Electronic Arts

Last updated

Electronic Arts Inc.
Public
Traded as
Industry Video game industry
FoundedMay 27, 1982;37 years ago (1982-05-27) in San Mateo, California, U.S.
Founder Trip Hawkins
Headquarters,
U.S.
Area served
Worldwide
Key people
ProductsSee List of Electronic Arts games
RevenueIncrease2.svg US$5.15 billion [1]  (2018)
Increase2.svg US$1.43 billion [1]  (2018)
Increase2.svg US$1.04 billion [1]  (2018)
Total assets Increase2.svg US$8.58 billion [2]  (2018)
Total equity Increase2.svg US$4.60 billion [2]  (2018)
Number of employees
9,300 [3]  (2018)
Subsidiaries See § Company structure
Website ea.com

Electronic Arts Inc. (EA) is an American video game company headquartered in Redwood City, California. It is the second-largest gaming company in the Americas and Europe by revenue and market capitalization after Activision Blizzard and ahead of Take-Two Interactive and Ubisoft as of March 2018. [4]

Redwood City, California City in California in the United States

Redwood City is a city on the San Francisco Peninsula in Northern California's Bay Area, approximately 27 miles (43 km) south of San Francisco, and 24 miles (39 km) northwest of San Jose. Redwood City's history spans its earliest inhabitation by the Ohlone people to being a port for lumber and other goods. The county seat of San Mateo County in the heart of Silicon Valley, Redwood City is home to several global technology companies including Oracle, Electronic Arts, Evernote, Box, and Informatica. The city had an estimated population of 86,685 in 2017. The Port of Redwood City is the only deepwater port on San Francisco Bay south of San Francisco. Redwood City is the location of the San Mateo County Jail, for both women and men. The Hetch Hetchy water pipeline runs through Redwood City and supplies a vast majority of the surrounding area with low grain rated water.

California State of the United States of America

California is a state in the Pacific Region of the United States. With 39.6 million residents, California is the most populous U.S. state and the third-largest by area. The state capital is Sacramento. The Greater Los Angeles Area and the San Francisco Bay Area are the nation's second- and fifth-most populous urban regions, with 18.7 million and 9.7 million residents respectively. Los Angeles is California's most populous city, and the country's second-most populous, after New York City. California also has the nation's most populous county, Los Angeles County, and its largest county by area, San Bernardino County. The City and County of San Francisco is both the country's second-most densely populated major city after New York City and the fifth-most densely populated county, behind only four of the five New York City boroughs.

Activision Blizzard video game publisher

Activision Blizzard, Inc. is an American video game and film holding company based in Santa Monica, California. The company was founded in July 2008 through the merger of Activision and Vivendi Games, the company is traded on the NASDAQ stock exchange under the ticker symbol ATVI, and since 2015 has been one of the stocks that make up the S&P 500. Activision Blizzard currently includes five business units: Activision Publishing, Blizzard Entertainment, King, Major League Gaming, and Activision Blizzard Studios.

Contents

Founded and incorporated on May 27, 1982, by Apple employee 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. EA published numerous games and productivity software for personal computers and later experimented on techniques to internally develop games, leading to the 1987 release of Skate or Die! . The company would later decide in favor of abandoning their original principles and acquiring smaller companies that they see profitable, as well as annually releasing franchises to stay profitable.

Trip Hawkins American businessman

William Murray "Trip" Hawkins III is an American entrepreneur and founder of Electronic Arts, The 3DO Company, and Digital Chocolate.

Home computer class of microcomputers

Home computers were a class of microcomputers that entered the market in 1977, that started with what Byte Magazine called the "trinity of 1977", and which became common during the 1980s. They were marketed to consumers as affordable and accessible computers that, for the first time, were intended for the use of a single nontechnical user. These computers were a distinct market segment that typically cost much less than business, scientific or engineering-oriented computers of the time such as the IBM PC, and were generally less powerful in terms of memory and expandability. However, a home computer often had better graphics and sound than contemporary business computers. Their most common uses were playing video games, but they were also regularly used for word processing, doing homework, and programming.

<i>Skate or Die!</i> video game

Skate or Die! is a skateboarding game released by Electronic Arts in 1988 for the Sinclair ZX Spectrum, Commodore 64, Atari ST, Apple IIGS, Amstrad CPC, and IBM Compatibles running MS-DOS. It was ported to the Nintendo Entertainment System (NES) by Konami, and published by Ultra Games. The Atari ST conversion was contracted to Codemasters, who contracted Kinetic Designs to do the work.

