In 2008, Electronic Arts gave gamers what they had been clamoring for: loads of new, original games. During the year, the publisher launched such new franchises as Spore, Dead Space, Mirror's Edge, Warhammer Online, and Boom Blox, which augmented EA's standard lineup of sequels, sports simulators, and EA Partners collaborations. And while EA's lineup helped the publisher grow fiscal-year revenues 15 percent to $4.21 billion, the cost of launching those new IPs weighed heavily on EA's bottom line, as losses amounted to $1 billion.
Into 2009, and EA has another ambitious portfolio loaded with new, unproven properties. During the publisher's fiscal year ending March 31, 2010, EA has announced plans to launch such new franchises as Dragon Age, Dante's Inferno, and The Saboteur, as well as a number of direct follow-ups, such as Army of Two: The 40th Day, Mass Effect 2, Battlefield: Bad Company 2, and Dead Space Extraction.
So how does EA plan to sidestep the massive losses with this new lineup of games? To find out the answer to that question, as well as learn more on EA's Wii strategy and EA Partners deals, GameSpot spoke with EA Games label president Frank Gibeau during the 2009 Electronic Entertainment Expo last week.
GameSpot: Last year, EA had easily one of its best lineups in a long time. Yet, the company ended up posting a $1 billion loss during the fiscal year. In your opinion, what happened there?
Frank Gibeau: There was a little event last year that caused the world economy to go sideways that had a bit of an impact. But in general, I'll speak specifically to the Games label. With regards to Dead Space and Mirror's Edge, those two products we were very proud of. They were new IP starts. It's something we've been hearing from our fan base for a while, which was EA had become known for repetitive sequels and not innovating. One of the things I brought to the job when I got it last year was, "How do we innovate, how do we start to create new IPs--the new franchises of the future?" And so we embarked on a campaign of doing that.
Mirror's Edge and Dead Space both shipped in a very tough market, not only from economic standpoint, but the competition was extremely high. What we saw was there was an extreme flight to quality and proven sequels in that mix around customer-buyer behavior. At the same time, Dead Space did very well critically, but it had a tough time finding a market against things like Gears of War and some other titles in that mix. And Mirror's Edge was a fresh, new take that did quite well in Europe, but not as well in the US, and I think that one suffered a bit from a lack of multiplayer, as well as being a relatively short experience--shorter than we had hoped.
From our standpoint, we are on a multiyear rebuilding of the company. Last year was about establishing some new IPs, starting some new franchises, making some investments online, and I think if you walk the [E3] show today, you start to see things like the Star Wars MMO, Mass Effect 2, Dragon Age, Brutal Legend; you see the reinvention of the Need for Speed brand with Shift and Nitro, and some of the products we have planned in front of that as well. You start to see a broader set of products on the Wii with Spore, Dead Space, and again Nitro.
So I think we're adjusting and adapting to what we learned last year and coming out with a much stronger product lineup, which is something that frankly we're very proud of. And if you look at the way we're going to be able to kick off the year with The Beatles--and Left 4 Dead 2 is in there with our EAP unit. We're pretty bullish on where we're at right now.
GS: Do you think there was an issue with launching so many new IPs at once, or what do you think is the danger with launching a lot of new IPs?
FG: Again, last year was a bit of an anomaly, given the fact of what happened with the economy. When you look at it analytically, you have to figure out how much of an impact that had, versus the idea that you can't launch new IPs in [EA's fiscal] Q3 [which runs October to December]. Which of those two factors are at play? I think it's a bit of both, frankly. I think that Mirror's Edge probably could have done better in a different window. I think that with regards to Dead Space, you need to run to the daylight a little bit more, which is to give that new IP the opportunity to find a marketplace without a proven sequel or a big franchise next to it like a Gears of War. And so, from my perspective, looking for windows of opportunity is paramount. You'll start to see that we have a much more broad-based approach to the market, we have a lot of new IPs this [fiscal] year in Q1 [April-June], Q2 [July-Sept.], and also in Q4 [Jan-March], so it's much more spread out.
GS: Right, you have a lot more new IPs coming out this year, from Dragon Age to Dante's Inferno to The Saboteur, just to name a few. What specifically did you learn last year that you plan on putting into effect this year to ensure the best launches? Was it just the release window?
FG: The release window is one. Two is a longer ramp for marketing and asset delivery so that we can get a base of demand and fans built for the games. Both Dead Space and Mirror's Edge we were able to announce, but then we had to go dark for a long period of time because the games were under development and we didn't have very good asset plans in place. So now you're seeing Dante's Inferno, which is shipping in fiscal Q4, and we've been marketing that now actively for two quarters. That's a much longer ramp and much longer engagement with our fans--and attempt to create fans for that game.
So it's longer marketing lead times, more asset delivery that's more consistent over a longer period of time, picking better windows, understanding where key competition is coming, and how to get either in front of them or in a window that is more applicable to them. And the other thing that I learned is that we need to give the teams even more polish time to really take the games into the high 80s and 90s from Metacritic because that, again, is where you're seeing a high concentration of unit sales and appeal from titles that are in the 90-plus range. And so that's our focus right now.
GS: The marketing one is interesting in particular, given talk about giving games too much of a lead time. How are you balancing giving a game enough marketing time without overexposing it?
