Last week Electronic Arts made public an audacious bid to acquire Take-Two Interactive, which had been rejected. The move came several months after the announcement that Bioware and Pandemic would be acquired by EA. The publisher's CEO, John Riccitiello, is certainly ringing in the changes. Here, former GamesIndustry.biz editor Rob Fahey considers what we're seeing and what it means for the company that many gamers love to hate.
There's something about the rolling flatlands and tranquil shores that lie between San Francisco and San Jose - some undefinable quality of air, earth or water that breeds a strange combination of genius, perfectionism and idealism. Its historical and cultural roots are complex, buried deep in San Francisco's liberal, multi-cultural background and the burning ambition of the pioneers who created the Bay Area's cities in the gold rush.
This is the background to many of the world's biggest corporate success stories of recent decades. The passion and idealism that flowed into San Francisco - from hippies hoping to change the world, to young gay people hoping to escape it - blended with the hard-nosed business nous of California's pioneer spirit. From it were born corporations like Google, a corporate behemoth which manages to soar above the stock market, dominate its target markets and challenge Microsoft's hegemony, all while still repeating its famous mantra, "Do No Evil".
Just down the road in Cupertino sits another of the Bay Area's remarkable creations - Apple, whose modern stylish image and dominance of digital media is belied by its very street address. Its head office is 1, Infinite Loop - a programming geek in-joke that harks back to Apple's origins in the late seventies as a haven for talented, idealistic engineers who knew that their products could change the world.
One of those people was Trip Hawkins. Shortly after Apple's IPO in late 1980 made him into a wealthy man, he left the company to pursue his real dream, the creation of a company that would be at the vanguard of a whole new medium - videogames.
Hawkins' dreams were far from conservative. He didn't just want to make games - he, like many others who have pursued their dreams in that unique area along the Bayshore Freeway, wanted to change the world. He believed that computer games and simulations were the antidote to passive broadcast media, that they could help society by boosting learning and understanding through an entertainment medium.
He also believed that game designers would be the auteurs and creative geniuses of their day, and drew inspiration from United Artists, the Hollywood studio created by early film pioneers like Charlie Chaplin and Douglas Fairbanks. Early game releases from Hawkins' studio reflected that ethos, with the game designers' names featured on the front of the stylish, album-style boxes. The name, too, reflected Hawkins' ambition.
The name was Electronic Arts.
The Fall From Grace
Hard to believe, isn't it? Our perceptions of EA have generally been shaped by the nineties and the noughties, not by those early years of idealism and ambition. Hawkins left EA in the early nineties, after appointing Larry Probst as CEO in 1991. By that stage, EA was already a behemoth in the burgeoning industry, and the seeds had been sown for vast ongoing franchises such as Madden NFL. Probst, however, was the first real "suit" to take charge of the firm, coming from a career featuring executive posts at general consumer goods companies like Johnson & Johnson or Clorox (a US bleach company). In 1997, he would be joined by John Riccitiello, a marketing veteran with a background at product firms such as Pepsi, Haagen-Dazs and, most recently at the time, the Sara Lee Corporation - where he was president and CEO of the bakery division.
It was under the stewardship of these men that EA became the games industry's 800-pound gorilla, a company whose wealth and influence in the market allowed it to crush competitors, swallow up rivals and monopolise entire genres for years on end. It created franchises which were annually refreshed, milking the cash cow anew with each iteration. Ironically, given that EA's original break in the market came via a great deal negotiated between Hawkins and SEGA for Genesis development, EA may even have inadvertently killed their old ally's platform holder ambitions with its failure to support the Dreamcast. A tough break for SEGA, but EA can't have been too unhappy with its growing reputation as a kingmaker.
At what cost, however, did this success come? That's easy. First, EA in some respects fought too hard to win lucrative sports and movie licences, turning franchises like FIFA, Harry Potter and Lord Of The Rings into the heart of its business - while sidelining its efforts to create the valuable original IP that would really let it rub shoulders with Hollywood studios on their own level.
