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[Andrew2]

Interesting article:

Game maker's sequel strategy: Getting old?

By Matt Richtel The New York Times

MONDAY, AUGUST 8, 2005

SAN FRANCISCO Electronic Arts, the biggest video game maker in the world, plans to release "Madden NFL 06" on Tuesday. It is the 18th annual version of an increasingly lifelike game that lets players be the quarterback of a pro football team, and it sells millions of copies each year.

In this year's edition, a slice of the field lights up to give the quarterback better vision and throwing precision when he makes a pass. It also lets players follow the athletes' off-the-field activities. But Steve Perry, 35, once an avid Madden fan, will not be lining up to buy the game. He said he had grown tired of spending $50 to get an update of a title he already owned. "I'm not willing to jump along and buy a new one each time," said Perry, a newspaper salesman in San Antonio, Texas.

His complaint underscores a big potential problem for Electronic Arts, which has suffered financial setbacks this year. Increasingly, industry analysts and game reviewers are wondering whether the company's dependence on sequels is a sign that it is losing its creative edge. By year's end, EA plans to release 26 games, all but one of them a sequel, including the 16th version of "NHL Hockey," the 11th of the racing game "Need for Speed" and the 13th of the "PGA Tour" golf game.

The company also relies heavily on creating games based on movies like the James Bond series and "The Lord of the Rings" rather than developing its own original brands.

"There's a feeling of franchise fatigue: gamers are wondering, 'Do I need to buy this game again this year? I just bought it last year,"' said Mike Hickey, an analyst with Janco Partners, an investment firm in Denver, who has a "sell" rating on EA's stock. The reliance on sequels and licensed media properties, he said, is "dampening the creative spirit."

Lawrence Probst 3rd, the EA chairman and chief executive officer, dismisses that view. "The teams that work on the franchise properties have a great deal of pride in constantly looking to improve the product," Probst said. Besides, he said, sequels appeal to Wall Street investors because of their steady following among consumers. He said that the company had a goal of putting out at least one new game every year and had several major original titles in its pipeline.

To be fair, sequels are a stock-in-trade of the industry, with nine of last year's 10 top-selling games being follow-ons. "Grand Theft Auto: San Andreas," the No. 1 title from Take-Two Interactive Software, for example, is the fifth version of that game. Reliance on sequels makes it possible to have a steady revenue stream in an unpredictable business.

Probst's defense, however, has not pushed aside worries about the company's continued growth. It recently reported a first-quarter net loss of $58 million, while sales dropped 16 percent from a year earlier.

The issue of creative fatigue emerges as EA and the rest of the video game industry have hit a cyclical soft spot. Consumers have slowed their buying of video games in recent months in anticipation of the release of two new video game consoles: the XBox 360, scheduled for release by Microsoft this year, and the PlayStation III, due from Sony next year.

Electronic Arts recently lowered its estimates for full-year revenue to between $3.3 billion and $3.4 billion, from $3.4 billion to $3.5 billion, in part blaming a delay in the release of the game "The Godfather," which will not be sold until next spring.

The highly anticipated new title, based on the mobster movies, was supposed to be out over the year-end holidays, when the game industry makes about 50 percent of its annual sales. But the company said it was still making improvements to the game. The sizable financial effect of that delay is precisely the kind of trouble that EA avoids by putting out sequels.

Electronic Arts has been profitable over the years because it has been able to smooth out the volatility of its business with games that sell year after year. With games based on soccer, racing, basketball and football, it can churn out dependable sequels that often are much cheaper to create than new titles, which can cost $10 million or more to produce.

Many analysts say that EA's strategy and dependence on sports games, which account for about 30 percent of its revenue, is smart. "Their sports business gives them a leg up on everybody else," said Michael Wallace, an analyst with UBS. "It's the closest thing there is to recurring revenue in this business."

But critics are worried that even if EA hangs on to the sports franchise, the company will need to take more creative risks to accelerate its growth.

Video game reviewers and Wall Street analysts are looking at "The Godfather" as a test of whether the company can create something great from scratch.