Currently, EA develops and publishes games including EA Sports titles FIFA , Madden NFL , NHL , NBA Live , and UFC . Other EA established franchises includes 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 , Titanfall and Star Wars: The Old Republic . [5] Their desktop titles appear on self-developed Origin, an online gaming digital distribution platform for PCs and a direct competitor to Valve's Steam. EA also owns and operates major gaming studios, EA Tiburon in Orlando, EA Vancouver in Burnaby, BioWare in Edmonton as well as Austin, and DICE in Sweden and Los Angeles. [6]

EA Sports brand of Electronic Arts

EA Sports is a division of Electronic Arts that develops and publishes sports video games. Formerly a marketing gimmick of Electronic Arts, in which they tried to imitate real-life sports networks by calling themselves the "EA Sports Network" (EASN) with pictures or endorsements with real commentators such as John Madden, it soon grew up to become a sub-label on its own, releasing game series such as FIFA, NHL, NBA Live and Madden NFL.

<i>FIFA</i> (video game series) association football video game series

FIFA, also known as FIFA Football or FIFA Soccer, is a series of association football video games or football simulator, released annually by Electronic Arts under the EA Sports label. Football video games such as Sensible Soccer, Kick Off and Match Day had been developed since the late 1980s and already competitive in the games market when EA Sports announced a football game as the next addition to their EA Sports label. The Guardian called the series "the slickest, most polished and by far the most popular football game around."

Madden NFL is an American football video game series developed by EA Tiburon for EA Sports. It is named after Pro Football Hall of Fame coach and commentator John Madden, and has sold more than 130 million copies, and influenced many players and coaches of the physical sport. Among the game's realistic features are sophisticated playbooks and player statistics, and voice commentary that allows players to hear the game as if it were a real TV broadcast. As of 2013 the franchise has generated over $4 billion in sales.

History

Trip Hawkins era: origins, founding, success (1982–1990)

Founder of EA Trip Hawkins. Trip Hawkins 2013 (10627605786).jpg
Founder of EA Trip Hawkins.

Trip Hawkins had been an employee of Apple Inc. since 1978, at a time when the company had only about fifty employees. Over the next four years, the market for home personal computers skyrocketed. By 1982, Apple had completed its initial public offering (IPO) and become a Fortune 500 company with over one thousand employees. [7]

Apple Inc. Technology company; developer of consumer electronics and multimedia platforms

Apple Inc. is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. It is considered one of the Big Four of technology along with Amazon, Google, and Facebook.

Initial public offering (IPO) or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors; an IPO is underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges. Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company. Initial public offerings can be used: to raise new equity capital for the company concerned; to monetize the investments of private shareholders such as company founders or private equity investors; and to enable easy trading of existing holdings or future capital raising by becoming publicly traded enterprises.

<i>Fortune</i> 500 Annual list compiled and published by Fortune magazine

The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The list includes publicly held companies, along with privately held companies for which revenues are publicly available. The concept of the Fortune 500 was created by Edgar P. Smith, a Fortune editor, and the first list was published in 1955. The Fortune 500 is more commonly used than its subset Fortune 100 or superset Fortune 1000.

In February 1982, Trip Hawkins arranged a meeting with Don Valentine of Sequoia Capital [8] to discuss financing his new venture, Amazin' Software. Valentine encouraged Hawkins to leave Apple, where Hawkins served as Director of Product Marketing, and allowed Hawkins use of Sequoia Capital's spare office space to start the company. On May 27, 1982, [9] Trip Hawkins incorporated and established the company with a personal investment of an estimated US$200,000. [7] [10] :89

Don Valentine American venture capitalist

Donald T. "Don" Valentine is an American venture capitalist who concentrates mainly on technology companies in the United States. He has been called the "grandfather of Silicon Valley venture capital". The Computer History Museum credited him as playing "a key role in the formation of a number of industries such as semiconductors, personal computers, personal computer software, digital entertainment and networking."

Sequoia Capital is an American venture capital firm. The firm is located in Menlo Park, California and mainly focuses on the technology industry. It has backed companies that now control $1.4 trillion of combined stock market value. Sequoia manages multiple investment funds including funds specific to India, Israel, and China.

