Is Resistance Futile?: EA as The Borg
by Alphaville Herald on 08/05/04 at 9:11 am
By The Phantom
A very interesting article in USnews.com describes EA’s inevitable path to total domination of the video game console market: “Is it time to say game over? Electronic Arts’ dominance of video games makes resistance futile for competitors.” I might add EA’s successful strategy has not involved innovation, creativity, or anything else, but simply traveling the universe, buying up successful game companies, gutting them of creativity and innovation, and running them as cash cows until they expire. Can the borg be stopped? Well at least in one instance:
“But EA’s strategy isn’t just about taking advantage of a growing market. It also wants to reap more revenue per gamer, so it’s not just dependent on the $50 games themselves. And that’s where online gaming comes in. … Of course, online is an area where EA suffered one of its greatest failures. In 2002, the company launched Sims Online, where players could interact with one another through self-created virtual people for $9.99 a month. Expected to attract 200,000 players in its first three months, so far it has lured just 70,000. It’s a costly failure the company candidly blames on a boring game that cost too much to play.”
Snowcrash
May 9th, 2004
We should go back in time to fight EA, and at the same time help Nolan Bushnell invent Pong.
Dyerbrook
May 9th, 2004
Um, 70,000? I don’t think so. Wasn’t it 50,000? And keep in mind that a good portion of them are all my Sims muahahahaha.
Urizenus
May 9th, 2004
I was just saying that by my calculations 1 in 3 sims is Dyerbrook, lol. But good point. I know lots of people with a half dozen sims or more. and last we heard (what EA told the New York Times) the number of accts was 57 K, and who knows if that is counting the temp accounts? If you winnow out the dead accounts (who pay the bills but are not in game — the idea customer for EA)and adjust for players with multiple accounts (again, no skin off EA’s nose) we may be left with just a few thousand active typists.
Cocoanut
May 9th, 2004
No, last we heard was 70,000 in U.S. News and World Report; that article was dated 5/10/04.
coco
Urizenus
May 10th, 2004
So you think subscriptions jumped 40% between March 30 (the Times article) and May 10 (The US News article?) Do we even know that US News contacted EA?
Urizenus
May 10th, 2004
in the last month, I mean.
It’s also possible that EA has no idea and is tossing out whatever numbers pop into their heads.
Cocoanut
May 10th, 2004
We don’t have any proof that ANY figures quoted in ANY national media article came from EA.
We can assume, though, that reputable magazines and newspapers have fact-checking departments (because they do), and that cited figures such as this are checked with the source (because they are). Even scandal sheets do fact-checking, for that matter.
In view of that, what I always do is take the last available figure from the reputable sources. In this case, USN is more recent than NYT. Therefore, I now cite that as the most recent figure we have, and no longer cite the NYT figure.
What reason would you have for sticking with the NYT number in light of the newer number from USN?
And no, I don’t think subscriptions jumped 40%. For one thing, a 40 percent from 57k (the NYT figure, I believe)would be a total 79,800. You mean, do I think it could have jumped 23%.
For another thing, I’m operating from the same premise you are – that we have no way of knowing whether EA gives these magazines figures, doesn’t give them figures (forcing them to consult earlier sources), or pulls random figures out of their heads.
Therefore, the only logical thing to do is go by the most recent figures from the most reputable sources in which EA was quoted, since one can reasonably assume a certain amount of fact-checking went on with EA (because that is how reputable magazines work).
You got a better idea? Or some better reason for clinging to the NYT number?
coco
Cocoanut
May 10th, 2004
P.S. In case I wasn’t clear, people from EA were quoted in both articles.
Cocoanut
May 10th, 2004
Ack, that is even LESS clear.
What I mean is, EA was quoted in both articles, meaning that they were a source for both articles, not that they actually were quoted saying those figures. Because they were a direct source, the fact-checkers (and the writer) generally will bounce a given number off of them to either confirm or deny.
So both articles are equal in that respect, as well as both publications being fairly equivalent in reputability.
coco
RebRachman
May 11th, 2004
When resistance is futile there is only one thing to do: Buy EA shares.
Urizenus
May 11th, 2004
Should have bought EA a year ago. Problem is, one needs money to buy shares!