Speaking to Probst at E3 in 2004, GamesIndustry.biz noted EA's deep longing to sit at the high table with other media holders. "There are parts of Disney we admire greatly," he said. "They have the most valuable portfolio of intellectual property of any company I can think of. That's something we admire and would like to emulate." The ambition was genuine, but the path was rocky - for years EA struggled to create new IP that could challenge the importance of its licensed products, only really achieving that goal for the first time with The Sims.
The other cost of EA's success was less obvious, but perhaps even more important - EA lost the respect of gaming's core consumers. Madden, FIFA and their ilk would sell like hotcakes anyway, and movie-licensed titles sold to an audience that never ventured onto forums or read the specialist press - but in other respects, the perception of EA as the Evil Empire, a shovelware operation that had no regard for quality or innovation, hurt the company terribly. It hampered efforts to create original IP, created hostility among the key consumers who act as opinion-formers for their peer groups, and even hurt the company's recruitment efforts. Most of those who want to work in videogames are, after all, gamers.
Moreover, EA's reputation wasn't entirely undeserved. Aside from its policy of annual updates to key franchises - resented by more hardcore gamers for charging customers for very minor tweaks to the formula - EA had also managed to absorb and subsequently kill off many of the most creative and beloved game development studios in the world, forging a reputation as a acquisitive behemoth that squashed innovation and creativity under layers of corporate drudgery.
The hitlist is depressing. Origin Systems, developers of the Ultima series. Bullfrog, super-talented British creators of gems such as Populous, Magic Carpet, Theme Park and many others. Maxis, creators of Sim City and its subsequent spin-offs. Westwood Studios, who practically invented the real-time strategy genre and created Command & Conquer.
Of course, EA itself would argue - quite convincingly - that not all of those acquisitions were mishandled, or all of those studio cultures squashed. Origin, after all, went on to develop and release Ultima Online as part of EA, while Maxis is still theoretically in existence - and its top creative mind, Will Wright, is working on EA's much-anticipated Spore. To gamers, however, EA seemed like the industry's answer to Star Trek's evil Borg, assimilating diverse cultures and stripping them of their individuality.
The New Deal
It's no wonder, then, that the gaming world groaned loudly when Electronic Arts bought a little-known investment vehicle called VG Holding Corp - a firm which happened to be the parent company for two of the industry's most respected and well-loved contemporary development studios, Pandemic and Bioware. Nor is it a surprise that there's been such a negative reaction to EA's most recent acquisition efforts - its attempt to buy Take-Two, the publisher behind the Grand Theft Auto franchise.
However, such reactions may not be entirely justified - at least, not any more. EA has spent the past year changing and reinventing itself. After years when it seemed content to sit back and churn out annual updates and movie licences, EA has been brought up short by a stagnation of its income - at a time when its development expenses have skyrocketed.
With the Lord of the Rings franchise all but finished and the end in sight for Harry Potter, with the strength of the Wii creating huge challenges for the cross-platform strategy that saw EA happily through the past half-decade, and with other publishers merging or bulking up to rival EA's might, some change was inevitable. When John Riccitiello returned to EA in early 2007 after a three-year absence (during which time he co-founded Elevation Partners, an investment firm that bought Bioware and Pandemic after failing to acquire Eidos), change was arguably long overdue.
Since his installation as CEO, however, Riccitiello's appetite for change has been undeniable. His objective appears to be a complete overhaul of EA's attitudes to everything from acquisitions to development - building an environment in which original IP can be created, innovative concepts can be explored and creative studios that have been brought in from outside can thrive, rather than being suffocated. If that all sounds like common sense to any gamer, then that's exactly why it's so unusual - and so positive - to see it coming from the man in charge of Electronic Arts.
Within EA, the single largest change Riccitiello's stewardship has brought about so far is the re-organisation of development into four major labels - huge "silos" inside the company that reflect the markets the company wants to tap into. The Sims gets a label all to itself, while EA Sports, EA Casual (for mainstream games) and EA Games (for headline, AAA titles) are all divided off from one another into other labels. The idea is to give proper focus to the firm's development efforts.
