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Electronic Arts

 
Hoover's Company Profiles:

Electronic Arts Inc.

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(NASDAQ:EA)
Contact Information
Electronic Arts Inc.
209 Redwood Shores Pkwy.
Redwood City, CA 94065
CA Tel. 650-628-1500
Fax 650-628-1422

Type: Public
On the web: http://www.ea.com
 Employees: 7,600
Employee growth: (2.6%)

To armchair quarterbacks and those with a trigger finger, Electronic Arts (EA) is their Picasso. EA is a top-three global video game publisher with popular titles such as "Madden NFL", The Sims, and Need for Speed. The company also distributes third-party titles such as MTV Games' Rock Band franchise and Valve Software's Left 4 Dead. It also publishes games based on other media franchises such as Harry Potter. EA develops its games for home and portable console systems from Sony, Nintendo, and Microsoft, as well as for PCs. Its EA Interactive sells online social games via websites Pogo and Playfish, as well as mobile and Hasbro-licensed games such as Monopoly. Its products are available in more than 30 countries.

Key numbers for fiscal year ending March, 2011:
Sales: $3,589.0M
One year growth: (1.8%)
Net income: ($276.0)M

Officers:
Chairman: Lawrence F. (Larry) Probst III
CEO and Director: John S. Riccitiello
EVP and CFO: Eric F. Brown

Competitors:
Activision Blizzard
Nintendo
Sony Online Entertainment

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Gale Directory of Company Histories:

Electronic Arts Inc

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Home > Library > Business & Finance > Company Histories

Incorporated: 1982 as Electronic Arts
SIC: 7372 Prepackaged Software

Electronic Arts Inc. (EA) is one of the world's leading publishers of video and computer games software. Better known video game companies, including Sega, Nintendo, and Atari, manufacture video game players but produce games only for their proprietary equipment. Electronic Arts, on the other hand, produces software for various manufacturers' hardware, whether computers, video game consoles, or CD-ROM players, and EA has specialized in just software. EA has experienced rapid growth in a swiftly expanding world market, with earnings increasing 60 percent annually between 1989 and 1994.

Electronic Arts was founded in 1982 by three former managers of Apple Computer: William M. (Trip) Hawkins III, who was a marketing director at Apple and at age 26 became head of the new enterprise; William Bingham (Bing) Gordon, who became the company's director of marketing; and Tom Mott. Both Hawkins and Gordon earned MBAs from Stanford University. The decision was made to form a company that specialized in developing and marketing software games for home computers at a dinner with four other friends at Hawkins's home. EA started with a team of 11 people and $5 million in capital from private investors.

EA was flexible from the beginning, developing its software for whatever computer hardware was most popular at the time, usually then producing multiple versions of programs to run on different systems. EA's first product, shipped in May of 1983, was a software game for the Atari 800 game player, but shortly thereafter the market shifted to the Commodore system. EA readjusted quickly, and in October 1983 it shipped six more games for the Commodore 64 computer. In 1984 its 'Skyfox' computer game, designed for the Apple II computer, became a best-seller. Two years later EA began producing games for the new Commodore Amiga, which turned out to be a very popular computer. By 1990 EA was investing an additional 50 percent of each product's development costs to retool the software so that it could run on a different hardware system.

Games software in the early 1980s was still a very new industry, as personal computers were not yet widespread. Thus, EA took a fresh approach to designing software, modeling the development and production more on the entertainment industry than on the software industry. Instead of hiring computer programmers, EA hired software graphic arts designers and project managers it called producers. Ideas for new computer games often came from freelancers, who proposed game scenarios just as independent scriptwriters submit their scripts to Hollywood studios. If an idea was approved by an in-house committee, the project was assigned to a 'producer.' Later, more of the ideas were developed in-house, but EA continued to consider its software developers artists.

Like movie studios, EA produces many games to increase the chance of a success. Since 1984 EA has also acquired marketing rights to software packages developed by smaller outside companies through its Affiliated Labels program. EA even began contracting celebrities, especially sports stars, whose names and images were added to the software. These have included football star John Madden, basketball players Michael Jordan and Larry Bird, and chess champion Garry Kasparov. NASA's Chuck Yaeger was involved in the development of a flight simulation game.

Unlike many of its competitors, who use third-party distributors, EA took the strategic approach of establishing its own sales force. EA's salespeople sell directly to such retailers as Egghead Inc., Toys 'R' Us, Wal-Mart and Target. In addition to permitting better control over sales and inventory, use of the sales forces has also helped EA keep better track of consumer trends.

Early on EA began selling its software overseas. In 1986 $1.5 million of its $30 million in revenues were from international sales. In 1987 EA established a manufacturing facility--which became part of what is known as EA Europe--in Langley, England. EA President and CEO Hawkins had begun to spend more time exploring strategic growth plans, particularly international expansion, and in 1987 much of the day-to-day administration of the company was turned over to his newly-hired senior vice president, Kenneth Zerbe. EA went public in September of 1989 with a market capitalization of about $84 million. Sales that year were $63.5 million, and net income had shot up from $1.3 million in 1988 to $4 million in 1989.

Having developed its software to run on a variety of computers, by 1986 EA had become the leading supplier of entertainment software in the United States, but this market was limited. In the late 1980s video game cartridges, which run on special players connected to television sets, were proving to be a more lucrative industry because most consumers had television sets but not computers at home. In 1989 the video game market was estimated at $3.4 billion in sales, as compared to $250 million for floppy disk computer games. It also comprised mostly children and teenagers, rather than the young adults who used computers. This market was dominated by the Japanese company Nintendo, with its own and compatible cartridges accounting for 80 percent of 1989 U.S. video game sales. Although EA had begun producing software for some cartridge game companies, it did not develop games for Nintendo's systems. EA was unwilling to abide by Nintendo's conditions, which would have involved agreeing not to provide the same games to Nintendo's competitors, such as Sega.