EA has an economically sound business policy for sure. Buy successful smaller game companies, gut them, run them as cash cows, take their brand names and extend them as far as possible, thus getting more cash cows. Focus on games that require annual repurchase even though no technological value has been added. Example: EA Sports — as long as teams keep changing their rosters people will have to keep buying new edtions of Madden Football etc. Gain total marken domination and stomp or buy all competition that makes games for the playstation platform. Rule the Universe!
Maria LaVeaux
May 11th, 2004
Whether it is 50,000, or 70,000, I think we are ALL agreed it is NOT the 200,000 Maxis expected. The POINT is, The Numbers are NOT there to support continuation of the game and the developers are too inept or indifferent to do anything to attract new players, or keep the ones it already has.
EA Does rule the Desk top Gaming world, but On Line, where the Big Dogs take the Big risks, Maxis is a very VERY small dog indeed. and no matter how effective their business stratigy is, their Complete mismanagement of this part of their corporation will not go unnoticed in the Business world.
Maria.
Urizenus
May 11th, 2004
I’m told that when EA purchased Maxis, it was in part a hedge, in case desk top PC gaming became a big thing. Turns out it hasn’t — consoles still rule, so the Maxis investment turns out to have been unnecessary and probably a mistake in the eyes of some. Investors will judge EA by its business plan as a whole, and failures like TSO are just little bugs splatting on their windshield. TSO is just a footnote in their annual report (well, maybe a sentences, but you get my drift).
Banshee
May 31st, 2004
Well, I think that despite the failure of TSO, the acquisition of Maxis was rather brilliant, because it gave EA the most successful desk top franchise in history, The Sims. EA has made buckets of money from TS and its extensions … it’s amazing, if you look at what is selling even today the Sims titles are bobing around in the Top Ten even today. My guess is that the folks in Redwood City are banking on a bumper crop of cash when TS2 comes out later this year.
I do think, however, that EA is not hog wild about PC gaming in general, apart from the Maxis franchises it acquired (Sims and Sim City). Most of the other EA PC titles are ports of console games. The PC gamer is a different fish from the console gamer, however, and I think that EA understands this but — again apart from a few lucrative exceptions — does not care to develop its PC market much because looking at the entire gaming market, the console market is much bigger than the PC market and much more lucrative from the corporate perspective.
For me, I am still happily progressing in Eve Online, which is not afiliated with any large company, so I can watch the drama of EA and the other biggies unfold from the observers perspective. We also have a lot of EA refugees in Eve, by the way, due to the shut down of EnB.
Urizenus
May 31st, 2004
“does not care to develop its PC market much because looking at the entire gaming market, the console market is much bigger than the PC market and much more lucrative from the corporate perspective”
Agree completely, Banshee. EA couldn’t know this a couple years ago, but the console market has emerged as the bigger market by far.
Its an interesting question as to whether they have/will recoup their investment in Maxis. Maybe someone knows…
Banshee
Jun 1st, 2004
Yes, that is an interesting question indeed. Does anyone know what they paid for Maxis?
Urizenus
Jun 1st, 2004
125 million is what I recall. Can’t vouch for that.
Banshee
Jun 1st, 2004
If it was “only” $125 million, my guess would be that with all of the sales of The Sims games they’re close to recouping that (or perhaps have done so), even after development costs and the drag of TSO on that number. The Sims simply sold (and still sells) a phenomenal number of units, even today *years* after the release (really unheard of in the gaming world). Margin on each of those units may not have been great at the beginning, but of course with each unit you sell the margin improves. It would be interesting to learn how good an investment Maxis was (EA knows but surely will never tell) but at $125 million it doesn’t sound like a bad one to me, given the unique level of sales of The Sims games.
Urizenus
Jun 1st, 2004
Yes, I think the purchase of Maxis was a surprising success for EA. Recall that they bought it when the Sims (i.e. the Dollhouse project) was still in development and EA wanted to kill it originally, so they weren’t even expecting to get anything out of that. Also, at that time Maxis was working on Sim City 3000 which was supposed to be 3D originally, and dev was going so badly it nearly sank EA — its prolly what forced Will to sell. All those sims expansion packs have been banged out on a shoestring, so its been a very nice cash cow for EA, thank you. They must have gotten their money out many times over.