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EA Shows Magic Touch with Burnout 3

http://biz.gamedaily.com/features.asp?article_id=7840&section=toppers&email=

Third times a charm

Former Acclaim franchise gets a turbo-boost from EA marketing muscle. We take a look at the critical and commercial success of one of the hottest racing titles in years.

by Justin Davis

Although Burnout 3 is the third title in the popular racing series, it's the first to be published by Electronic Arts. The first two titles sold around 600,000 copies each and were met with critical praise, but this alone could not have been what caught EA's eye. EA not only acquired the publishing rights from Acclaim in early 2004, they also bought Criterion outright, the development house behind the franchise.

Standing out from the crowd
Why did Electronic Arts feel that Burnout 3 would succeed in a market that's already over saturated with street-style racers? "EA's biggest challenge is to get Burnout 3 to stand out from the crowd," said David Cole, President of DFC Intelligence.

Undoubtedly, buying Criterion for $48 million was also attractive because EA wanted to acquire the developer's ubiquitous middleware Renderware. Renderware has been licensed to Konami, Rockstar, Activision, and nearly every other major developer. Still, the eventual critical and commercial success of Burnout 3 and EA's pre-release hopes for the title show that they recognized the series' worth as well.

Although the quality of Burnout 1 & 2 led to Burnout 3 turning up on some media outlets' 'Most Wanted' lists in early 2004, the title didn't truly start to turn heads until E3. This was the first time that the press began to realize that the game was shaping up to be more than just a typical sequel. Besides featuring the "more, better, faster" sequel treatment, an extra year in development allowed Criterion to craft a nearly flawless experience.

Exceptional quality, while easier said than done, is one of the primary ways that Burnout 3 has separated itself from other street racing titles. "Burnout 3 is literally one of the highest reviewing games released in the past couple years," Cole said.

Splitting the market
EA recognized that the title was extraordinarily good, but rather than rest on their laurels and let the media build its hype, they took a more proactive approach. "On the marketing side we really focused on getting the game into people's hands (we had more than 100,000 demos at retail) because once you picked it up, you couldn't put it down," EA rep Trudy Muller told GameDAILYBiz.

With Burnout 3, EA was able to split the market in a way that only a very large company can do. The title proves that not only can NASCAR-type racing games coexist with the more arcade-style street racers, but the genres can be broken down even further to be successful—as long as you have the marketing dollars, of course. "We focused on creating a clear separation that this was 'not your father's racing game' and made sure crashing and fighting traffic had a prominent place in our marketing campaign. 'Aggressive Racing Required' is the game's tagline," said Muller.

"EA's ability to split the market is a key reason behind the company's continued success. They do it yearly with their NFL and college football titles, and now with Burnout 3 they have shown there's lots of room for different types of racing," said Cole.

Marketing know-how
An extensive TV, print, and online ad campaign coupled with glowing reviews still wasn't enough to convince all gamers. Besides the relatively newfound crowding of the racing market, this fall's unbelievable release schedule has forced many gamers to watch their budgets. The sentiments heard from many is that Burnout 3 was a game they'd like to purchase, but they were saving their money for something else that fell higher on their wish list.

Upon release, Burnout 3 was a resounding commercial success, despite the saturation of quality software in the pipeline for this quarter. "Burnout 3 is performing very well and is meeting or exceeding our expectations," EB Games' Divisional VP of Marketing Debbie Mola told GameDAILYBiz. Interestingly, despite the PS2's far larger installed base, Mola also reported that out of the chute, the Xbox version of the title was the better seller by a ratio of nearly 2:1. This increase in Xbox sales mimics that of Madden 2005, showing that hardcore gamers are responding to EA's titles being Xbox Live enabled.

Although the extremely high praise being paid to the title certainly helps, there's no doubt that EA's intelligent marketing will make Burnout 3 a far greater commercial success than it would have been otherwise. EA recognized that the title was something truly exceptional, and got it into as many gamers' hands as possible prerelease. Their ad campaign was not just about raising awareness, but also telling gamers why they should be interested in this title even though they may already have 1 (or 5) kind of like it. EA has once again found success through creating a great product and selling it the right way... to the right people.
 
I've been watching my friend play this game for a few days, but I only bothered to pick up the controller and try it for myself last night, and then I almost intantly went "WOW! I didn't know the game was this fun!"... Burnout 3 truely does rock.
 

