In an interview conducted with financial news site Bloomberg just last month, EA's CEO John Riccitiello claimed purchasing Harmonix, developers of the hugely popular Rock Band franchise, was akin to "catching a falling knife". Instead, the 4.98 billion dollar company has opted to focus on smaller, more profitable acquisitions, in the shape of Angry Birds developers, Chillingo, and Playfish, who have the second-largest stake in Facebook games.
It's a far cry from the EA of old who were lambasted for their IP-hungry gaze, gobbling up companies for millions of dollars simply to acquire rights to their proprietary software. It signals a shift in focus, from the core to the casual, and with Microsoft tightening their belts and investing less and less in original IP and cutting more and more jobs, what effect can we expect this to have on the industry?
In recent years, EA has shifted its approach from snatching up companies and draining them of every last profit-laced drop, to establishing partnerships with the likes of Valve and the aforementioned Harmonix, where they can develop in peace, retaining rights to their Intellectual Properties, with EA handling the marketing and publishing duties. So far, it's been quite the success, and has benefited the company's public image.
It's a radical new approach, and it must be working as EA continue to form new partnerships and announce a slew of future titles, such as Crysis 2 and Bulletstorm. In the grand scheme of things, for gamers at least, it's no different to EA purchasing a company and investing millions in new IP or bigger and better sequels. And for the developers themselves it's a far more beneficiary relationship, as retaining their IP rights ensures the future safety of their business.
It's not unlike the approach Microsoft has favored this generation, securing exclusive rights to third-party IPs, such as Gears of War, or timed incentives like DLC appearing first on the 360. Last generation, we saw Microsoft invest heavily in first-party studios, such as the 375 million dollar acquisition of Rare Studios. In recent years, however, Microsoft has changed gears, shutting down prestigious studios like Ensemble, and even severing ties with the Xbox's saviour, Bungie. Microsoft's first-party stable pales in comparison to Sony's roster. But it's working, so don't expect it to change.
It's not quite clear what's prompted EA to shift their focus towards the casual market. The economic climate isn't rosy at the moment, and while I'm not privy to stone-cold facts, it hasn't been a dire year for gaming. Red Dead Redemption was a resounding success. Halo Reach, despite the odds, broke its own lofty records. EA's own Fifa dominated the charts and ousted the competition. And Call of Duty continues to steamroll the market, amassing Activision a not-so-small fortune within hours. Money is being spent and, in turn, money is being made.
However, the less than superlative success of Medal of Honor may be worth investigating. It was supposed to be a spectacular reinvention and a true competitor for Call of Duty's crown. Instead, the result was decidedly mixed. The campaign had promise but was beset with issues. And the multiplayer, whilst as solid as you'd expect from a rushed DICE job, was shamefully identical to Call of Duty.
EA obviously invested a vast amount in Medal of Honor, and was banking on a good return. It's sold well, I believe, but it's not even close to the billion dollar hauls CoD enjoys. Nor does its multiplayer enjoy much success. At the end of November, Medal of Honor didn't even feature in Xbox LIVE's Top 10. At least if it had a thriving community, EA might have a venture to exploit. Instead, it appears the venerable shooter was something of a loss for EA. EA answer to their shareholders, who don't take kindly to seeing no return on their investments. EA's interest in the casual market is probably tied to the much less horrific downsides to failure on a platform where millions play for free.
Kotick To The Rescue
EA might be banking on Facebook and mobile apps to be our future, but Activision isn't. CEO Bobby Kotick, speaking at Reuter's Global Media Summit, told the crowd he believes the core audience, responsible for the success of his favored sons, Call of Duty and World of Warcraft, will continue to grow and broaden the market, but has less confidence in such growth occurring for Facebook games and apps.
Now, Kotick isn't a saint. Activision's CEO has already told us he'd implement a Call of Duty subscription model "tomorrow" if possible. But it's reassuring to hear the CEO of a major publisher like Activision declare its support of the core community. I dread to speculate on a future where I can only play videogames on Facebook or my iPhone.
But then, on the other hand, I can't stand the idea of paying to play Call of Duty, as Sir Kotick so desires. It's certainly ambivalent ground. While I appreciate Kotick's confidence in the core, I can only assume it's because Activision is preparing a profit-minded assault on our wallets, be it a CoD subscription model or an increased price for the likes of DLC and possibly even boxed games. That said, Activision, too, looks less likely to invest in big developer purchases. Although, with a roster as strong as theirs with healthy growth across the board, why should they?
Ultimately, I believe the future of our industry is difficult to predict. If the likes of EA continue to invest in more casual ventures, perhaps the medium begin to favor Facebook and iPhone-enabled games. Or maybe Activision's continued support of the core will eventually overwhelm the competition. What I expect, however, is the current fragile relationship between the two to continue, whether in favor of one or the other, I cannot say.