By all accounts, it's working - not least in its ability to easily accommodate acquisitions. As managing director of Elevation Partners (which owned VG Holding, which in turn owned Bioware and Pandemic), Riccitiello could practically have brought the two top-flight developers with him on the day he first sat down again on the EA throne. Instead, the deal was done eight or nine months later - long enough for the labels to be in place, and for Riccitiello to be confident that the studios would be allowed to go about the business of making games without having EA middle managers stepping on their patch and messing things up.
The Leaf Turns Over
The Take-Two deal, too, was put on hold. Riccitiello has gone on record to say that EA was in talks with Take-Two in early 2007, but he scotched the deal, putting it on ice until December of last year. This wasn't, we're told, because Take-Two was an unappealing prospect - but rather because EA needed to get its house in order before trying to swallow a rival publisher.
That spring-clean has had consequences for more than just acquisitions, of course. Across the company, the word is that while the big franchises are continuing, more innovative and original development is now to be encouraged. Quality is a new watchword for a firm frequently accused of churn, and the new Holy Grail within EA is the creation of original IP - franchises that EA generates itself, owns itself, and which can go some distance to clawing back the respect of gamers as well as adding plenty of dollars to the bottom line.
In some parts of the company, this is more obvious than in others. One studio that will be watched with keen interest in the coming months and years is the low-profile outfit under the EA Games label, called EA Blueprint. With its roots in the soil of the Bay Area which spawned EA in the first place, and headed up by Brit ex-pat and EA veteran Neil Young, the division is devoted to exploring new approaches to development, nurturing innovative (and thus risky) low-cost projects, and pushing the boundaries between games and other mediums. Blueprint's remit includes EA's work with Steven Spielberg - and the Maxis studio.
In the final analysis, though, this may all sound grand and good - but is it working? Is Electronic Arts really about to break out of its decade as the industry's Evil Empire, and become the Magic Kingdom?
Right now, nobody can answer that question - not even John Riccitiello. The company is making all the right noises, and more importantly, Bioware and Pandemic are making the right noises - in that we'd been expecting them to make horrible throttling noises as the life and creative freedom was choked from them, and they're actually doing quite the opposite. Both studios seem happy and healthy, and EA seems desperately protective of the independence of its new brood. PR, of course, can distort such things - but if that really is the case, then long may it last.
We'll know for sure when the first EA-published games appear from the studios - just as we'll know how EA's own internal creative shifts have affected the firm when their original IP starts to hit the market later this year. That's going to be the real test of EA's commitment to originality, innovation and new IP - but if nothing else, we know that the line-up from the publisher for 2008 and 2009 is looking more interesting for gamers than any of EA's release schedules for a decade.
Hard facts on the full release list are thin on the ground, but this we have been able to establish - around a third, if not more, of the games EA will release in the coming 12 months could well be original IP. They may not be great original IP - we'll just have to wait and see - but either way, this isn't the EA we've all come to know and hate. This is a new EA, and it's an EA that doesn't just want to sell FIFA to the annoying kids next door any more - they want to sell games to you, too.
In the next few months, we'll know whether EA's bid for Take-Two has been successful - and right now, all the signs suggest that it will be. It's hard to see Take-Two's shareholders holding on to their risky stocks rather than accepting EA's generous handout, regardless of what the management may recommend. A year ago, we'd have been preparing our obituaries for Rockstar and its studios, and wondering how Grand Theft Auto would look as an annual release.
Now, we're not so sure. EA has behaved differently in the last 12 months - Riccitiello's sure hand on the tiller is guiding the firm back into the kind of waters that Trip Hawkins originally envisioned back in the 1980s, and words like risk, innovation and originality are no longer dirty. We like what we hear, and we hear it more loudly with each passing day. Perhaps the spirit of the Bay Area's idealism and genius is finally returning to Electronic Arts' corridors.