EA made its major move into the video game market by gambling on an unreleased game player from Sega. EA did not merely revise, but designed entirely new games for Sega's Genesis machine, which in 1989 was the first 16-bit video game player available to the U.S. market. The 16-bit players were almost twice as fast as the existing 8-bit machines. For the Genesis player, EA worked on eight to ten projects, each costing about $250,000, for a total product development investment of $2 million to $2.5 million. EA shipped its first games for Sega's Genesis in June of 1990, although sales of the machines did not really take off until 1991. Nevertheless, a quarter of EA's 1990 sales were from games for Genesis. The success of the Genesis, in fact, was partly due to the great popularity EA's sports games. EA was soon producing about 35 percent of the games that could run on Sega's Genesis, allowing EA to get a jump on the software competition in developing games for 16-bit machines.

The successes of Genesis spurred ever higher sales for EA. EA's net revenue increased 54.8 percent from $113 million in fiscal year 1991 to $175 million in 1992, largely due to a 215 percent increase in sales of cartridge games for the Sega Genesis, which totaled $77 million in fiscal year 1992. The following year, EA's total net revenues were up another 70.4 percent to $298 million, with sales of Sega games up 117 percent to $167 million.

It was also in 1990 that EA changed its position and began making games for Nintendo's 8-bit player for the first time. Nintendo did not introduce a 16-bit machine, the Super Nintendo Entertainment System (Super NES), to the United States until June of 1991. At this time, however, Nintendo reversed its policy and began letting software developers revise games they sold to competitors to also run on Nintendo machines. Thus, EA suddenly had a broader market for the 16-bit games it had developed for Sega.

In December of 1990 Lawrence Probst, who had joined the company as vice president of sales in 1984, took over Hawkins's post as president. Six months later Probst also assumed the position of CEO, which had been held by Hawkins, who remained as chairman and leading shareholder. In 1991 EA, originally incorporated in California, was reincorporated in Delaware and became Electronic Arts Inc.

EA quickly established itself as the leading independent developer of video games for 16-bit players. In fiscal year 1992, EA's sales of software for video game cartridges overtook its sales of software on floppy disks for personal computers for the first time. The following year 56 percent of EA's worldwide revenues were from Sega format games, while 18 percent was from Super NES games.

EA capitalized on its leadership in sports games by introducing the EA SPORTS brand name in 1991. Over the years, EA had purchased licenses for team and league names and logos from the National Basketball Association, the Professional Golf Association, the National Hockey League, the National Hockey League Players Association, and the Major League Baseball Players Association. Some of EA's most popular games were 'John Madden Football,' 'NHLPA Hockey,' 'Bulls vs. Blazers and the NBA Playoffs,' 'Lakers vs. Celtics and the NBA Playoffs,' and 'PGA Tour.'

In the early 1990s EA took great strides towards further international expansion. In 1991 EA acquired Vancouver, Canada-based Distinctive Software Inc. and renamed the subsidiary Electronic Arts Canada Inc. This acquisition doubled the company's games developers to about 115 people. In September of 1992 EA formed a joint venture with Japan's Victor Musical Industries Inc. The Tokyo-based company, called Electronic Arts Victor Inc., translated and distributed EA's games for the Japanese market and several other Asian countries. During the year following the establishment of EA Victor, EA's sales in Japan increased 140 percent. EA also established a manufacturing facility in Puerto Rico in 1992. Meanwhile, EA Europe had expanded its activities beyond manufacturing to include the translation of EA titles into up to seven languages and their distribution in 31 European and Mediterranean countries. EA Europe also developed original software games itself, and European sales doubled in both 1992 and 1993 before declining in fiscal 1994. International sales accounted for about one-third of EA's revenues in 1993.

In 1992 EA acquired Origin Systems Inc., a leading computer games developer based in Austin, Texas, with net revenues of $121 million. Origin was best known for its Ultima series of fantasy role-playing games in personal computer diskette and CD-ROM formats. These story games complemented EA's offerings in action, flying and driving simulation, and strategy games. EA subsequently diversified into educational games software for children, a category also known as 'edutainment.' In December of 1992 the EA*Kids brand and division was launched to provide software for children aged 3 to 14. Learning games introduced in 1993 included 'Ping and Kooky's Cuckoo Zoo,' 'Eagle Eye Mysteries,' 'Peter Pan: A Story Painting Adventure,' and 'Scooter's Magic Castle.' EA*Kids has also created versions of its software for schools. In April of the following year EA signed an exclusive long-term licensing agreement with the Children's Television Workshop to produce interactive multimedia software featuring the Sesame Street characters. A 1994 plan to merge with Broderbund Software, which was later cancelled, would have further expanded EA's involvement in the edutainment field. Part of the reason for EA's move into educational software was the aging of the company, whose employees were having children themselves.

Although EA has usually stayed out of developing hardware for running software games, it did introduce an innovative device in 1993 called a 'Four-Way Play Adapter.' It was the first device on the market that allowed up to four players, rather than just two, to simultaneously play a competitive game on a Sega Genesis game system. EA has also devised special performance-enhancing computer chips inside game cartridges.

An even more significant contribution to hardware development was EA's leading role in establishing a joint-venture technology company, 3DO Inc. 3DO was set up to license technology to hardware developers for the next generation of video game players, the 3DO Interactive Multiplayer, which has a 32-bit RISC microprocessor and a double-speed CD-ROM drive. EA was the largest of the original shareholders of 3DO, with approximately a 20 percent share. Other participants included Time Warner Inc.'s Time Warner Enterprises unit, Matsushita Electric Industrial Co., Ltd., MCA, AT&T, and two venture capital firms. EA helped develop 3DO's system software, and Hawkins, who was the driving force behind venture, became CEO of the new company, while remaining chairman of EA. The 3DO Interactive Multiplayer permitted quality of sound and graphics that was unmatched for video games played on a television set. In 1993 EA was one of the first companies to introduce games for the 3DO format, which would hopefully become the new standard for video games.

