mature for an ever more sophisticated gaming market.

You need good solid I.P's to carry your pipeline forward, and it may take a company like EA a few years to build them with budgets of between 20 to 60 million, depending on the size of the title and the technical challenges that may lie ahead during development. Rome wasn't build in a day.

You want a company to have a solid base and a pedigree of good products that give you modest growth year on year, with a sustainable model so you don't experience a huge boom in one year, and then a bust the next, where you have to lay off half your team to keep the company on life support...

Less greed I think would generally yield a better more stable business/working environment for all concerned... without necessarily sacrificing moderate growth for the said company and industry as a whole.

Q!

"play.experience.enjoy"

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WorldEndsWithMe
Friday, October 15, 2010 @ 1:14:42 PM

Which is why I like Sony, instead of milking the crap out of a franchise and just reskinning it and calling it a sequel, they aren't afraid to take a risk on something like Heavy Rain.

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Qubex
Saturday, October 16, 2010 @ 9:15:16 AM

Agreed World, I think generally Sony do a better job than most...

Q!

"play.experience.enjoy"

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KNG201
Friday, October 15, 2010 @ 10:48:41 AM
Reply

look what ff7 did for squaresoft/$e...it brought in alot of fans who after playing it was lookinf for anything with ss/$e on the box. that is until they took the risk of going multiplat. I say just give us gamers aaa all the time and stop trying to buy a bigger boat you greedy shareholders.

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big6
Friday, October 15, 2010 @ 11:19:06 AM
Reply

I actually own shares in EA. My patience will last as long as their fiscal year-end in Feb 2011. I'm out, if they don't bring their sales up by then.

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Underdog15
Friday, October 15, 2010 @ 11:36:34 AM

Case in point!

But it's hard to blame shareholders. Why put your very livelihood at stake if it isn't working out. It doesn't take a genius to realize that if you're losing money, you should stop losing money if able.

I like the approach EA is taking, and I know in the future I'll become more and more loyal to their products, but only if they stick to the business plan.

Unfortunately shareholders don't always realize, that a new business approach typically takes a couple years to take root.

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big6
Friday, October 15, 2010 @ 12:07:17 PM

@Wreckless
Haha... of course you don't want to sell when it's down. I'm waiting until Feb because the holiday season usually brings big sales numbers for everyone. The numbers will be crunched and made public before their fiscal year-end.
So, the gamble is on holiday sales.

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BeezleDrop
Friday, October 15, 2010 @ 11:31:29 AM
Reply

I wouldn't be too worried, they have some great games coming. Battlefield 3, Dead Space 2 and Crysis 2 to name a few. There are more games but I cannot think of many right now, I can appreciate taking chances and exploring creativity something Activision doesn't like.

Last edited by BeezleDrop on 10/15/2010 11:31:48 AM

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WorldEndsWithMe
Friday, October 15, 2010 @ 1:16:20 PM

Dragon Age 2 :)

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Jawknee
Friday, October 15, 2010 @ 12:07:50 PM
Reply

Bank Machine.

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WorldEndsWithMe
Friday, October 15, 2010 @ 1:16:50 PM

Fast Food Drive Thru

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Snaaaake
Friday, October 15, 2010 @ 12:19:44 PM
Reply

This is good for long term, at least they got more franchise supporting the company.

Activision is just lucky they got a bunch of mindless fans.

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main_event05
Friday, October 15, 2010 @ 12:34:23 PM
Reply

They do need to branch out and get some new IPs. Eventually the Need for Speed subsides and QB vision gets blurry.


EDIT: Mirrors Edge was a great game. My only issue with it was that it was WAY too short.

Last edited by main_event05 on 10/15/2010 12:35:20 PM

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Lotusflow3r
Friday, October 15, 2010 @ 12:35:33 PM
Reply

Shocking.

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Alienange
Friday, October 15, 2010 @ 12:47:57 PM
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I've been looking at EA lately and I've noticed anything BUT fresh ideas. An over the shoulder horror shooter? A modern warfare setting fps? An action game with extendable scythe in the pits of hell? A workout game? Unlimited NSF and sports games?

Nothing about EA is smelling fresh these days. Could it be the stockholders are feeling the same way?

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SvenMD
Friday, October 15, 2010 @ 2:52:56 PM

I thought you liked Dead Space and MW2?

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Hezzron
Friday, October 15, 2010 @ 4:27:28 PM

@ Alienange - Couldn't have said it better myself. Despite their games having a certain level of acceptable quality, a lot of them have been derivative.

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Alienange
Friday, October 15, 2010 @ 5:17:39 PM

@ SvenMD - I do. I'm just saying EA hasn't given us anything fresh. Their line up is a bunch of "me toos"

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WorldEndsWithMe
Friday, October 15, 2010 @ 6:43:35 PM

I don't think of Dead Space as a "me too" to anything already out there. It uses and improves upon a few standards but that's it.

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SvenMD
Friday, October 15, 2010 @ 10:42:37 PM

Yeah I don't think it's a me too either....I mean they can't create a NEW genre with every game....so as a survival/horror game goes, they did alot of new and interesting things.

Zero-G/Vacuum
Insane Weapons - ie, plasma cutter
Dismemberment (as opposed to just shooting something in the face)
Stasis
No HUD
No Pause
and Peng - I mean they invented a new drink!!!

Lots of great stuff there....did I mention I loved Dead Space? :)

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frylock25
Friday, October 15, 2010 @ 12:59:44 PM
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i thought mirrors edge 2 was in the works? did i miss that being cut? or was it never confirmed?

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WorldEndsWithMe
Friday, October 15, 2010 @ 1:25:11 PM
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I understand the frustration but no pain, no gain, no risk, no reward. Dead Space and Dragon Age are gonna be hot properties for some time to come. Mass Effect will get higher sales now that it has come to PS3, and their LBP competitor Create could capture the casual creative crowd.

It's all about patience and letting the franchises grow. Of course you all know I just hope there's room for an Inferno 2 (And it looks like there is).

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Victor321
Friday, October 15, 2010 @ 7:21:38 PM
Reply

Investors like them are a huge factor that's contributing to our world's downfall when looking at economics and business, always favouring short term profit over long term success.

I know they contribute greatly to a business's bottom line among other things, but haven't they realized that practically every industry has been hurt in some way thanks to them? I don't think investing is a bad thing, I just think millions of investors' intentions to invest today, are wrong.

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___________
Saturday, October 16, 2010 @ 1:15:50 AM
Reply

your kidding right!?
hes the savior of the company, he turned them from one of the industries worst most hated publishers to one of the best most loved!
crysis 2 and bulletstorm alone are going to sell like hotcakes!
i wish EA would do another godfather game, the first one was great and the second one was different but just as good.
shame they said were not doing anymore, was one of my favorite games.
:(

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Victor321
Saturday, October 16, 2010 @ 4:29:29 PM

I don`t think they clearly see that, as it isn`t green, if you catch my drift.

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bingshi
Tuesday, October 19, 2010 @ 9:44:01 PM
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