Former EA executive, Mitch Lasky has published a blog in which he publicly and very definitely slams EA’s business strategy over the past few years. If you’ve got a head for business or an interest in financial affairs then the full blog is definitely worth a read but for those of us who just want the spirit of what he says I’ll try to summarise.
Basically Lasky laments not being listened to when he had meetings with former head of EA, Larry Probst. Lasky’s advice was for EA to make signicant cuts to their business overheads at that time (2007) in order to steamline the company and make them smaller and, ultimately, more profitable when the landscape of video gaming made the transition to digital distribution. Lasky goes on to state that current EA boss, John Riccitiello, has bet his whole tenure at EA on their ability to remain massively profitable through all aspects of their business whilst transitioning into the future of digital distribution.
What Lasky is saying, basically, is that EA’s business relies on three things: Their annual sports franchises (which incur massive, and growing, licensing fees year on year), their annual franchises being big hits (Need For Speed, The Sims) and their digital arms (POGO and Playfish) and distribution deals (Rock Band, Left 4 Dead). Mr. Lasky says that, from a busines perspective, only one of those three arms is still performing (the digital and distribution one).
From a business perspective, Lasky is almost certainly correct in his assesment of EA’s model but I have to wonder whether following his advice in 2007 would have meant an EA without the adventure needed to make titles like Dead Space and Mirror’s Edge. Unfortunately, those games were largely a business failure but, as a gamer, I’m glad they were made. My personal opinion, which is far less informed than either Lasky or Ricitiello (obviously), is that the ideal route for everyone is a path somewhere between what Lasky suggested (which was basically to put the studios out of business early and focus on mobile phone and facebook games) and Riccitiello’s strategy (which seems to have been to continue pouring vast amounts of money into games which end up being a bit sub-standard).
Either way, I think that EA have become one of the better publishers out there but possibly at the expense of a safe business strategy. Ultimately, without a way of making their money, EA will end up having to close more studios, lose more of their talented staff and the great original IP they started making in 2008 will not get a chance in the future because there will be nobody left to make it.