Electronic Arts is facing a tough uphill battle. While the company is proving itself in the digital and mobile spaces, its boxed retail games -- still the bulk of its business -- are declining badly, particularly after the commercial and critical flop from its military-based shooter, Medal of Honor: Warfighter.
The performance is leading some investors and analysts to wonder if there's a future for triple-A console games. It's Riccitiello's job to convince them that there is, so during a conference call on Wednesday following his company's less-than-stellar results, he opened up to investors and analysts asking about where game technology is headed, why EA isn't making Wii U games, and whether real-life gun violence is having an effect on game sales.
We've highlighted some choice quotes from Mr. Riccitiello's answers below.
Investing big in Durango and Orbis
As you might well expect, we know more about the roadmap, and more about what's coming in consumer electronics, in terms of the specifics of devices that will play games, than you might otherwise be exposed to. [With] the information that we have, we remain bullish. It's why we have outlined our plan to invest… in the current fiscal year $80 million in that opportunity.
We’ve signaled that we’re working on the next editions of our two biggest franchises in Battlefield and FIFA.
We do recognize as we moved into what we called "gen 3," i.e. PlayStation 3, Wii and Xbox 360, we started weak. We climbed forward and improved, but we lost market share coming into this transition. We've climbed back. We think Battlefield and FIFA are going to help us lead as we move into this next set of technology opportunities and platform opportunities, and continue to get bigger.
We expect [fiscal year 2014, beginning March 1, 2013] to be a point of departure -- the starting point for a new era of gaming and a growth period for the best game companies.
Why the Wii U isn't a "next gen" console…
Never count Nintendo out. They've got some of the best IP in the game industry. When their marquee titles show up, that's when you usually see the bounce. I deeply respect the achievements they've had over the last several years. And as I said, you never really count them out.
Having said that, I wouldn't say that we see a correlation between the results that Nintendo has shown with their console debut of the Wii U and what we see coming. We see a pretty sharp distinction, and unfortunately I'm unable to go any further than that.
Ours is an industry where a lot of devices come in and represent themselves as the next generation, or the next generation after that. In many ways we would argue that the what we're describing as "gen 4" is yet to come. It's that that we're excited about, and that's what we're investing in. And frankly, we've been quite consistent with that for some time, while recognizing the frustration our inability to articulate precisely why causes for you.
…and why the "Steam Box" might not be either
I am squarely in the Gabe Newell fan club. I really enjoy my conversations with him, and certainly have enjoyed a whole lot of content [Valve has] produced. At one time, and certainly even today, I'd say Portal represents one of my all-time favorite pieces of game software that have ever been produced.
Having said that, Valve really hasn't put enough information out there to suggest whether or not they've got the wherewithal to compete in console.
Large-scale success in game console usually goes with multiple billions of dollars in investment, in content development… retail relationships, online relationships, consumer marketing, chip fabrication, manufacturing, supply pipeline and the rest.
So based on what they've said so far, it could be anything from a cool niche product that appeals to, you know, Gabe and his friends and people like me, to a product that actually has the shoulders to help move our industry forward into what we're describing as "gen 4."
They need to put a few more breadcrumbs on the ground to tell us what path we're on. [They're] good people, smart people, technologically innovative people, and right now there's just not enough information out there.
Gun violence and the game industry's perception problem
There's no doubt we like you were stunned and horrified by the violence in Connecticut or Colorado and in many other places over the years. But there's been an enormous amount of research done in the entertainment field about looking for linkages between entertainment content and actual violence. And they haven't found any. I can give you long stories about how people in Denmark or the UK or Ireland or Canada consume as much or more violent games and violent media as they do in the United States, yet they have an infinitely smaller incidence of gun violence. But that's not really the point. The point is direct studies have been done, hundreds of millions of dollars of research has been done, and it has been unable to find a linkage because there isn't one.
Now, having said all of that -- and with all, if you will, humility about the world we live in -- we understand that while there may not be a factual problem, given all the finger-pointing going on in the press, there appears to be a perception problem. We do have to wrestle with that. Ours is an industry with an association that has risen to that call many times before, and will as we move forward. We're responsible, we're mature, we tend to be a part of the solution. Our media reaches literally every American, and that can be used as a voice for good.
And I think you'll hear more from Mike Gallagher, the head of the ESA, and other industry participants, including ourselves, over how we can be part of the solution to this perception problem, as opposed to, if you will, the butt of the joke.