United States dollar Currency of the United States of America

The United States dollar is the official currency of the United States and its territories per the United States Constitution since 1792. In practice, the dollar is divided into 100 smaller cent (¢) units, but is occasionally divided into 1000 mills (₥) for accounting. The circulating paper money consists of Federal Reserve Notes that are denominated in United States dollars.

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. By November, employee headcount rose to 11, including Tim Mott, Bing Gordon, David Maynard, and Steve Hayes. [11] [7] 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.

Business plan

A business plan is a formal written document containing business goals, the methods on how these goals can be attained, and the time frame within which these goals need to be achieved. It also describes the nature of the business, background information on the organization, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets. In its entirety, this document serves as a road map that provides direction to the business.

Apple II first Apple II series computer

The Apple II is an 8-bit home computer and one of the world's first highly successful mass-produced microcomputer products, designed primarily by Steve Wozniak. It was introduced by Jobs and Wozniak at the 1977 West Coast Computer Faire and was the first consumer product sold by Apple Computer, Inc. It is the first model in a series of computers which were produced until Apple IIe production ceased in November 1993. The Apple II marks Apple's first launch of a personal computer aimed at a consumer market – branded toward American households rather than businessmen or computer hobbyists.

Bing Gordon Executive in the video games industry

William "Bing" Gordon is a video game executive and technology venture capitalist. He served ten years as Chief Creative Officer of video game publisher and developer Electronic Arts (EA) prior to his current partnership with Kleiner Perkins Caufield & Byers (KPCB). He was a founding director of Audible.com and has served on several high profile Boards of Directors including Amazon, Ngmoco, and Zynga.

When he incorporated the company, Hawkins originally chose Amazin' Software as their company name, but his other early employees of the company universally disliked the name. [11] He scheduled an off-site meeting in the Pajaro Dunes, where the company once held such off-site meetings. [12] 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 bestselling book about the film studio United Artists, and liked the reputation that the company had created. Hawkins said everyone had a vote but they would lose it if they went to sleep. [13]

Electronic Arts' original corporate logo, designed by Barry Deutsch, 1982-1999. Electronic Arts historical logo 80s.svg
Electronic Arts' original corporate logo, designed by Barry Deutsch, 1982–1999.

Hawkins liked the word "electronic", and various employees had considered the phrases "Electronic Artists" and "Electronic Arts". 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 [the developers] are..." This statement from Hayes immediately tilted sentiment towards Electronic Arts and the name was unanimously endorsed and adopted later in 1982. [13]

He recruited his original employees from Apple, Atari, Xerox PARC, and VisiCorp, and got Steve Wozniak to agree to sit on the board of directors. [14]

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. Former CEO Larry Probst arrived as VP of Sales in late 1984 and helped expand the already successful company. 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. [7] [15]

One of the advertisements promoting the home computer as part of the "We See Farther" campaign. All the pictured "software artists" wrote at least one game published by EA.
Top: Mike Abbot, Dan Bunten, Jon Freeman, Anne Westfall, Bill Budge
Bottom: Matt Alexander, John Field, David Maynard Can a Computer Make You Cry advertisement.jpg
One of the advertisements promoting the home computer as part of the "We See Farther" campaign. All the pictured "software artists" wrote at least one game published by EA.
Top: Mike Abbot, Dan Bunten, Jon Freeman, Anne Westfall, Bill Budge
Bottom: Matt Alexander, John Field, David Maynard

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. [16] EA routinely referred to their developers as "artists" and gave them photo credits in their games and numerous full-page magazine ads. Their first such ad, accompanied by the slogan "We see farther," was the first video game advertisement to feature software designers. [15] EA also shared lavish profits with their developers, which added to their industry appeal. 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". [16]

The Amiga will revolutionize the home computer industry. It's the first home machine that has everything you want and need for all the major uses of a home computer, including entertainment, education and productivity. The software we're developing for the Amiga will blow your socks off. We think the Amiga, with its incomparable power, sound and graphics, will give Electronic Arts and the entire industry a very bright future.