FG: I think that's the art to this. The idea is not to oversaturate the market with assets that are all about the same level interest. It's really understanding those curves of when can you pique interest, when does it slide down, when can you pique it up again, and keep momentum behind it.
So it's really much more of an art form than a pure science, there's a lot of science to it, of course. But it's really how can you entertain and engage an audience over a long period of time about, say, Dante's Inferno? We've done a pretty good job so far in Dante's, I think, of starting to build up the hype--and then when you go a little bit quiet and let it sit for a while, you come back with a bigger impactful piece. We manage that very carefully, and we look at how long is too long, and obviously, we think last year was too short. And it also has a lot to do with the sustained communication and conversations you have, as far as asset drops and media exposure.
GS: EA has made a point of significantly ramping up its support for Nintendo's Wii. Do you see these Wii titles as a way to support the big-budget development business, or what's your strategy there?
FG: No, these need to be stand-alone, high-quality games that are profitable. Our operating assumption is that ports on the Nintendo Wii don't sell very well, and we have to design from the ground up--design from the controller out, frankly--an experience that can happen in an IP universe that might be someplace else or might be on multiple platforms, but it really needs to cater to Wii players and how Wii players play games. And so we've done a lot of research over the past year about how that happens and what happens. I mean, it's a vast market--it's a gigantic market.
We think that there's opportunity to bring custom designs like Dead Space Extraction, Spore, and Need for Speed Nitro, which are all in their own unique windows--they're not shipping with other games on other platforms. They all have their own unique designs, their own looks. They're also targeting different customers. So, Shift and Nitro in Need for Speed is a useful illustrative case; which is Shift is on the Xbox, PlayStation 3, and PC and is focused on high-end racing fans. Whereas Nitro is much more accessible, it's a little younger skewing in terms of how the cars look, it's more arcade, it's more party oriented in terms of multiplayer. What we found is if we'd just done Shift on the Wii, it wouldn't have worked. One, we wouldn't have hit the fidelity of the experience, and two, it wouldn't have tied into how people play Wii games.
We've also started to build all of our Wii games out of Montreal, inside of my unit, where we can get a center of excellence built around Nintendo players--guys who know how to develop against Nintendo platforms and understand the Nintendo customer. Strategically, in our label, we're looking at building out from there and having custom designs over the long term for where the Wii goes.
GS: Do you see any kind of fundamental problem with the big-budget development? Is spending $20, $30, $40 million on development a sustainable business?
FG: Absolutely. It's a tough business, though. It used to be a lot easier in prior generations, but there's a lot a competition, one, and there are a lot of other issues. There's a lot more choice now for people's time and money. You can play games online, social networking, go do other things, so the big-budget titles are competing against a lot more choice out there than they have in the past. The stakes are higher. You're competing on a level where you've got Epic, id, Valve, EA, Activision--there's a lot of really talented development teams going after this slice of the pie. And there's a lot of issue with how you keep people entertained. There's a component of how connected is your game, how long can you keep that disc in the tray, how long can you keep people engaged. It's a lot more complicated, it's a lot harder. The business model is great when you get one, but the beta, or risk factor, on it is much higher than it used to be.
GS: Two of the big announcements during EA's E3 press conference were the EA Partners deals with Crytek and Realtime Worlds. How does EA Partners benefit EA?
FG: No company can have a monopoly on the best talent in the industry. And a lot of the best talent in the industry, frankly, is independent. There are great development companies that are on their own, they're stand-alone, have a great track record of success. What we want to do is partner with them to bring those games to market and to help them realize the dream of what they want to build. It's a very different approach than the way we traditionally handled EA Partners. When David DeMartini, myself, and a couple of other guys got together was more about how do we flip the equation around and reach the largest possible markets. EA has the largest publishing infrastructure in the business, we reach more countries than any other company and in a more powerful way.
And so we looked at that infrastructure and we looked at our internal development staff, and said, "Wow, we've got some really good developers, but there's a lot more out there that are even better or need an opportunity to get with a publisher." And so we've actively gone out, and what we do is sit down with a Valve or an id or a Realtime Worlds or a Crytek, and we talk to them about what they need. When you're an independent developer, you can't cover everything. And there are things that EA has from a development standpoint that we can help them with, such as, say, solve certain issues on the PS3 that we've already cracked or how to use our development services to help them scale or find another developer to help them get on another platform. At the same time, it's providing a publishing platform for them to put, say, Left 4 Dead in as many markets worldwide as they can possibly reach.
And so that's kind of the access point to EA, how the relationship with the developer happens over time, it's interesting: It can become part of EA at some point, or not. It doesn't matter to us. But it's having that engagement, and that access to the best of the best in the third-party development community is in self-interest, and the power that we bring from a publishing standpoint is we can give them larger audiences and better distribution than any other company in the world. If you look at our track record of signings, people are buying into that thesis and they're buying into our approach to the business. And frankly, they like working with us because we don't get in their hair. They're spectacular at what they do; they don't need advice from us.
We don't try to jump into the front of the car and try to drive the car with them. We sit in the backseat, and if they have a question, they ask. And if they need assistance with something, we lend it, and we give them feedback and guidance when they want it. But it's much more of an opt-in, best-argument approach, as opposed to how it was handled traditionally or how other companies handle it.