EA: Game Console Cycle Has 'Gone Forever'

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John Riccitiello

Here today, gone tomorrow, that—in so many words—was what EA CEO John Riccitiello had to say about video game consoles in an earnings call yesterday. Riccitiello was on the phone to discuss EA's fiscal 2012 first quarter, which he described as "ahead of expectations," led by strong sales of digital games and the release of first-person sci-fi puzzler Portal 2 ("Portal 2: A Little Better All The Time"). He also name-checked Battlefield 3 and Star Wars: The Old Republic (he says EA's "bolstered by strong preorders" for both) and, no surprise here, said the company was "pleased" that the NFL lockout had ended (it wrapped up Monday, though the Salt Lake Tribune notes the NBA's is "just beginning").

When CEO's prognosticate, the conventional wisdom boils down to "watch out." Self-fulfilling speechifying is more or less part of the job description. So take this with a grain of salt, given what EA, with its budding addiction to pithier mobile and digital games, might like to be the case.

Describing the industry as "radically changed" and adding that "the pace...has accelerated dramatically," Riccitiello spoke in sweeping terms about the fate of the video game console biz.

"Gone forever is the 4- to 5-year console cadence that gave developers ample time to invest and retool for the next big wave," he said, implying the mobile and digital markets are the culprits. "Consider that just 18 months ago, there was no iPad, Google was just experimenting with Android and most big games were limited to a single revenue opportunity at launch. Consider that each of the major consoles now has a controller that encourages users to get off the couch and get into the action."

Downloadable content, check. Smartphones and tablets, double and triple check. But wait-a-minute, motion-sensing peripherals? What do they have to do with disrupting the "console cadence" (aside from extending the life of Nintendo's Wii and plaguing the Xbox 360 and PS3 with a bunch of awful games)? Answer: nothing yet. If anything, they've simply filled demographic deficits (as Riccitiello notes, "While the game industry has fundamentally changed, games are reaching a far larger audience base than ever before").

Hat-tipping digital distribution, Riccitiello said the top paid apps on smartphones and tablets were all games, adding that it's "the fastest-growing revenue [stream]" for console, PC, smartphones, and tablets. I assume he means the part where digital distribution changes the predominant type as well as the prevailing price of games available, which in turn references the shift, for better or worse, to smaller games with quicker turnaround times and significantly diminished development and publication costs.

With that in mind, says Riccitiello, EA's three-forked approach involves further developing its intellectual property, establishing EA as a distribution platform (think "Origin," it's digital distribution tool), and growing a talent pool capable of juggling content "across the full spectrum of [the company's] many channels and business models."

All well and good, save for the part about IP-development, which is just EA's same-ol'-same-ol' strategy with a fresh coat of social-mobile paint. EA says it has about "a dozen very substantial IPs," and that "[each] of these will be transformed into year-round businesses with major packaged goods launches, social launches, mobile launches, downloadable content and micro-transactions."

Which means? For better or worse, more Battlefield, Need for Speed, Madden, FIFA, The Sims, and Mass Effect than you can shake a gamepad, smartphone, Facebook page, or Twitter feed at.

(via Seeking Alpha)

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