–Trip Hawkins,1985 Amiga advertisement [17] :6

In the mid-1980s, Electronic Arts aggressively marketed products for the Commodore Amiga, a premier home computer of the late 1980s and early 1990s in Europe. Commodore had given EA development tools and prototype machines before Amiga's actual launch. [17] :56 For Amiga EA published some notable non-game titles. A drawing program Deluxe Paint (1985) and its subsequent versions became perhaps the most famous piece of software available for Amiga platform. In addition, EA's Jerry Morrison conceived the idea of a file format that could store images, animations, sounds, and documents simultaneously, and would be compatible with third-party software. He wrote and released to the public the Interchange File Format, which would soon become an Amiga standard. [18] :45 Other Amiga programs released by EA included Deluxe Music Construction Set , Instant Music [19] and Deluxe Paint Animation . [20] Some of them, most notably Deluxe Paint, were ported to other platforms. For Macintosh EA released a black & white animation tool called Studio/1, [21] and a series of Paint titles called Studio/8 and Studio/32 (1990). [22]

Relationships between Electronic Arts and their external developers often became difficult when the latter missed deadlines or diverged from the former's creative directions. In 1987, EA released Skate or Die! , their first internally developed game. EA would continue publishing their external developers' games while experimenting with their internal development strategy. This led to EA's decision of purchasing out a series of companies they identify as successful, as well as the decision to release annualized franchises to cut budget costs. Because of Trip Hawkins' obsession of simulating a sports game, he signed a contract with football coach John Madden that would lead to EA's developing and releasing annual Madden NFL games. [23] :8 [23] :10

In 1988 EA published a flight simulator game exclusively for Amiga, F/A-18 Interceptor , which received attention due to its vector graphics that were notable for 1988 standards. [24] [25] Another significant Amiga release (also initially available for Atari ST, later converted for numerous other platforms) was Populous (1989) developed by Bullfrog Productions. It was a pioneering and influential title in the genre that was later called "god games". [26] :282

Hawkins stepping down, Larry Probst rising (1990–1999)

In 1990, Electronic Arts began producing console games for the Nintendo Entertainment System, after previously licensing its computer games to other console-game publishers. [27] A year later, Trip Hawkins stepped down as EA's CEO and was succeeded by Larry Probst [26] :186 to found the now-defunct 3DO Company, while remaining the former company's chair until July 1994. There, once a critic of game consoles, Hawkins conceived a console that unlike its competitors would not require a first-party license to be marketed, and was intended to appeal to the PC market. In October 1993, 3DO developed the 3DO Interactive Multiplayer, which at the time was the most powerful game console. Electronic Arts was The 3DO Company's primary partner in sponsoring their console, showcasing on it their latest games. With a retail price of US$700 (equivalent to $1,214.08in 2018) compared to its competitors' $100, the console lagged in sales, and with the 1995 arrival to North America of Sony's PlayStation, a cheaper and more powerful alternative, combined with a lower quality of the 3DO's software library as a backfiring of its liberal license policy, it fell further behind and lost competition. Electronic Arts dropped its support for 3DO in favor of the PlayStation, 3DO's production ceased in 1996, and for the remainder of the company's lifetime, 3DO would develop video games for other consoles and the IBM PC until it folded in 2003. [7] [13] [28] :79 [26] :283 [26] :646 [29]

In 1995 Electronic Arts won the European Computer Trade Show award for best software publisher of the year. [30] As the company was still expanding, they opted to purchase space in Redwood Shores, California in 1995 for construction of a new headquarters, [31] which was completed in 1998. [7]

Early in 1997, Next Generation identified Electronic Arts as the only company to regularly profit from video games over the past five years, and noted it had "a critical track record second to none". [32]

Continuous expansion and success through the new millennium (1999–2007)

Headquarters of EA in October 2007. Electronicartsheadquarters.jpg
Headquarters of EA in October 2007.

EA is headquartered in the Redwood Shores neighborhood of Redwood City, California. [33] In 1999, EA replaced their long-running Shapes logo with one based on the EA Sports logo used at the time, and Larry Probst took over the reins. EA also started to use a brand-specific structure around this time, with the main publishing side of the company re-branding to EA Games. The EA Sports brand was retained for major sports titles, the new EA Sports Big label would be used for casual sports titles with an arcade twist, and the full Electronic Arts name would be used for co-published and distributed titles. [11] [34]

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. [35] In 2009, EA acquired the London-based social gaming startup Playfish. [36]

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. [37] On June 20, 2006, EA purchased Mythic Entertainment, who are finished making Warhammer Online . [38]

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. [39] 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. [40]

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. [41] 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. [42]