In addition to the 3DO CD player, EA began developing more products for the PC and Macintosh CD-ROM formats. Its first CD-ROM games were introduced in 1992. With the emerging base of computers with CD-ROM drives in homes, CD-ROM software was expected to be the fastest growing category in the mid-1990s.

As equipment became more advanced, EA pursued its Hollywood model of entertainment software publishing even further, developing more sophisticated software. In the fall of 1993 EA formed its Advanced Entertainment Group, which brought together animators, musicians, photographers, writers, and film makers. Through this venture, live actors have been filmed in Hollywood sound stages, and the videotaped performances have been digitized and integrated into the software. EA also began joint projects with Colossal Pictures, creators of the MTV show Liquid Television. Advanced Entertainment Group Senior Vice President Stewart Bonn explained in a company brochure: 'We want to create a place where artists and craftsmen from various disciplines are inspired to gather and collaborate on exciting new forms and images.' The resulting multimedia software combined CD-quality digitized stereo sound, full-motion video, and 3D-modeled animation. The more creative and realistic software helped extend EA's video game market beyond children and teenagers to adults.

To create these highly sophisticated games, EA increased its already deep investment in research and development. In 1994 the company was investing 14 percent of its revenues in R&D, up from around 12 percent the previous two years. EA's innovative development techniques have included its Artist Work Station, a computerized means of efficiently designing software and adapting it for multiple platforms. EA also came up with new ways to merge computer animation and live-action video. In 1993 the company formed a special group to oversee software development for the 32-bit hardware format, involving both the creation of entirely new games and the extensive redesign of existing games. Each new game for the 32-bit machine cost over $1 million to develop due to their complexity. Even if the 3DO were not to become the standard, the 32-bit system was expected to be the next trend, as Sega and Nintendo began developing 32-bit game players. Always looking toward the future, in the mid-1990s EA had other plans in the works, including interactive movies, travel-based entertainment, and access to its software through interactive cable television.

Principal Subsidiaries

Origin Systems; Electronic Arts Puerto Rico Inc.; Electronic Arts Canada Inc.; Electronic Arts Ltd. (U.K.); Electronic Arts Pty. Ltd. (Australia); Electronic Arts GmbH (Germany); Electronic Arts S.A. (France); Electronic Arts Victor, Inc. (Japan; 65%).

Further Reading

Burstiner, Marcy, 'Game Plan Pays Off; Software Maker Plays to Win in Competitive Field,' San Francisco Business Times, May 21, 1993, p. 7A.

Carlsen, Clifford, 'Electronic Arts Hires Zerbe, Looks to Future,' San Francisco Business Times, July 27, 1987, p. 8.

Chakravarty, Subrata N., 'The Best Job in the World?' Forbes, March 28, 1994, pp. 50-51.

Grant, Linda, 'Plugging in to a New Game Plan, ' U.S. News & World Report, April 25, 1994, p. 74.

'King of the Nerds,' The Economist, July 28, 1990, pp. 58-59.

Pitta, Julie, 'Electronic Smarts,' Forbes, May 27, 1991, pp. 10-12.

------, "This Dog is Having a Big Day,' Forbes, January 22, 1990, pp. 106-107.

Shapiro, Eben, 'Jury Still Out on Video Games: Electronic Arts' Prospects Studied,' San Jose Mercury News, June 24, 1991, p. 11E.

— Heather Behn Hedden


Wikipedia on Answers.com:

Electronic Arts

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Home > Library > Miscellaneous > Wikipedia
"EA" redirects here. For other uses, see EA (disambiguation).
Electronic Arts, Inc.
Type Public company
Traded as NASDAQ: EA
NASDAQ-100 Component
S&P 500 Component
Industry Interactive entertainment
Computer and video games
Founded 1982
Founder(s) Trip Hawkins
Headquarters Redwood City, California, United States
Key people Larry Probst
(Chairman)
John Riccitiello
(CEO)
Products Battlefield series
Burnout series
Command & Conquer series
Dead Space series
Dragon Age series
FIFA series
Fight Night series
Harry Potter series
Madden NFL series
Mass Effect series
Medal of Honor series
NBA Live series
NCAA Football series
Need for Speed series
NHL series
Rock Band series
SimCity series
The Sims series
Skate series
SSX series
Revenue decrease US$3.589 billion (FY 2011)[1]
Operating income increase US$-312 million (FY 2011)[1]
Net income increase US$-276 million (FY 2011)[1]
Total assets increase US$4.928 billion (FY 2011)[1]
Total equity decrease US$2.564 billion (FY 2011)[1]
Employees 7,820 (September 2011)[2]
Website EA.com

Electronic Arts, Inc. (EA) (NASDAQ: EA)[3] is a major American developer, marketer, publisher and distributor of video games. Founded and incorporated on May 28, 1982 by Trip Hawkins, the company was a pioneer of the early home computer games industry and was notable for promoting the designers and programmers responsible for its games. It is one of the largest video game publishers in the world.

