I'll admit that video game producer Electronic Arts confuses me quite often. Any company their size is going to suffer from some internal conflicting opinions, but as an organization EA sometimes comes off as suffering from multiple personality disorder. One personality says that sales pricing
on games is horrific, while the other embraces free games
. They've shown that they can use trademark law
well, but then manage to swallow a crazy pill when it comes to recognizing how an endless stream of sequels
hurts their business. That last link is from 2007, when the boss of EA at the time admitted that pumping out sequels instead of original titles was having a negative effect on the bottom line. It seems that in five short years, the new brass at EA forgot that admission.
Speaking with Games Industry, current President of EA's labels, Frank Gibeau, discusses the chaos of the marketplace and the golden era of gaming
he believes is going to come out of it. I'll admit, there's some very encouraging stuff in the piece, between once again acknowledging the emerging success of new business models, free to play games, and the power of the internet to massively expand the marketplace for gaming as a whole. That's all good thinking. But then we get to where he discusses EA's intellectual property strategy.
"The time to launch an IP is at the front-end of the hardware cycle, and if you look historically the majority of new IPS are introduced within the first 24 months of each cycle of hardware platforms," Gibeau says. "Right now, we're working on 3 to 5 new IPs for the next gen, and in this cycle we've been directing our innovation into existing franchises.
"As much as there's a desire for new IP, the market doesn't reward new IP this late in the cycle; they end up doing okay, but not really breaking through."
In case you don't want to parse through the exec speak, let me break this down for you. EA is actively working on new, original franchises, but they won't release them until the next generation of consoles comes out. This is under the notion that new franchises released in the middle or late stages of a console's life are doomed to failure or mediocrity. There are examples of why that outlook shouldn't be taken as gospel: Pokemon (released 7 years into the original Game Boy's life), Grand Theft Auto (released roughly 4 years into the original Playstation's life cycle), Gran Turismo (released roughly 3 years into the original Plastation's life cycle), or Guitar Hero (released roughly 5 years into the PS2's life cycle). All of those titles, by the way, are among the best selling franchises of all time. The point is that if you match the desire for new titles that Gibeau acknowledges with great game franchises, you build huge sales.
But even if Gibeau's supposition was true, there is a problem: the console life cycle this go around is longer than previous generations. While rumors about the next generation of gaming consoles surfaced way back in 2010, everyone's best guess for the soonest release is sometime in 2013 (and by "sometime", they mean Christmas at best). The XBOX 360 and PS3 came out in 2005 and 2006 respectively, which puts us somewhere in the neighborhood of a seven or eight year gap between console releases, depending on who gets to market first. Wii consoles are in roughly the same boat.
For the sake of comparison, here are some other timelines for console generations
Console generartion jump between the NES to Sega Genesis: 4 years
Console generation jump between the Genesis/SNES to Playstation/N64: 5 years
Console generation jump between the Playstation to PS2/Xbox: 5 years
Console generation jump between the PS2/XBOX to PS3/XBox 360: 4 years for Xbox, 5 years for Playstation
The point is that the strategy is going to have to change with what is looking like something between 1.5 and 2 times the life cycle of the console. Customers simply aren't going to buy sequels for longer periods of time and if EA doesn't want to fill their need for new titles, someone else will. And, despite his earlier words, even Gibeau hints that he recognizes this.
"This is the longest cycle that any of us have ever seen, and we're at the point where a little bit of fatigue has set in, and people are wondering what they can possibly do next. I've seen the machines that we're building games for, and they're spectacular."
But then he goes right back to discussing how balls-droppingly great the next generation of hardware is going to be and how that's where they'll focus.
"Gen 4 hardware is a huge opportunity, and it's going to lead to a huge growth spurt for the industry."
Once again, it seems like they have multiple personality disorder. In the meantime, perhaps actually developing new material for the consoles your fans will have to deal with for the next couple of years yet might do wonders to turn around that sliding stock price