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 were able to download seven EA titles ( Tetris , Tetris Mania , The Sims 2 , Doom , FIFA 06 , Tiger Woods PGA Tour 06 and FIFA Street 2 ) on 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. [43]

John Riccitiello era (2007–2013)

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. [44] 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. [45] 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. [46] [47]

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. [48]

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. [49] 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. [50] [51] 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. [52] In September 2008, EA dropped its buyout offer of Take-Two. No reason was given. [53]

As of November 6, 2008, it was confirmed that Electronic Arts is closing their Casual Label & merging it with their Hasbro partnership with The Sims Label. [54] 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." [55] This statement comes a week after EA announced it was laying off 6% about 600 of their staff positions and had a US$310 million net loss for the quarter. [56]

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 also closed 12 of their facilities. 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. [57] [58] 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. [59] By fall 2012, both Muzyka and Zeschuk had chosen to depart the merged entity in a joint retirement announcement. [60] [61] [62]

On November 9, 2009, EA announced layoffs of 1,500 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", [63] 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. [64]

In October 2010, EA announced the acquisition of England-based iPhone and iPad games publisher Chillingo for US$20 million in cash. Chillingo published the popular Angry Birds for iOS and Cut the Rope for all platforms, but the deal did not include those properties, [65] so Cut the Rope became published by ZeptoLab, and Angry Birds became published by Rovio Entertainment.

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. [66] In a note to employees, EA CEO John Riccitiello called this "an incredibly important milestone" for the company. [67]

In June 2011, EA launched Origin, an online service to sell downloadable games directly to consumers. [68] In July 2011, EA announced that it had acquired PopCap Games, the company behind hits such as Plants vs. Zombies and Bejeweled . [69]

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." [70] 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." [70]

Andrew Wilson era: exclusive partnership with Disney, monetization schemes (2013–present)

On March 18, 2013, John Riccitiello announced that he would be stepping down as CEO and a member of the Board of Directors on March 30, 2013. Larry Probst was also appointed executive chairman on the same day. [71] Andrew Wilson was named as the new CEO of EA by September 2013. [72]

In April 2013, EA announced a reorganization which was to include dismissal of 10% of their workforce, consolidation of marketing functions which were distributed among the five label organizations, and subsumption of Origin operational leadership under the President of Labels. [73] [74]

EA acquired the lucrative exclusive license to develop games within the Star Wars universe from Disney in May 2013, shortly after Disney's closure of its internal LucasArts game development in 2013. EA secured its license from 2013 through 2023, and began to assign new Star Wars projects across several of its internal studios, including BioWare, DICE, Visceral Games, Motive Studios, Capital Games and external developer Respawn Entertainment. [75] [76]

In April 2015, EA announced that it would be shutting down various free-to-play games in July of that year, including Battlefield Heroes , Battlefield Play4Free , Need for Speed: World , and FIFA World . [77]

The reorganization and revised marketing strategy lead to a gradual increase in stock value. In July 2015, Electronic Arts reached an all-time high with a stock value of US$71.63, surpassing the previous February 2005 record of $68.12. This is also up 54% from $46.57 in early January 2015. The surge was partly attributed to EA's then-highly anticipated Star Wars Battlefront reboot, which released one month before Star Wars: The Force Awakens , also highly anticipated. [78]

During E3 2015, vice-president of the company, Patrick Söderlund, announced that the company will start investing more on smaller titles such as Unravel so as to broaden the company's portfolio. [79] On December 10, 2015, EA announced a new division called Competitive Gaming Division, which focuses on creating competitive game experience and organizing ESports events. It was once headed by Peter Moore. [80] In May 2016, Electronic Arts announced that they had formed a new internal division called Frostbite Labs. The new department specializes in creating new projects for virtual reality platforms, and "virtual humans". The new department is located in Stockholm and Vancouver. [81]

EA announced the closure of Visceral Games in October 2017. Prior, Visceral had been supporting EA's other games but was also working on a Star Wars title named Project Ragtag since EA's acquisition of the Star Wars license, even hiring Amy Hennig to direct the project. While EA did not formally give a reason for the closure, industry pundits believed that EA was concerned about the principally single-player game which would be difficult to monetize, as well as the slow pace of development. [82]