Originally, EA was a home computing game publisher. In the late 1980s, the company began developing games in-house and supported consoles by the early 1990s. EA later grew via acquisition of several successful developers. By the early 2000s, EA had become one of the world's largest third-party publishers. On May 4, 2011, EA reported $3.8 billion in revenues for the fiscal year ending March 2011, and on January 13, 2012, EA announced that it had exceeded $1 billion in digital revenue during the previous calendar year.[4] In a note to employees, EA CEO John Riccitiello called this “an incredibly important milestone” for the company.[5] EA began to move toward direct distribution of digital games and services with the acquisition of the popular online gaming site Pogo.com in 2001.[6] In 2009, EA acquired the London-based social gaming startup Playfish,[7] and in June 2011, EA launched Origin, an online service to sell downloadable games directly to consumers.[8] In July 2011, EA announced that it had acquired PopCap Games, the company behind hits such as Plants vs. Zombies and Bejeweled.[9]

EA continued its shift toward digital goods in 2012, folding its mobile-focused EA Interactive (EAi) division "into other organizations throughout the company, specifically those divisions led by EA Labels president Frank Gibeau, COO Peter Moore, and CTO Rajat Taneja, and EVP of digital Kristian Segerstrale."[10]

EA is currently the No. 1 publisher in Western markets with a 16% segment share,[11] and the second-largest social games company on Facebook. EA's rankings have been propped up by the launch of The Sims Social, which is currently the fastest-growing game on Facebook.[12]

On May 4, 2011, EA reported $3.8 billion in revenues for the fiscal year ending March 2011. On July 27, 2011, EA reported fiscal first-quarter profits had more than doubled on brisk sales of "highly-anticipated sports and shooter games".[13] EA earned $221 million, or 66 cents a share, in the three months that ended June 30. "That's up from earnings of $96 million, or 29 cents a share, in the same period a year earlier. Revenue rose 23 percent to $999 million from $815 million."[14]

EA’s earnings are marked by an ongoing difference between non-GAAP and GAAP accounting – which, for example, mandates deferrals of revenue related to services provided for online-enabled packaged goods and digital content. Consequently, EA’s quarterly reports reflect hundreds of millions of dollars which, under GAAP accounting, are deferred for a period of months – then appear in the earnings over multiple quarters subsequent to the original sale. Other companies with significant online revenues face similar issues. This can make it extremely difficult to understand the company’s GAAP profitability.

Currently, EA develops and publishes games under several labels including EA Sports titles, Madden NFL, FIFA Soccer, NHL, NCAA Football, SSX and NBA Jam. Other EA labels produce established franchises such as Battlefield, Need for Speed, The Sims, Medal of Honor, Command & Conquer, as well as newer franchises such as Dead Space, Mass Effect, Dragon Age, Army of Two and Star Wars: Knights of the Old Republic, produced in partnership with LucasArts.[15] EA also owns and operates major gaming studios in Tiburon in Orlando, Burnaby, Vancouver, Montreal and DICE in Sweden.[16]

Contents

History

1982–1991

In February 1982, Trip Hawkins arranged a meeting with Don Valentine of Sequoia Capital[17] to discuss financing his new venture, Amazin' Software. Valentine encouraged Hawkins to leave Apple Inc., in which Hawkins served as Director of Product Marketing, and allowed Hawkins use of Sequoia Capital's spare office space to start the company. On May 28, 1982, Trip Hawkins incorporated and established the company with a personal investment of an estimated US$200,000. Seven months later in December 1982, Hawkins secured US$2 million of venture capital from Sequoia Capital, Kleiner Perkins Caufield & Byers, and Sevin Rosen Funds.

Electronic Arts' original corporate logo, 1982–1999.

For more than seven months, Hawkins refined his Electronic Arts business plan. With aid from his first employee (with whom he worked in marketing at Apple), Rich Melmon, the original plan was written, mostly by Hawkins, on an Apple II in Sequoia Capital's office in August 1982. During that time, Hawkins also employed two of his former staff from Apple, Dave Evans and Pat Marriott, as producers, and a Stanford MBA classmate, Jeff Burton from Atari for international business development. The business plan was again refined in September and reissued on October 8, 1982. Between September and November, employee headcount rose to 11, including Tim Mott, Bing Gordon, David Maynard, and Steve Hayes.[citation needed] Having outgrown the office space provided by Sequoia Capital, the company relocated to a San Mateo office that overlooked the San Francisco Airport landing path. Headcount rose rapidly in 1983, including Don Daglow, Richard Hilleman, Stewart Bonn, David Gardner, and Nancy Fong.

Hawkins was determined to sell directly to buyers. Combined with the fact that Hawkins was pioneering new game brands, this made sales growth more challenging. Retailers wanted to buy known brands from existing distribution partners. Despite this, revenue was US$5 million in the first year and US$11 million the next.[citation needed] After yet more flyers were handed out, former CEO Larry Probst arrived as VP of Sales in late 1984 and helped the company sustain growth into US$18 million in its third full year. Handing out yet more flyers and teaming with the existing sales staff that included Nancy Smith, David Klein, and David Gardner, Probst built the largest sales force of any American game publisher.[citation needed] This policy of dealing directly with retailers gave EA higher margins and better market awareness, key advantages the company would leverage to leapfrog its early competitors.

In December 1986, David Gardner and Mark Lewis moved to the UK to open a European headquarters. Up until that point publishing of Electronic Arts Games, and the conversion of many of their games to compact cassette versions in Europe was handled by Ariolasoft. A small company in Wales was already called Electronic Arts, and until 1997 Electronic Arts in the UK was known legally as EOA, a name derived from its square/circle/triangle logo. The Welsh company ceased trading in 1997 and Electronic Arts acquired the rights to the name.[citation needed]

Most of the early employees of the company disliked the Amazin' Software name that Hawkins had originally chosen when he incorporated the company.[citation needed] While at Apple, Hawkins had enjoyed company offsite meetings at Pajaro Dunes and organized such a planning offsite for EA in October 1982. Following a long business day at the offsite, the dozen employees and advisers who were present agreed that they would stay up that night and see if they could agree unanimously on a new name for the company.[citation needed]