"The Godfather game is a big deal for that company," said Greg Kasavin, executive editor Gamespot.com, an online publication that reviews games. "If it doesn't turn out good for them, it's going to be a problem."

http://www.iht.com/articles/2005/08/07/business/game.php

 

[Chittagong]

This was probably posted a week before the new Madden went on sale and shifted a shitload of units

 

[Link316]

how is "The Godfather" creating something from scratch? its their same old strategy of relying some license rather than developing an original brand

 

[C- Warrior]

Ah snap Greg in Time Magazine. :lol

 

[C- Warrior]

how is "The Godfather" creating something from scratch? its their same old strategy of relying some license rather than developing an original brand

This is EA, that's has original as it's gunna get.

 

[Ruzbeh]

Yeah, this was posted before. The article sounds awfully familiar.

 

[Blackace]

Well it is only dated August 8th...

 

[Kangu]

:lol :lol at EA losing it's 'creative edge', like they ever had one.

 

[ManDudeChild]

:lol :lol at EA losing it's 'creative edge', like they ever had one.

Syndicate, Populus, SimCity, Command & Conquer and Dungeon Keeper told me to pass along a message to you, lets see.

*reads note*

It says, "Hey, just because we're what's wrong with the industry, doesn't mean we didn't used to be good. Was N64 or PlayStation your first console." Hm. I'm not quite sure where this message was going. Maybe you know something I dont.

 

[Kangu]

The Playstation was not my first console, but even if it was, that's still 10 years that EA has been creatively bankrupt.

Command and Conquer was by Westwood IRC, they were later bought out by EA.

 

[Myoclonic Jerk]

Syndicate, Populus, SimCity, Command & Conquer and Dungeon Keeper told me to pass along a message to you, lets see.

C&C - Westwood (bought by EA later)
Dungeon Keeper - Bullfrog (bought by EA? when?)
Populous - ????

 

[ManDudeChild]

C&C - Westwood (bought by EA later)
Dungeon Keeper - Bullfrog (bought by EA? when?)
Populous - ????

Still all count as Electronic Arts. I'm usually the last one to defend them, and I avoid purchasing most EA games released over the last couple console generations, but blanket statements are stupid and should be called out. Fyi, Populous was for the Amiga.

 

[Myoclonic Jerk]

Still all count as Electronic Arts.

No..

 

[pilonv1]

Still all count as Electronic Arts.

Command & Conquer 1996, Avalon Interactive
Command & Conquer: Red Alert 1997 Avalon Interactive
Sim City 2000 1993 Maxis Software Inc

 

[Vashu]

Populous was made by Peter Molyneux, Bullfrog, and EA published it... That's about it... Even though they bring out some good games I still hate EA.. They took out Origin and with that all hope for the third chapter in the Crusader series.. And I want a new Privateer!!!

 

[DDayton]

Remember when EA made console games that weren't based on licensed properties?

Or before that... when they made computer games that were original. Like Racing Destruction Set.

When did they get rid of Trip Hawkings? I'd find it bizarre if Trip's departure and EA's loss of creativity tied together somehow... it just doesn't seem possible.

 

[Acosta]

Still all count as Electronic Arts.

Hell, no, all that games are from Bullfrog, Avalon and Maxis. Being publlished by EA doen´t give them credit for them. EA was a fantasic company before, with good internal projects and the publisher support for games worth of it. Then it became a company obsessioned with growth, benefits and so.

EA can take credit for destroying Bullfrog and Origin, that is what count as Electronic Arts.

However, is not that I think EA is a bad company, no way. But they tend to be hit & miss and they are too focused on licended games and sequels. They should put more power in projects like Spore and Black & White to avoid that image of sequels only company.

 

[ManDudeChild]

EA was a fantasic company before, with good internal projects and the publisher support for games worth of it. Then it became a company obsessioned with growth, benefits and so.

But that's the point. They used to publish some original and great games, and used to develop some great ones too. Yes they're down right evil now, they've destroyed many developers, and they're basically what's wrong with the industry. But the point is, they haven't always been a pos company, and although it's true you can't credit them from a development standpoint on the titles I listed, you can on a publishing standpoint. Just as you can credit say Majesco for publishing a great game such as Psychonauts.