Prine

Banned
Interestingly, despite the PS2's far larger installed base, Mola also reported that out of the chute, the Xbox version of the title was the better seller by a ratio of nearly 2:1. This increase in Xbox sales mimics that of Madden 2005, showing that hardcore gamers are responding to EA's titles being Xbox Live enabled.

oh.
 

puck1337

Member
They might just make their money back off of Burnout 3 sales alone. Amazing. A few years from now, this and the Bungie sale will be recognized as the most impactful acquisitions of this generation.
 
puck1337 said:
A few years from now, this and the Bungie sale will be recognized as the most impactful acquisitions of this generation.

I think the Take-Two aquisition of DMA Design might edge those out. It single-handedly built them into one of the top 3 publishers in the US (EA, Activision, Take-Two).

Bungie is huge and made the Xbox what it is, so it's importance can't be understated, but damn 25 million units of GTA3 & GTA:VC is hard to argue. Add in a probable 10 mil+ of GTA:SA and it will be one of the top franchises of all time.

In the rarified air of:
--------------------------
Mario
Zelda
Final Fantasy
Gran Turismo
Sims
Madden
 

gtmax

Member
Sony seems very slow in acquisitions. I always thought they shoudl have bough Criterion. They also should've nabbed Rainbow Studios and Melbourne House. They keep losing more exclusive games but i guess it won't matter next generation.
 
gtmax said:
Sony seems very slow in acquisitions. I always thought they shoudl have bough Criterion. They also should've nabbed Rainbow Studios and Melbourne House. They keep losing more exclusive games but i guess it won't matter next generation.

The main teams they should think about getting now are Zipper and Insomniac. Zipper seems especially important considering how big SOCOM has become for Sony.
 
gtmax said:
Sony seems very slow in acquisitions. I always thought they shoudl have bough Criterion. They also should've nabbed Rainbow Studios and Melbourne House. They keep losing more exclusive games but i guess it won't matter next generation.

The real problem with aquisitions is you run a very real risk of losing the key people involved at some point. Both parties have to really want it to happen.

Naughty Dog is losing Jason Rubin
Bungie lost Alex Seropian (and many others)
Rare lost the Stamper Bros (and many others)

and there are many more examples.

That being said, exclusives will be the major selling points next gen if the assumption that all of the hardware will have some level of parity is correct.

Major players out there that are coveted:
---------------------------------------------------
1) SquareEnix - Their merger was partially to protect themselves, but I still think Sony should attempt to aquire them outright. They can single handledly assure success in Japan. For Microsoft it would be tough as Square might brisk at being bought by them and lose alot of staff, but owning the Final Fantasy and Dragon Quest licenses...
2) Zipper - There were good before SOCOM, but now they're gold.
3) Blizzard
4) Bioware

Those developers bring with them not only great talent, but (with the exception of Zipper) also tremendous IP's.

There are a number of independant developers that are great, but I don't know that buying them has all that bang for the buck.

Insomniac, Harmonix, and Silicon Nights come to mind.
 

TekunoRobby

Tag of Excellence
EA purchased Criterion for RenderWare not because of Burnout 3. Burnout 3 is the extremely nice frosting on an already excellent cake. Why do people insist it's the other way around.

Every sale of GTA: San Andreas and THUG 2 (etc., etc.) is going to make EA money.
 

Prine

Banned
Im pretty sure Jason Jones is still with Bungie, and the Stampers Bros are still at Rare. Though they lost David Doak to Free Radical, and some other producer to Zoonami
 
Prine said:
Im pretty sure Jason Jones is still with Bungie, and the Stampers Bros are still at Rare. Though they lost David Doak to Free Radical, and some other producer to Zoonami

You're right about Jones, I mean Alex Seropian (fixed above)
 

PhatSaqs

Banned
Speaking of Bioware, I hear there's a larger reason as to why they've shifted focus onto creating and establishing their own IP. Has something to do with a potential deal with MS.
We'll see I guess ;)
 

kaching

"GAF's biggest wanker"
TekunoRobby said:
EA purchased Criterion for RenderWare not because of Burnout 3. Burnout 3 is the extremely nice frosting on an already excellent cake. Why do people insist it's the other way around.