Hawkins had developed the ideas of treating software as an art form and calling the developers, "software artists". Hence, the latest version of the business plan had suggested the name "SoftArt". However, Hawkins and Melmon knew the founders of Software Arts, the creators of VisiCalc, and thought their permission should be obtained. Dan Bricklin did not want the name used because it sounded too similar (perhaps "confusingly similar") to Software Arts. However, the name concept was liked by all the attendees. Hawkins had also recently read a best-selling book about the film studio, United Artists, and liked the reputation that company had created. Early advisers Andy Berlin, Jeff Goodby, and Rich Silverstein (who would soon form their own ad agency Goodby, Silverstein & Partners) were also fans of that approach, and the discussion was led by Hawkins and Berlin. Hawkins said everyone had a vote but they would lose it if they went to sleep.[citation needed]

Hawkins liked the word "electronic", and various employees had considered the phrases "Electronic Artists" and "Electronic Arts". Other candidates included Gordon's suggestion of "Blue Light", a reference from the Disney film Tron.[citation needed] When Gordon and others pushed for "Electronic Artists", in tribute to the film company United Artists, Steve Hayes opposed, saying, "We're not the artists, they are..." meaning that the developers whose games EA would publish were the artists. This statement from Hayes immediately tilted sentiment towards Electronic Arts and the name was unanimously endorsed.[citation needed]

Pinball Construction Set was an enormous hit for EA. The original version for the Apple II by Bill Budge was quickly ported to other popular home systems of the era.

A novel approach to giving credit to its developers was one of EA's trademarks in its early days. This characterization was even further reinforced with EA's packaging of most of their games in the "album cover" pioneered by EA because Hawkins thought that a record album style would both save costs and convey an artistic feeling.[18] EA routinely referred to their developers as "artists" and gave them photo credits in their games and numerous full-page magazine ads. EA also shared lavish profits with their developers, which added to their industry appeal. Because of this novel treatment, EA was able to easily attract the best developers.[citation needed] The square "album cover" boxes (such as the covers for 1983's M.U.L.E. and Pinball Construction Set) were a popular packaging concept by Electronic Arts, which wanted to represent their developers as "rock stars".[18] After a very successful run on home computers, Electronic Arts later branched out and produced console games as well. Eventually, Trip Hawkins left EA to found the now defunct 3DO Company.

1991–2007

EA headquarters in Redwood Shores.

EA is currently headquartered in the Redwood Shores neighborhood of Redwood City, California. Following the retirement and departure of Trip Hawkins, Larry Probst took over the reins.

In 2004, EA made a multimillion dollar donation to fund the development of game production curriculum at the University of Southern California's Interactive Media Division. On February 1, 2006, Electronic Arts announced that it would cut worldwide staff by 5 percent.[19] On June 20, 2006 EA purchased Mythic Entertainment, who are finished making Warhammer Online.[20]

After Sega's ESPN NFL 2K5 successfully grabbed market share away from EA's dominant Madden NFL series during the 2004 holiday season, EA responded by making several large sports licensing deals which include an exclusive agreement with the NFL, and in January 2005, a 15-year deal with ESPN.[21] The ESPN deal gave EA exclusive first rights to all ESPN content for sports simulation games. On April 11, 2005, EA announced a similar, 6-year licensing deal with the Collegiate Licensing Company (CLC) for exclusive rights to college football content.[22]

Much of EA's success, both in terms of sales and with regards to its stock market valuation, is due to its strategy of platform-agnostic development and the creation of strong multi-year franchises. EA was the first publisher to release yearly updates of its sports franchises—Madden, FIFA, NHL, NBA Live, Tiger Woods, etc.—with updated player rosters and small graphical and gameplay tweaks.[23] Recognizing the risk of franchise fatigue among consumers, EA announced in 2006 that it would concentrate more of its effort on creating new original intellectual property.[24]

In September 2006, Nokia and EA announced a partnership in which EA becomes an exclusive major supplier of mobile games to Nokia mobile devices through the Nokia Content Discoverer. In the beginning Nokia customers will be able to download seven EA titles, Tetris, Tetris Mania, The Sims 2, Doom, FIFA 06, Tiger Woods PGA Tour 06 and FIFA Streets 2 the holiday season in 2006. Rick Simonson is the executive vice president and director of Nokia and starting from 2006 is affiliated with John Riccitiello and are partners.[25]

2007

In February 2007, Probst stepped down from the CEO job while remaining on the Board of Directors. His handpicked successor is John Riccitiello, who had worked at EA for several years previously, departed for a while, and then returned.[citation needed] Riccitiello previously worked for Elevation Partners, Sara Lee and Pepsico. In June 2007, new CEO John Riccitiello announced that EA would reorganize itself into four labels, each with responsibility for its own product development and publishing (the city-state model). The goal of the reorganization was to empower the labels to operate more autonomously, streamline decision-making, increase creativity and quality, and get games into the market faster.[26] This reorganization came after years of consolidation and acquisition by EA of smaller studios, which some in the industry blamed for a decrease in quality of EA titles. In 2008, at the DICE Summit, Riccitiello called the earlier approach of "buy and assimilate" a mistake, often stripping smaller studios of its creative talent. Riccitiello said that the city-state model allows independent developers to remain autonomous to a large extent, and cited Maxis and BioWare as examples of studios thriving under the new structure.[27][28]

Also, in 2007, EA announced that it would be bringing some of its major titles to the Macintosh. EA has released Battlefield 2142, Command & Conquer: Tiberium Wars, Crysis, Harry Potter and the Order of the Phoenix, Madden NFL 08, Need for Speed: Carbon and Spore for the Mac. All of the new games have been developed for the Macintosh using Cider, a technology developed by TransGaming that enables Intel-based Macs to run Windows games inside a translation layer running on Mac OS X. They are not playable on PowerPC-based Macs.[29]

