AGTurbo Says: EA Takes Chances

AGTurbo is a passionate guy, with a unique perspective on the world of gaming. Every week or so, we give him a chance to sound off on whatever tickles his fancy. This week, Turbo takes a look at Electronic Arts; the former Evil Empire. 

 I give EA the most ambitious publisher award of 2011, for four main reasons.

First off, buying casual developer Popcap Games for $650 million dollars, with value up to $1.1 billion dollars in stock options. Crazy, when you think of a developer that made Peggle, Bejeweled, and Plants vs. Zombies. EA in the past spent over $350 million dollars acquiring another casual developer, Playfish, back in 2010. They are very serious in competing with the current number one, Zynga, in the realm of social gaming and sparing no expense. CEO John Riccitiello had a goal of earning one billion dollars 2011 fiscal year.

My second reason is Battlefield 3. Never has there been a FPS to market itself head to head with the number one Call of Duty. CEO John Riccitiello said EA was prepared to spend over $100 million dollars on advertising and marketing for Battlefield 3. In a post COD 4 dominated FPS world, no competitor spent as much money marketing an alternative to Call of Duty. Battlefield 3 did wonders for EA becoming their fastest selling game they ever published, selling over 5 million the first week, and over 8 million units by the end of November 2011. While it doesn’t reach Modern Warfare 2 sales levels, so far it has been the most successful FPS to compete with Call of Duty. While they announced that a Battlefield 4 is coming, I’m not surprised if they will have a big budget FPS late October 2012 two to three weeks before Call of Duty Black Ops 2 is out.

EA's stock prices. I won't pretend to understand this, but maybe you can.

My third reason in Star Wars The Old Republic. This game was made to compete with Activision-Blizzard's number one MMO for the past 6 years: World of Warcraft. It has been in development for over 6 years and the production cost estimates range wildly. Analysts like Michael Pachter estimated that it cost EA at least $80 million dollars in production costs.  Other sources put development costs anywhere from $80 million to $300 million. Cowen & Company analyst Doug Cruetz, based on server activity, estimated that Star Wars the Old Republic sold over 1.5 million units. Which makes it the fastest selling MMO of all time. However the most important thing is how well can EA retain their base. If it doesn’t retain their base this will probably be the most costly for my four main reasons.

My last reason is their online distribution service Origin. It is competing with the number one in digital distribution which is Steam from Valve. It’s been a rough start for Origin. EA is very ambitious and sees digital sales as the future. Activision currently isn’t making strides in digital distribution except newer channels to monetize Call of Duty. The few instances of bad service from Origin, and how clunky it is to start Battlefield 3 on Origin get crucified on Reddit regularly. When Origin gets it shit together, there will be amazing price wars between them and Steam. Until then, I will be Steam-ing all the way.

Overall EA, is a very ambitious company trying to compete with the best all at the same time. EA is shooting in multiple directions to be the number one publisher. Some of their ventures will do great, but they are stretching themselves out.

 

 

AGTurbo knows everything you didn't know you didn't know. Follow him on Twitter @AGTurbo9000.