Every sale of GTA: San Andreas and THUG 2 (etc., etc.) is going to make EA money.
I think Criterion's game development may be on more equal footing in importance with Renderware than you think. Criterion are hot to trot to put Burnout on the PSP from the sound of it and EA can parlay the newfound success and attention the third entry is getting into a PSP outing most likely. Plus, there's Black which also turned heads at E3, behind closed doors. EA's bread and butter is game IP and they've been saying for a while now that they want to grow their own stable of original IP rather than relying heavily on external licenses. Middleware is new territory for them and somewhat speculative
 
kaching said:
EA's bread and butter is game IP and they've been saying for a while now that they want to grow their own stable of original IP rather than relying heavily on external licenses.

Yes, but this is EA we're talking about...owner of the most game IPs in the world. They don't need the games quite that much, IMO. I'm going with the Renderware bit as their chief goal in the Criterion acquisition here. They want to expedite the process of next-gen R&D and cross-platform development. Instead of spending loads on creating their own internal bits for engines that work well across all main platforms, I'm thinking that they're planning to use Criterion's Renderware and associated assets to make certain that they can deliver big titles, for a bit less cash spent, on all major platforms right from the word, go. Then there's the extra income and possibility for more acquisition/publishing to be had from dealing with those licensing the tech.
 
MightyHedgehog said:
Yes, but this is EA we're talking about...owner of the most game IPs in the world. They don't need the games quite that much, IMO.

That might be going a bit overboard. I'm not sure they've got the most game IP's. Madden isn't really as much an IP as a brand. One that they don't own, but have to pay for, as many of their games are licensed in some way, including all the sports, Harry Potter, Bond, & LOTR They might just have the most, but I think Nintendo might have something to say about it.
 

TekunoRobby

Tag of Excellence
kaching said:
I think Criterion's game development may be on more equal footing in importance with Renderware than you think.
Those games are most likely what put EA over the edge in terms of purchasing them outright. They are definitely NOWHERE NEAR equal footing in terms of importance with RenderWare.

Owning one of the most popular and efficient game engines along with the entire programming/support crew so you can have a single unifying foundation to implement all future games is worth FAR FAR MORE than two game IPs and a competant game developer. The projected savings of this deal on their development budget alone is probably astronomical. Let's not even think about what they're going to make with all the third party lisences, that'd make our heads spin.
 

pilonv1

Member
kaching said:
I think Criterion's game development may be on more equal footing in importance with Renderware than you think.

EA now own the most widely used middleware in the market, and if people want to use it EA gets a cut. So not only do they make money off their games, they're now going to make money of other publishers games.
 

DarienA

The black man everyone at Activision can agree on
pilonv1 said:
EA now own the most widely used middleware in the market, and if people want to use it EA gets a cut. So not only do they make money off their games, they're now going to make money of other publishers games.

The question with this generation winding down now becomes is the next version of Renderware which I believe was announced a bit back going to be less appealing to developers because it's owned by EA?
 
TekunoRobby said:
EA purchased Criterion for RenderWare not because of Burnout 3. Burnout 3 is the extremely nice frosting on an already excellent cake. Why do people insist it's the other way around.

Every sale of GTA: San Andreas and THUG 2 (etc., etc.) is going to make EA money.

I'm not sure that anyone will know the answer, but it's worth asking.

Does anybody know how the licensing of the Middleware works? I'm sure there's an upfront fee involved to insure they get paid regardless of how well the game does. But of the over 500 (according to Criterion) games that use some part of it (it's a full suite of middleware), most probably sell < 250-500k. So, does it make sense for them to try and get a per unit fee on games?

From another perspective, GTA has sold over 25 million units with renderware and it'll probably jump to 35-40 million within a year. I don't think anybody would argue that the reason GTA is great is because of the renderware engine, beyond, of course allowing for the fact that not worrying about the engine lets them concentrate on other areas. I'm pretty sure Take-Two wouldn't want to agree to a licensing situation where they had to pay a per unit fee, thus giving the renderware folks a huge payout when 99% of the other renderware clients pay much, much less for the same engine.

Any thoughts?
 
DarienA said:
The question with this generation winding down now becomes is the next version of Renderware which I believe was announced a bit back going to be less appealing to developers because it's owned by EA?

To bigger publishers, I'm sure. Take Two isn't about to give one their rivals any money if they can help it. Unreal tech and others are being poised as multiplatform solutions and I'm sure that there will be many more publishers flying their own multiplatform solutions.
 

TekunoRobby

Tag of Excellence
I'm not trying to undercut the awesomeness of Burnout 3. That game is truly one of the best racers (if not the best) of 2004.