In October 2007, EA purchased Super Computer International, a long standing industry provider of game server hosting for development studios, who were currently developing the new Playlinc software. A week later they then purchased VG Holding Corp, the parent company of BioWare and Pandemic Studios.[30]

2008–present

It was revealed in February 2008 that Electronic Arts had made a takeover bid for rival game company Take-Two Interactive. After its initial offer of US$25 per share, all cash stock transaction offer was rejected by the Take-Two board, EA revised it to US$26 per share, a 64% premium over the previous day's closing price and made the offer known to the public.[31] Rumours had been floating around the Internet prior to the offer about Take-Two possibly being bought over by a bigger company, albeit with Viacom as the potential bidder.[32][33] In May 2008, EA announced that it will purchase the assets of Hands-On Mobile Korea, a South Korean mobile game developer and publisher. The company will become EA Mobile Korea.[34] In September 2008, EA dropped its buyout offer of Take-Two. No reason was given.[35]

As of Nov 6, 2008 it was confirmed that Electronic Arts is closing their Casual Label & merging it with their Hasbro partnership with The Sims Label.[36] EA also confirmed the departure of Kathy Vrabeck, who was given the position as former president of the EA Casual Division in May 2007. EA made this statement about the merger: "We've learned a lot about casual entertainment in the past two years, and found that casual gaming defies a single genre and demographic. With the retirement and departure of Kathy Vrabeck, EA is reorganizing to integrate casual games—development and marketing—into other divisions of our business. We are merging our Casual Studios, Hasbro partnership, and Casual marketing organization with The Sims Label to be a new Sims and Casual Label, where there is a deep compatibility in the product design, marketing and demographics. [...] In the days and weeks ahead, we will make further announcements on the reporting structure for the other businesses in the Casual Label including EA Mobile, Pogo, Media Sales and Online Casual Initiatives. Those businesses remain growth priorities for EA and deserve strong support in a group that will compliment their objectives."[37] This statement comes a week after EA announced it was laying off 6% about 600 of their staff positions & had a US$310 million net loss for the quarter.[38]

Due to the 2008 Economic Crisis, Electronic Arts had a poorer than expected 2008 holiday season, moving it in February 2009 to cut approximately 1100 jobs, which it said represented about 11% of its workforce. It will also close 12 facilities, yet to be identified. Riccitiello, in a conference call with reporters, stated that their poor performance in the fourth quarter was not due entirely to the poor economy, but also to the fact that they did not release any blockbuster titles in the quarter. In the quarter ending December 31, 2008, the company lost US$641 million. As of early May 2009, the subsidiary studio EA Redwood Shores was known as Visceral Games.[39][40] On June 24, 2009, EA announced it will merge two of its development studios, BioWare and Mythic into one single role-playing video game and MMO development powerhouse. The move will actually place Mythic under control of BioWare as Ray Muzyka and Greg Zeschuk will be in direct control of the new entity. The actual impact of this merger remains to be seen.[41]

On November 9, 2009, EA announced its acquisition of social casual games developer Playfish for US$275 million.[42] On the same day, the company announced layoffs of 1500 employees, representing 17% of its workforce, across a number of studios including EA Tiburon, Visceral Games, Mythic and EA Black Box. Also affected were "projects and support activities" that, according to Chief Financial Officer Eric Brown "don't make economic sense",[43] resulting in the shutdown of popular communities such as Battlefield News and the EA Community Team. These layoffs also led to the complete shutdown of Pandemic Studios.[44]

In October 2010, EA announced the acquisition of UK based iPhone and iPad games publisher 'Chillingo' for US$20 million in cash. While Chillingo publishes the popular Angry Birds and Cut the Rope games, the deal did not include those properties.[45]

Company structure

All of EA's labels and studios are overseen by CEO John Riccitiello who has held the position since 2007. Many have attributed Riccitiello's success in leading EA to his passion as a gamer.[46]

The following are the Electronic Arts labels, with the studios that fall under each label[47]

Studios and subsidiaries

EA headquarters in Redwood City, California.

Current

Defunct

  • Original HQ in San Mateo, California, moved to Redwood City in 1998.
  • Origin Systems in Austin, Texas founded in 1983, acquired in 1992, closed in 2004.
  • Bullfrog Productions in Surrey, England, founded in 1987, acquired in 1995, merged with EA UK and effectively closed in 2001.
  • EA Baltimore in Baltimore, Maryland, established in 1996 as part of Origin, closed in 2000
  • EA Seattle in Seattle, Washington, founded in 1982 as Manley & Associates, acquired January 29, 1996, closed in 2002
  • Maxis in Walnut Creek, California, founded in 1987, acquired in June 1997, folded into Redwood Shores in 2004
  • Westwood Studios in Las Vegas, Nevada, founded in 1987, acquired from Virgin Interactive Entertainment in August 1998, merged into EA Los Angeles in 2003.
  • EA Pacific (known for a time as Westwood Pacific) in Irvine, California, formerly part of Virgin Interactive, acquired with Westwood in 1998, closed in 2003
  • Kesmai (known also as GameStorm), founded in 1981, acquired in 1999, closed in 2001.
  • DICE Canada in London, Ontario, started in 1998, acquired DICE fully October 2, 2006; closed DICE Canada studio hours later.
  • EA Japan in Tokyo, Japan, closed due to consolidation; moved under EA Partners model
  • EA UK in Chertsey, United Kingdom, moved to EA UK in Guildford
  • EA Chicago in Hoffman Estates, Illinois, founded in 1990 as NuFX, acquired in 2004, closed November 6, 2007.
  • Pandemic Studios in Los Angeles, California and Brisbane, Queensland, Australia, founded in 1998, acquired October 2007 from Elevation Partners, closed November 17, 2009.
  • Bright Light, in Guildford, Surrey, formerly EA UK, closed in 2011.

