08/18 - Electronic entertainment has evolved well beyond the point of flashing fists and handguns - East Valley Tribune: Business

08/18 - Electronic entertainment has evolved well beyond the point of flashing fists and handguns

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Posted: Monday, August 18, 2003 9:36 am | Updated: 2:09 pm, Thu Oct 6, 2011.

REDWOOD CITY Calif. - Video games are no longer simply about getting the highest score or disgracing an opponent. They’re also about immersing yourself in makebelieve worlds you help fashion.

No one understands that better than Electronic Arts, the video game publisher that has evolved over two decades into an entertainment powerhouse as muscled as some of its game characters. EA sees itself not as a toy maker, but a provider of mainstream amusement that adapts to cultural shifts along with its customers. ‘‘It’s not like GI Joe, it’s more like TV,’’ said company spokesman Jeff Brown.

The company publishes the all-time best-selling computer game, "The Sims," which is essentially a digital dollhouse. Addicted players from investment bankers to housewives have bought 27 million copies in three years. It’s an example of what EA does best, luring gamers from outside the

testosterone-charged, under-25 crowd.

EA also was the first video game developer to successfully exploit a franchise model — games built upon story sequels, sports-like seasons, and expansion packs that have fans buying follow-up versions year after year.

The company’s rivals develop plenty of hits. And EA can’t take credit for all the breakthroughs in visuals and ever-more addictive features.

But no one can argue with its ability to create games that sell, squeeze every dollar out of them and get them on retailers’ shelves.

In the 14th iteration of "Madden NFL" that hit stores last week, gamers can be coach, owner and quarterback, controlling not only the plays on the field but the price of hot dogs.

And in EA’s upcoming online version of "Tiger Woods PGA Tour," players can fashion personas that are bignosed or freckled, beer-bellied or toned — as close to or far from themselves as they’d like.

Don’t be fooled by the recreational opportunities at EA’s shiny and expansive Redwood City headquarters, where employees can use a theater for video game playoffs or hit the couch in a darkened break room with a flat-screen TV and a dozen other game setups, chalking off the time they spend there as research.

Last year, EA’s 4,000 employees produced 22 games that each sold more than a million copies, while five sold more than 4 million. EA’s profits tripled to $317 million in the fiscal year ended in March, and company executives expect revenues to top the industry’s growth of about 15 percent this year.

‘‘We’re relentless and we’re serious about it,’’ said company president John Riccitiello.

Yet for all its predatory business prowess, EA shows little blood lust in its video games.

Most of EA’s games are Boy Scout-clean compared to all the gory mature-rated games on the market, some of which have players slash an enemy’s neck with glass shards or pull out body organs. Even with EA’s James Bond games, the Bond girls are more clothed than some players would like.

‘‘They’re not whores and hookers. Their blouses don’t pop open,’’ Riccitiello said. ‘‘We’re not going to jump on the bandwagon just because everyone else is.’’

EA’s management opposes gratuitous violence and sex, but it hasn’t avoided M-rated games entirely, and does plan to produce more, says Riccitiello. He cites "Alice" and "Clive Barker’s Undying" and another M-rated game, "Medal of Honor."

But some analysts say EA may have to rethink its Disney-like approach if the popularity of M-rated games continues to rise. The ‘‘mature’’ category represented 18 percent of all console games sold in 2002, up from 7 percent in 2000, said Michael Pachter, analyst at Wedbush Morgan Securities.

‘‘That’s their highest risk, I think. Nobody bleeds in their games,’’ Pachter said.

Founded in 1982 by Trip Hawkins and Bing Gordon, the company has turned into a $2.5 billion empire. With recurring revenue from its fortress of franchises, Pachter thinks the company will rule the $10 billion gaming industry for another 10 years.

EA has what analysts call the industry’s strongest balance sheet, reporting more than $1.6 billion in cash and short-term investments and no debt in the last quarter, along with earnings well ahead of Wall Street estimates. The company also raised its earnings outlook for the year.

As other Silicon Valley companies shrivel, EA just constructed a new building at its headquarters and plans to double the size of its Los Angeles studio from 300 developers to 600 in two years.

EA’s dominance has even allowed it to snub Microsoft.

When EA launches its online versions of Tiger Woods golf and other games this fall, they will be playable only on Sony’s PlayStation2, not Microsoft’s Xbox. That’s because Microsoft refused to give EA royalties or a cut of the subscription fees for its Xbox Live game network, EA said.

Even America Online recently agreed to reverse the money flow, paying EA instead of collecting fees for carrying EA’s Club Pogo games on its Internet service.

Part of EA’s strength has come from correctly betting its resources on games for new platforms, as it did for Sony’s PlayStation in 1995.

Not every move has paid off for EA.

Despite a $300 million investment in EA.com, the subscription-based online arena for "The Sims" game has not taken off as expected. The division reported a $12 million loss in the fiscal year ended in March, the final time EA broke out results for the segment.

Still, EA paces an industry that has evolved from a fragmented market built by smallstudio developers to one churning out Hollywood-style rel eases with music soundtracks and celebrity voices.

When Warner Bros. sought bids for a line of Harry Potter video games, it chose EA for its creative vision and distribution power, said Warner Bros. spokeswoman Karime Joret.

The video game version of "Harry Potterand the Sorcerer’s Stone," launched in 57 countries on the same day as the movie two years ago — a marketing triumph that involved 18 months of collaboration between the producers, artists and engineers of the movie and the game.

Last year, the sequel, "The Chamber of Secrets," was released in 75 countries, 31 languages and on seven different game platforms. Both have so far generated $500 million in revenues.

‘‘Other studios can create good games, but no one else could put it on the shelf like that,’’ crowed EA’s Brown.

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