EA's original approach to the microtransactions in Star Wars Battlefront II sparked an industry-wide debate on the use of random-content loot boxes. While other games had used loot boxes, EA's original approach within Battlefront II from its early October 2017 launch included using such mechanics for pay to win gameplay elements, as well as locking various Star Wars characters behind expensive paywalls, leading several gaming journalists and players to complain. EA modified some of the costs of these elements in anticipation of the game's full November 2017 launch, but they were reportedly told by Disney to disable all microtransactions until they could come up with a fairer monetization scheme. [83] Ultimately, by March 2018, EA had developed a fairer system that eliminated the pay to win elements and drastically reduced costs for unlocking characters. The controversy over Battlefront II's loot boxes led to an 8.5% drop in stock value in one month—about $3.1 billion and impacted EA's financial results for the following quarters. Further, the visibility of this controversial led to debate at government levels around the world to determine if loot boxes were a form of gambling and if they should be regulated. [84] [85] [86] [87]

In January 2018, EA announced eMLS, a new competitive league for EA Sports' FIFA 18 through its Competitive Gaming Division (CGD) and MLS. [88] That same month, EA teamed up with ESPN and Disney XD in a multi-year pact to broadcast Madden NFL competitive matches across the world through its Competitive Gaming Division arm. [89]

On August 14, 2018, Patrick Söderlund announced his departure from EA as its vice-president and chief design officer, after serving twelve years with the company. With Söderlund's departure, the SEED group was moved as part of EA's studios, while the EA Originals and EA Partners teams were moved under the company's Strategic Growth group. [90]

On February 6, 2019, Electronic Arts' stock value was hit by a decline of 13.3%, the worst decline since Halloween 2008. This was largely due to the marketing of their anticipated title Battlefield V , which was released after the holiday season of October 2018. Stocks were already declining since late August, when EA announced that Battlefield V's release would be delayed until November. Upon release, the game was met with a mixed reception, and EA sold one million fewer copies than their expected figure of 7.3 million. Also attributed to the stock plunge was the game's lack of the game mode Battle Royale, popularized by PlayerUnknown's Battlegrounds and then Fortnite . [91] Stocks then surged 9.6% with the surprise release of Apex Legends , which garnered 25 million players in just one week, smashing Fortnite's record of 10 million players in two weeks. [92] [93] In advance of the end of its financial quarter ending March 31, 2019, Wilson announced they were cutting about 350 jobs, or about 4% of its workforce, primarily from their marketing, publishing, and operations divisions. Wilson stated the layoffs were necessary to "address our challenges and prepare for the opportunities ahead". [94]

Company structure

EA is headed by chairman Larry Probst and CEO Andrew Wilson. Many have attributed Riccitiello's success in leading EA to his passion as a gamer. [95]

Studios

Former

Labels

EA Worldwide Studios

Formerly EA Games, EA Worldwide Studio is home to many of EA's studios, which are responsible for action-adventure, role playing, racing and combat games marketed under the EA brand. In addition to traditional packaged-goods games, EA Worldwide Studios also develops massively multiplayer online role-playing games.[ citation needed ] As of April 2018, the division is led by Laura Miele. [103]

EA Sports

First introduced in 1991 as the Electronic Arts Sports Network, before being renamed due to a trademark dispute with ESPN, [104] EA Sports publishes all the sports games from EA, including FIFA Football , Madden NFL , Fight Night , NBA Live , NCAA Football , Cricket , NCAA March Madness , Tiger Woods PGA Tour , NHL Hockey , NASCAR and Rugby .[ citation needed ] In 2011, Forbes ranked EA Sports eighth on their list of most valuable sports brands, with a value of $625 million. [105]

EA All Play

EA All Play is a mobile-oriented label that, since 2012, publishes digital titles like The Simpsons', Tetris , and Battlefield , as well as Hasbro board games like Scrabble . [106]

EA Competitive Gaming Division

The EA Competitive Gaming Division (CGD), founded in 2015 by Peter Moore and currently headed by Todd Sitrin, is the group dedicated on enabling global eSports competitions on EA's biggest franchises including FIFA, Madden NFL, Battlefield and more. [107]

SEED

The Search for Extraordinary Experiences Division (SEED) was revealed at the 2017 Electronic Entertainment Expo as a technology research division and incubator, using tools like deep learning and neural networks to bring in player experiences and other external factors to help them develop more immersive narratives and games. [108] [109] SEED has offices in Los Angeles and Stockholm. [110]