EA Partners Program

The EA Partners co-publishing arm is dedicated to publishing and distributing games developed by third-party developers. Notable publishing/distribution agreements include:

Criticism

Studio acquisition and management practices

See also: List of acquisitions by Electronic Arts

During its period of fastest growth, EA was often criticized for buying smaller development studios primarily for their intellectual property assets, and then producing drastically changed games of their franchises. For example, Origin-produced Ultima VIII: Pagan and Ultima IX: Ascension were developed quickly under EA's ownership, over the protests of Ultima creator Richard Garriott,[54] and these two are widely considered[55] to be subpar compared to the rest of the series.[56][57]

In early 2008, current CEO John Riccitiello acknowledged that this practice by EA was wrong and that the company now gives acquired studios greater autonomy without "meddling" in their corporate culture.[27]

In 2008, John D. Carmack of id Software said that EA is no longer the "Evil Empire"[58] and decided to go with EA Partners, despite having a poor opinion of the publisher's past record.

"I'll admit that, if you asked me years ago, I still had thoughts that EA was the Evil Empire, the company that crushes the small studios...I'd have been surprised, if you told me a year ago that we'd end up with EA as a publisher. When we went out and talked to people, especially EA Partners people like Valve, we got almost uniformly positive responses from them."

Like other EA Partners, such as Harmonix/MTV Games, Carmack stressed that EA Partners deal "isn't really a publishing arrangement. Instead, they really offer a menu of services—Valve takes one set of things, Crytek takes a different set, and we're probably taking a third set".[58]

EA was criticized for shutting down some of its acquired studios after they released poorly performing games (for instance, Origin).[59] Though, in some of the cases, the shutdown was merely a reformation of teams working at different small studios into a single studio.[60][61] In the past, Magic Carpet 2 was rushed to completion over the objections of designer Peter Molyneux and it shipped during the holiday season with several major bugs. Studios such as Origin and Bullfrog Productions had previously produced games attracting significant fanbases. Many fans also became annoyed that their favorite developers were closed down, but some developers, for example the EALA studio, have stated that they try to carry on the legacy of the old studio (Westwood Studios). Once EA received criticism from labor groups for its dismissals of large groups of employees during the closure of a studio. However, later, it was confirmed that layoffs were not heavily confined to one team or another, countering early rumors that the teams were specifically targeted—countering the implication that the under performance of certain games might have been the catalyst.[62]

EA was once criticized for the acquisition of 19.9 percent of shares of its competitor Ubisoft, a move that many[who?] felt would lead to a hostile takeover but has not yet materialized. However, Ubisoft CEO Yves Guillemot later indicated that a merger with EA was a possibility. "The first option for us is to manage our own company and grow it. The second option is to work with the movie industry, and the third is to merge," he said.[63] However in July 2010, EA elected to sell its reduced 15 percent share in Ubisoft[64] That share equated to roughly €94 million (US$122 million).[65]

EA was criticized in the media for its attempted hostile takeover of Take Two Interactive.[66]

Treatment of employees

In 2004, Electronic Arts was criticized for employees working extraordinarily long hours—up to 100 hours per week—and not just at "crunch" times leading up to the scheduled releases of products. The publication of the EA Spouse blog, with criticisms such as "The current mandatory hours are 9 a.m. to 10 p.m.—seven days a week—with the occasional Saturday evening off for good behavior (at 6:30 p.m.)".[67] The company has since settled a class action lawsuit brought by game artists to compensate for unpaid overtime.[68] The class was awarded US$15.6 million. As a result, many of the lower-level developers (artists, programmers, producers, and designers) are now working at an hourly rate. A similar suit brought by programmers was settled for US$14.9 million.[69]

Since these criticisms first aired, it's been reported that EA has taken steps to positively address work-life balance concerns by focusing on long-term project planning, compensation, and communication with employees. These efforts accelerated with the arrival of John Riccitiello as CEO in February 2007. In December 2007, an internal EA employee survey showed a 13% increase in employee morale and a 21% jump in management recognition over a three year period.[70]

In May 2008, 'EA_Spouse' blog author Erin Hoffman, speaking to videogame industry news site Gamasutra, stated that EA had made significant progress, but may now be falling into old patterns again. Hoffman said that "I think EA is tremendously reformed, having made some real strong efforts to get the right people into their human resources department," and "I've been hearing from people who have gotten overtime pay there and I think that makes a great deal of difference. In fact, I've actually recommended to a few people I know to apply for jobs there," but also claims that she's begun to hear "horror stories" once again.[71]

Game quality

For 2006, the games review aggregation site Metacritic gives the average of EA games as 72.0 (out of 100); 2.5 points behind Nintendo (74.5) but ahead of the other first-party publishers Microsoft (71.6) and Sony (71.2). The closest third-party publisher is Take-Two Interactive (publishing as 2K Games and Rockstar Games) at 70.3. The remaining top 10[72] publishers (Sega, Konami, THQ, Ubisoft, Activision) all rate in the mid 60s. Since 2005, EA has published five games that received "Universal Acclaim" (Metacritic score 90 or greater): Battlefield 2, Crysis, Rock Band, Mass Effect 2, and Dragon Age: Origins.

