EA strategy 'bankrupt' says ex-EA EVP

Former EA Mobile head Mitch Lasky blasts former employer, expresses amazement that company hasn't been acquired or management ousted.

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After EA lowered its fiscal expectations earlier this week, analysts responded with politely reserved disappointment. The harshest of criticisms came from Wedbush's Michael Pachter, who merely suggested that the company "lacks introspection."

Lasky believes EA ridiculously overspent on a number of projects, including The Godfather.
Lasky believes EA ridiculously overspent on a number of projects, including The Godfather.

Not all reactions to the news were so diplomatic. In a post on his personal blog, former head of EA Mobile and Jamdat founder Mitch Lasky took issue with the publisher's direction, particularly the management team in the years since John Riccitiello took over as CEO. The most pressing of Lasky's concerns was the company's insistence on trying to grow its traditional gaming business.

"EA is in the wrong business, with the wrong cost structure and the wrong team, but somehow they seem to think that it is going to be a smooth, two-year transition from packaged goods to digital," Lasky said. "Think again."

Before leaving the company in early 2007, Lasky said he wanted the company to embrace the transition to digital distribution and the games-as-service approach. While EA has since devoted attention to both of those areas, Lasky said it was unwilling to do so if it meant smaller revenues from its traditional EA Sports and EA Games divisions.

Among the missteps Lasky pointed to in those divisions were "ridiculous" and "appalling" spending on a number of projects, including Spore, The Godfather, Superman Returns, and The Simpsons. He also criticized the NFL and ESPN exclusivity deals for the Madden series, saying they hamstrung EA Sports' profitability.

"But by far the greatest failure of Riccitiello's strategy has been the EA Games division," Lasky said. "JR bet his tenure on EA's ability to 'grow their way through the transition' to digital/online with hit packaged goods titles. … Since the recurring-revenue sports titles were already 'booked' (i.e., fully accounted for in the Wall Street estimates) it fell to EA Games to make hits that could move the needle. It's been a very ugly scene, indeed."

Lasky pointed to Spore, Dead Space, Mirror's Edge, and Need for Speed: Undercover as examples of expensive games that didn't hit with consumers the way EA had hoped. He also brought up the functional closure of Mercenaries 2 developer Pandemic, which he called "half the justification" for the $860 million acquisition of BioWare and Pandemic.

"And don't think that Dante's Inferno or [Star Wars: The Old Republic] is going to make it all better," Lasky said. "It's a bankrupt strategy."

Lasky wrapped up his assessment of his former employer by expressing surprise that the publisher has neither been acquired nor seen its board of directors oust Riccitiello and the rest of the management team.

"It's remarkably hard to kill a company doing $4 billion in revenues," Lasky said. "But with flat or down stock performance since Q3 2003, how long are the institutional investors going to continue to hope against hope for a turnaround?"

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