Former labels

  • EA Kids — A label for educational titles. In January 1995, EA sold the label to and in conjunction with Capital Cities/ABC formed the independent ABC/EA Home Software, which was later absorbed into Creative Wonders in that year's May. [111] [112] [113]
  • EA Sports Big — A label introduced in 2000, and used for arcade-styled extreme sports. In 2008, Electronic Arts retired the EA Sports Big label and replaced it with EA Sports Freestyle, which would focus exclusively on casual sports games, regardless of genre. The label was used for just a few games until being quietly retired. [34]

Partnership and initiatives

EA Partners program (1997–present)

EA Partners co-publishing program was dedicated to publishing and distributing games developed by third-party developers. EA Partners began as EA Distribution, formed in 1997 and led by Tom Frisina, a former executive from Accolade and Three-Sixty who helped both companies find third-party developers as to provide publishing support for them. Frisina's early partners included Looking Glass Studios, MGM Interactive for the rights to the James Bond property, DreamWorks Interactive, and eventually DICE; in the latter two cases, these studios would later be acquired by EA as part of the EA DICE family. [114] In 2003, EA's president John Riccitiello pushed for a renaming of the EA Distribution label, seeing the potential to bring in more independent developers and additional revenue streams. While they rebraned the label as EA Partners in 2003, Riccitiello left EA the following year, which disrupted the direction the label had been aiming to go. [115] [114]

Oddworld Inhabitants, who had signed on with EA Partner for their next Oddworld games, found the situation difficult as EA Partners was reluctant to support games where they did not own the intellectual property rights and instead favored internal development. [114] The situation with EA Partners switched gears in 2005 after EA and Valve Corporation signed a EA Partners deal for the physical distribution of The Orange Box ; EA Partners realized it needed to be flexible to handle the different publishing opportunities presented to them. A similar breakthrough was reached with signing on Harmonix for the distribution of the Rock Band games, requiring them to work closely with MTV Games on the plastic instrument controllers necessary for the titles. [114] A number of major partnerships were made over the next few years, including Namco Bandai, Crytek, Starbreeze Studios, id Software, Epic Games and People Can Fly, Double Fine Productions, Grasshopper Manufacture, Spicy Horse, and Realtime Worlds. [114] While many of these partnerships proved successful, the division had two major marks on its name. It was associated with the situation around Kingdoms of Amalur: Reckoning developed by 38 Studios, which had been significantly backed by loans from taxpayer funds from the state of Rhode Island. Kingdoms failed to be commercially successful, and EA Partners pulled out of making a sequel, leaving 38 Studios in default of its loan payback to the state. Secondly, while The Secret World from Funcom launched as a paid-for game without subscriptions, Funcom had to switch their monetization model to free-to-play to improve their revenues, which further affected EA Partners. [116]

Around April 2013, as part of a large 1000-employee layoff, many reporters claimed that EA Partners was also being shut down for its poor commercial performance, [117] but the program remained active as the company refocused its efforts. [118] The label remained dormant over the next several years, while Letts expanded on the EA Originals program, but following the move of EA Partners and EA Origins into the Strategic Growth group in August 2018, [119] the label was revived on the March 2019 with a publishing deal with Velan Studios, formed from the former heads of Vicarious Visions. [120]

Notable publishing/distribution agreements include:

EA Originals program (2017–present)

EA Originals is a program within Electronic Arts to help support independently-developed video games. The program was announced at EA's press event at the 2016 E3 Conference, and builds upon the success they had with Unravel by Coldwood Interactive in 2015. The first game to be supported under this program is Fe by Zoink, with plans for release in 2018. [123] [124] It was followed by A Way Out by Hazelight Studios and eventually Sea of Solitude by Jo-Mei Games.

Criticism and controversy

Since the mid-2000s, Electronic Arts has been in the center of numerous controversies involving acquisitions of companies and alleged anti-consumerist practices in their individual games (which can be further read on their own articles), as well as lawsuits alleging EA's anti-competition when signing sports-related contracts.