EA's aggregate review performance had shown a downward trend in quality over recent years and was expected to affect market shares during competitive seasons. Pacific Crest Securities analyst Evan Wilson had said, "Poor reviews and quality are beginning to tarnish the EA brand. According to our ongoing survey of GameRankings.com aggregated review data, Electronic Arts' overall game quality continues to fall...Although market share has not declined dramatically to date, in years such as 2007, which promises to have tremendous competition, it seems likely if quality does not improve."[73][74]

EA had also received criticism for developing games that lack innovation vis-à-vis the number of gaming titles produced under the EA brand that show a history of yearly updates, particularly in their sporting franchises. These typically retail as new games at full market price and feature only updated team rosters in addition to incremental changes to game mechanics, the user interface, and graphics. One critique compared EA to companies like Ubisoft and concluded that EA's innovation in new and old IPs "Crawls along at a snail's pace,"[75] while even the company's own CEO, John Riccitiello, acknowledged the lack of innovation seen in the industry generally, saying, "We're boring people to death and making games that are harder and harder to play. For the most part, the industry has been rinse-and-repeat. There's been lots of product that looked like last year's product, that looked a lot like the year before." EA has announced that it is turning its attention to creating new game IPs in order to stem this trend, with recently acquired and critically acclaimed studios BioWare and Pandemic would be contributing to this process.[76][77]

Anti-trust lawsuit

On June 5, 2008, a lawsuit was filed in Oakland, California alleging Electronic Arts is breaking United States anti-trust laws by signing exclusive contracts with the NFL Players Association, the NCAA and Arena Football League, to use players' names, likenesses and team logos. This keeps other companies from being able to sign the same agreements. The suit further accuses EA of raising the price of games associated with these licenses as a result of this action.[78] However, in an interview with GameTap, Peter Moore claims it was the NFL that sought the deal. "To be clear, the NFL was the entity that wanted the exclusive relationship. EA bid, as did a number of other companies, for the exclusive relationship," Moore explained. "It wasn't on our behest that this went exclusive... We bid and we were very fortunate and lucky and delighted to be the winning licensee."[79] More recently, EA has been sued by former NCAA players for allegedly using their images without compensation.[80]

EULA agreements and DRM

In the September 2008 release of EA's game Spore it was revealed that the DRM scheme included a program called SecuROM and a lifetime machine-activation limit of three (3) instances. A huge public outcry over this DRM scheme broke out over the Internet and swarmed Amazon.com with one-star ratings and critical reviews of the game in order to get EA to "pay attention to their consumers".[81] This DRM scheme, which was intended to hinder the efforts of pirates to illegally use and distribute EA software, instead mainly affected paying customers, as the game itself was pirated well before release.[82] On September 13, 2008, it was announced that Spore was the most pirated game ever with over half a million illegal downloads within the first week of release.[83] In response to customer reaction, EA officially announced its release of upcoming Command & Conquer: Red Alert 3 would increase the installation limit to 5 rather than 3.[84] Many customers were still unsatisfied, claiming they were still renting the game at full price.

On September 22, 2008, a global class action law suit was filed against EA regarding the DRM in Spore, complaining about EA not disclosing the existence of SecuROM from the game manual, and addresses how SecuROM runs with the nature of a rootkit, including how it remains on the hard drive even after Spore is uninstalled.[85][86][87] On October 14, 2008, a similar class action lawsuit was filed against EA for the inclusion of DRM software in the free demo version of the Creature Creator.[88]

On March 31, 2009, EA released a "De-Authorization Management Tool" that allows customers who have installed games containing the SecuROM activation scheme to "de-authorize" a computer, freeing up one of the five machine "slots" to be used on another machine.[89]

On June 24, 2009, EA announced and formalized a change in its approach to preventing piracy of PC games. The company plans to drop all DRM from its games, replacing it with a traditional CD-key check. However, games will include content that is not present on the disc, requiring a download during the activation of the game. The intent is to create an incentive to buy a legitimate copy of the game. A general policy has been laid out with plans envisioning games more as services with a lot of content to freely download or buy linked to the game, some goodies and regular updates as a way to coax players to use the genuine copies of EA games.[90]

Sexism and ageism in advertising

EA's advertising campaign for Dead Space 2 was decried as sexist and ageist, with gamers claiming that it reinforcing out-dated stereotypes against female and older gamers.[91][92] The game is rated M for Mature, and is therefore only recommended for players over the age of seventeen. Others thought the advertisements were pointless and would hurt market share.[93] "The video game's campaign hinges on a unique premise – one that ignores how much the culture of gaming has changed."[94] As of 2010, 40% of console-only gamers were women and the average game player was 34 years old.[95]

For the advertising campaign, 200 women were selected for their conservative values and lack of familiarity with video games. Their reactions to a screening of the game were featured in EA's web and TV advertisements with the campaign slogan "Your mom hates Dead Space 2".[96]

On February 24, 2011, the Extra Credits team (at the time on The Escapist) published the episode "An Open Letter to EA Marketing", denouncing Electronic Arts' marketing decisions for the Dante's Inferno, Medal of Honor and Dead Space 2 releases. They argue that EA's decisions to hire fake protesters and market games solely on shock value, while neglecting to defend the Medal of Honor on a 1st Amendment basis for letting the player play as the Taliban, have been hurtful to the gaming industry. They also argue that the advertisements are counterproductive to Electronic Arts' wishes to elevate games to an art medium as demonstrated in the 1980s Electronic Arts ad 'Can a Computer Make You Cry?'.[97][98]

Games

Main article: List of Electronic Arts games

Notable games published

Some of the most notable and popular games of video game history have been published by EA, and many of these are listed below. Though EA published these titles, they did not always develop them; some were developed by independent game development studios. EA developed their first game in 1987.

Electronic Arts also published a number of non-game titles. The most popular of these was closely related to the video game industry and was actually used by several of their developers. Deluxe Paint premiered on the Amiga in 1985 and was later ported to other systems. The last version in the line, Deluxe Paint V, was released in 1994. Other non-game titles include Music Construction Set (and Deluxe Music Construction Set), Deluxe Paint Animation and Instant Music. EA also published a black and white animation tool called Studio/1, and a series of Paint titles on the Macintosh: Studio/8 and Studio/32 (1990).

Games in development

2012 release

2013 release

TBA

See also

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Portal icon Companies portal


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