Seriously, guys give it a shot. It's that good.
 

kaching

"GAF's biggest wanker"
Back when the EA/Criterion deal first went through, Faf chimed in to mention that Renderware licensing is among the cheapest for middlware right now, which is part of why it's so popular. Maybe he could clarify if there's a royalty per unit sold involved or if its strictly an upfront license fee.

Regardless, the EA/Criterion deal went down for about $50 million, not $400 million. In other words, one successful million selling game would go a long way towards paying off that investment, which Burnout 3 sounds like its on its way towards doing. Game IP by itself is enough to justify the purchase.
 
Michael Pachter from Wedbush Morgan Securities adjusted the earnings and sales estimates for EA on Wednesday, Sept 15, due to strong shipments of BO3. However, he didn't talk about the revenue contribution from Renderware. The following is an excerpt from the research report:

We are adjusting our revenue and EPS estimates for Electronic Arts for the next two quarters, due to our belief that the company will substantially exceed the high end of its revenue guidance (between $680 million and $715 million) for Q2, and our belief that the company faces significant competition during Q3. We are increasing our revenue estimate for Q2 from $715 million to $752 million and our EPS estimate from $0.35 to $0.39, reflecting our expectation of strong initial shipments of Burnout 3. The game has consistently received ratings in the 90s, and we believe that it will sell quite well for the foreseeable future.

We are lowering our revenue estimate for Q3 from $1.518 billion to $1.482 billion and are lowering our EPS estimate from $1.34 to $1.28, reflecting a combination of lower revenues from Madden NFL 2005 reorders and higher marketing expense for the game. We believe that Madden sales during the holidays are at risk due to competition from Take-Two's ESPN NFL 2K5, which is currently offered at $19.99 compared to the $49.95 retail price for Madden. We believe that EA will respond to this competitive threat either through discounting, increased marketing, or a combination of the two. We are lowering our FY:05 estimate from $2.15 to $2.13, reflecting the adjustments to the next two quarters.
 

TekunoRobby

Tag of Excellence
No one has a doubt in their mind that those games will help recoup the costs of the Criterion buyout but again they pale in comparison with acquiring RenderWare.

If you were to analyze the projected sales of Burnout 3 minus the money spent on advertising and assorted publishing costs you could easily say it justifies the purchase. Even if it only makes them half of what they spent, Criterion is an excellent team that has a very bright future.

Now analyze and compare what EA is going to save by having a singular solution for all of their projects versus their current development method. This is including having an in-house suite of tools that can power all of their products with an excellent support group that is available to every single EA team within the company, independent of projects. Now factor in amount of cash from every single lisencee, essentially your competitors success is now a small part of yours.

Now you're getting to the real reason behind the buyout, a single, unified and streamlined development solution that will both speed up the process and ensure compatability with all next-gen platforms. That is something they didn't have to develop, it's already done for them thanks to Criterion. With a company as large as EA that is ESSENTIAL with the amount of projects they are working with. EA is currently expaning with new IPs on top of the growing list of franchises they already own. They don't have the resources or time to develop a solution similar to Criterion's.

RenderWare was critical component for ensuring EA's future profitability as they continue to grow as a company.
 

GDJustin

stuck my tongue deep inside Atlus' cookies
The article is all about the success of burnout 3 and the history behind it. A different game is covered every week. I could have gotten into the Renderware situation in more detail, but the Chart Toppers feature is meant to be sort of a profile of the most successful games on the market, and why they're succeeding.

Going into depth about renderware just didn't fit.
 

Gattsu25

Banned
Interestingly, despite the PS2's far larger installed base, Mola also reported that out of the chute, the Xbox version of the title was the better seller by a ratio of nearly 2:1. This increase in Xbox sales mimics that of Madden 2005, showing that hardcore gamers are responding to EA's titles being Xbox Live enabled.

consumers are starting to realize that when it comes to multiplatform games, 99% of the time XB version > PS2 version
 

BeOnEdge

Banned
Interestingly, despite the PS2's far larger installed base, Mola also reported that out of the chute, the Xbox version of the title was the better seller by a ratio of nearly 2:1. This increase in Xbox sales mimics that of Madden 2005, showing that hardcore gamers are responding to EA's titles being Xbox Live enabled.

i just had to say it one more time....OOOOOOOOOOOOOOOOOOOOOOOoooOOOOooOOOhHHHHH!!!
 
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