Studio acquisition and management practices

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. [125] [126] [127] 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, [128] and these two are widely considered [129] to be sub-par compared to the rest of the series. [130] [131]

In early 2008, 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. [46]

In 2008, John D. Carmack of id Software said that EA is no longer the "Evil Empire": [132]

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". [132]

EA was criticized for shutting down some of its acquired studios after they released poorly-performing games (for instance, Origin). [133] Though, in some of the cases, the shutdown was merely a reformation of teams working at different small studios into a single studio. [134] [135] 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. [136]

EA was once criticized for the acquisition of 19.9 percent of shares of its competitor Ubisoft, a move that Ubisoft's then spokesperson initially described as a "hostile act". [137] However, Ubisoft CEO Yves Guillemot later indicated that a merger with EA was a possibility, stating, "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." [138] However, in July 2010, EA elected to sell its reduced 15 percent share in Ubisoft. [139] That share equated to roughly €94 million (US$122 million). [140]

Treatment of employees

In 2004, Electronic Arts was criticized for employees working extraordinarily long hours, up to 100 hours per week, as a routine practice rather than occasionally to meet critical goals such as release of a major new product. 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 PM)." [141] The company has since settled a class action lawsuit brought by game artists to compensate for unpaid overtime. [142] 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. [143]

Since these criticisms first aired, it has been reported that EA has taken steps to 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% increase in perception of management recognition over a three-year period. [144]

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 she also said she has begun to hear "horror stories" once again. [145]

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 publishers (Sega, THQ, Ubisoft, Activision, Square Enix) all rate in the mid 60s. Since 2005, EA has published eight games that received "Universal Acclaim" in at least one platform (Metacritic score 90 or greater): Battlefield 2 , Crysis , Rock Band , FIFA 12 , FIFA 13 , Mass Effect 2 , Mass Effect 3 , 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." [146] [147]

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," [148] 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. [149] [150] In 2012, EA’s games were ranked highest of all large publishers in the industry, according to Metacritic. [151]

Sports licensing and exclusivity

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. [152] In an interview with GameTap, Peter Moore said 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 said. "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." [153] While EA argued the player's likenesses was incidentally used, this was rejected by the United States Courts of Appeals in 2015. [154] A further appeal to the US Supreme Court was unsuccessful. [155] In June 2016, EA settled with Jim Brown for $600,000. [156]

On September 26, 2013, EA settled a series of wide-ranging class action lawsuits filed by former NCAA players accusing EA and others of unauthorized use of player likenesses in their football and basketball games. EA settled the lawsuit for an undisclosed amount. [157] [158] The settlement is reported to be around $40 million, to be paid to between 200,000 and 300,000 players. [159]

The Consumerist rating as "Worst Company in America"

In April 2012, The Consumerist awarded EA with the title of "Worst Company in America" along with a ceremonial Golden Poo trophy. [160] The record-breaking poll drew in more than 250,000 votes and saw EA beating out such regulars as AT&T and Walmart. The final round of voting pitted EA against Bank of America. EA won with 50,575 votes or 64.03%. [161] This result came in the aftermath of the Mass Effect 3 ending controversy which several commentators viewed as a significant contribution to EA's win in the poll. [161] [162] Other explanations include use of day-one DLC and EA's habit of acquiring smaller developers to squash competition. [163] EA spokesman John Reseburg responded to the poll by saying, "We're sure that bank presidents, oil, tobacco and weapons companies are all relieved they weren't on the list this year. We're going to continue making award-winning games and services played by more than 300 million people worldwide." [164] [165]

In April 2013, EA won The Consumerist's poll for "Worst Company in America" a second time, consecutively, becoming the first company to do so. Games mentioned in the announcement included the critically controversial Mass Effect 3 for its ending, Dead Space 3 for its use of microtransactions, and the more recent SimCity reboot due to its poorly handled launch. Additionally, poor customer support, "nickel and diming", and public dismissiveness of criticisms were also given as explanations for the results of the poll. The Consumerist summarized the results by asking, "When we live in an era marked by massive oil spills, faulty foreclosures by bad banks, and rampant consolidation in the airline and telecom industry, what does it say about EA’s business practices that so many people have — for the second year in a row — come out to hand it the title of Worst Company in America?" [166]

When asked about the poll by VentureBeat, Frank Gibeau, President of EA Labels, responded "we take it seriously, and want to see it change. In the last few months, we have started making changes to the business practices that gamers clearly do not like." [167] Gibeau attributes the elimination of online passes, the decision to make The Sims 4 a single-player, offline experience, as well as the unveiling of more new games to the shift in thinking. "The point is we are listening, and we are changing," Gibeau said. [167]

See also

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Further reading