Editorial: Is Electronic Arts’ Reign Over?

July 27, 2007

One announcement that may have come as a shock to many within the industry this past week was that Activision snatched the “biggest third-party on the block” crown from EA for the first half of 2007, bolstered by an impressive $387 million in earnings, over $20 million more than their Redwood City rivals for the same period. Of course, to be fair to EA, the sports franchises that make up the bread and butter of the bottom-line don’t start to roll out until August, so any claims of a new world order are probably a bit premature.

Still, the announcement was somewhat refreshing for the scores of us who like to watch the big corporations duke it out like some sort of capitalistic soap opera. Gamers have long bemoaned EA’s rigid focus on riding the same old intellectual properties into the ground, releasing yearly updates to their major franchises and charging full retail price for what often amounts to roster reshuffling. Sports games and yearly updates definitely have their place at the table – Madden alone has probably expanded the gaming market more than a lot of Italian plumbers I could mention. But their rigid focus on this tired release philosophy has made them few friends within the gaming community.

In light of EA exec John Riccitiello’s comments that the company has under-supported Nintendo’s Wii, is it possible that EA might take a few furtive steps in the direction gamers have been pointing for years – using their position as an industry leader to drive the development of innovative and experimental titles? Before I started praising my new Activision overlords, I thought it might be a helpful exercise to compare the two companies’ strategies for the remainder of this year to find out whether EA’s really operating from such a prone position as the community seems to believe it is.

Activision’s 2007 Upcoming Release Lineup:

Bee Movie Game (PC, Wii, DS, 360)
Soldier of Fortune: Pay Back (PC, 360, PS3)
Call of Duty 4: Modern Warfare (PC, 360, PS3)
Spider-Man 3 (PSP)
Guitar Hero III: Legends of Rock (Wii, 360, PS2, PS3)
Tony Hawk’s Proving Ground (DS, Wii, 360, PS2, PS3)
Spider-Man Friend or Foe (PC, Wii, DS, 360, PS2, PSP)
Animal Genius (DS)
Enemy Territory: Quake Wars (PC, 360, PS3)

Of course, we also have to keep in mind that Activision just recently released Guitar Hero Encore: Rock the 80s and a Transformers game for nearly all platforms, both of which you can expect to sell extremely strongly. But if you look at what the company is offering for the rest of the year, it becomes evident that nearly all of their titles in development are going to be big hitters in terms of sales.

If the success of past iterations is any indication (and if people are still digging the novelty of the idea), Guitar Hero III will sell like hotcakes, even if Neversoft’s re-imagining of the franchise doesn’t end up being quite what fans of the series are used to. Call of Duty 4 made a huge impression at E3, and given how sales of Call of Duty 2 are still plugging along, it’s not too much to expect that the fourth game in the franchise will continue to exceed sales expectations.

On the flip side, while the Tony Hawk franchise has been a huge money-maker for Activision over the past decade, I don’t think it’s got nearly the momentum that it once had. I’d expect it to probably crack the Top 10 in NPD sales for at least a week or two, but I wouldn’t be shocked at all if it got flushed out quickly by all the other mega-hits coming out around the same time. Enemy Territory: Quake Wars was highly anticipated amongst fans, but the demo left a sour taste in most peoples’ mouths. I don’t think it was really poised to be a big seller outside of the hardcore community anyway, but with the poor showing it received, especially in playable form, it might be hard for them to recover.

EA’s 2007 Upcoming Release Lineup:

NCAA March Madness 08 (PS3, 360)
Burnout Paradise (PS3, 360)
Medal of Honor Heroes 2 (Wii, PSP)
Army of Two (360, PS3)
Crysis (PC)
Left 4 Dead (360)
The Simpsons Game (Wii, DS, 360, PS2, PS3, PSP)
SimCity Societies (PC)
Mercenaries 2: World in Flames (360, PS2)
Medal of Honor: Airborne (PC, 360, PS3)
Need for Speed Pro Street (PC, Wii, DS, 360, PS3, PSP)
FIFA Soccer 08 (PC, DS, 360, PS2, PS3, PSP)
EA Playground (Wii, DS)
Half-life 2: The Orange Box (PC, 360, PS3)
Rail Simulator (PC)
NBA Live 08 (PC, Wii, 360, PS2, PS3, PSP)
EA Replay (PSP)
SKATE (360, PS3)
MySims (Wii, DS)
NHL 08 (360, PS3)
Tiger Woods PGA Tour 08 (PC, Wii, DS, 360, PS2, PS3, PSP)
Madden NFL 08 (PC, Wii, DS, 360, PS2, PS3, PSP)
Boogie (Wii)
Rock Band (360, PS3)
Hellgate: London (PC)

You don’t need me to tell you how big that list is. Even if you were to take away all the sports games from that list, you’d still find a healthy and hearty mix of new IPs (Army of Two, Hellgate: London, and Crysis seem like slam dunks), promising sequels (Mercenaries and Medal of Honor look pretty good), and direct snipes at the competition’s market share (how else do you explain SKATE and Rock Band?). Even if you don’t like the company for it’s business practices, it’s hard to imagine a Christmas list later this year that doesn’t include at least one title published by EA.

The one flaw I see in their strategy is the flaw that CEO Riccitiello highlighted in his meeting with investors – while EA is the number one publisher for the Wii at the moment, they’re still under serving that market and losing a lot of potential revenue. If there’s anybody whose good at squeezing money from the casual market, it’s EA, and the Wii fits that bill more than any console in recent memory. Of course, they’re in no worse a position than Activision in this respect, but it’s still a glaring oversight on their part.

So what can we conclude from this? Pretty much what we suspected all along. EA is anything but weak at the moment. The multi-headed hydra of a publisher is poised to pounce on consumers this fall, and you can expect them to do it with some authority. Indeed, with Madden‘s release date right around the corner, Activision’s edge in sales will erode quickly, despite their best efforts, and the world will soon return to a state of normalcy.

In the end, so what if EA is still the Mr. Burns of the game industry? As long as they keep delivering the games, we’ll keep playing them.