Electronic Arts

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"EA" redirects here. For Electronic Arts' sports label, see EA Sports. For other uses, see EA (disambiguation).
Electronic Arts, Inc
Type Public (NASDAQ: ERTS)
Founded 1982
Headquarters Redwood City, California, United States
Key people Trip Hawkins, Founder and CEO to 1991
Larry Probst, current chairman of the board and CEO from 1991-2007
John Riccitiello, current CEO
Industry Interactive entertainment
Revenue $2.951 billion USD (2006)
Operating income $325.00 million USD (2006)
Net income $236.00 million USD (2006)
Employees 7,200 (2006)
Website www.ea.com

Electronic Arts (EA) (NASDAQ: ERTS) is an American developer, marketer, publisher, and distributor of computer and video games. Established in 1982 by Trip Hawkins, the company was a pioneer of the early home computer games industry and was notable for promoting the designers and programmers responsible for their games. EA was just a publisher for its first few years and exclusively published for home computers, but began developing games in-house in the late 1980s and started supporting consoles in the early 1990s. Also in the 1990s, EA began to expand by acquiring several successful developers and, as of the early 2000s, EA has become the world's largest third-party publisher, with a net revenue of US$3.129 billion for its fiscal year March 31, 2005.[1] Currently, the company's most successful products are sports games published under their EA Sports label, games based on popular movie licenses and games from long-running franchises like Need for Speed, Medal of Honor, The Sims, Command & Conquer and the later games in the Burnout series.

Contents

[edit] History

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Electronic Arts' original corporate logo, 1982–1999.
Electronic Arts' original corporate logo, 1982–1999.

In February 1982, Trip Hawkins arranged a meeting with Don Valentine of Sequoia Capital to discuss financing his new venture, Amazin' Software. Valentine encouraged Hawkins to leave Apple Inc., in which Hawkins served as Director of Product Marketing, and allowed Hawkins use of Sequoia Capital's spare office space to start the company. On May 28, 1982, Trip Hawkins incorporated and established the company with a personal investment of an estimated US$200,000. Seven months later in December 1982, Hawkins secured US$2 million of venture capital from Sequoia Capital, Kleiner, Perkins, Caufield & Byers, and Sevin Rosen Funds.

For more than seven months, Hawkins had refined his Electronic Arts business plan. With aid from his first employee (whom he worked in marketing with at Apple), Rich Melmon, the original plan was written, mostly by Hawkins, on an Apple II in Sequoia Capital's office in August 1982. During that time, Hawkins also employed two of his former staff from Apple, Dave Evans and Pat Marriott, as producers. The business plan was again refined in September and reissued on October 8, 1982.

Between September and November, employee headcount rose to 11, including Tim Mott, Bing Gordon, David Maynard, and Steve Hayes. Having outgrown the office space provided by Sequoia Capital, the company relocated to a San Mateo office that overlooked the San Francisco Airport landing path. Headcount rose rapidly in 1983, including Don Daglow, Richard Hilleman, Stewart Bonn, David Gardner, and Nancy Fong.

[edit] Sales strategy

Hawkins was determined to sell directly to buyers. Combined with the fact that Hawkins was pioneering new game brands, this made sales growth more challenging. Retailers wanted to buy known brands from existing distribution partners. Despite this, revenue was $5 million in the first year and $11 million the next. [citation needed] Former CEO Larry Probst arrived as VP of Sales in late 1984 and helped the company sustain growth into $18 million in its third full year. Teaming with the existing sales staff that included Nancy Smith, David Klein, and David Gardner, Probst built the largest sales force of any American game publisher. [citation needed] This policy of dealing directly with retailers gave EA higher margins and better market awareness, key advantages the company would leverage to leapfrog its early competitors.

In December of 1986 David Gardner and Mark Lewis moved to the UK to open a European headquarters. Up until that point publishing of Electronic Arts Games, and the conversion of many of their games to compact cassette versions in Europe was handled by Ariolasoft. A small company in Wales was already called Electronic Arts, and until 1997 Electronic Arts in the UK was known legally as EOA, a name derived from its square/circle/triangle logo. The Welsh company ceased trading in 1997 and Electronic Arts acquired the rights to the name. [citation needed]

[edit] Name change

Some of the early employees of the company disliked the Amazin' Software name that Hawkins had originally chosen when he incorporated the company. [citation needed] While at Apple, Hawkins had enjoyed company offsite meetings at Pajaro Dunes and organized such a planning offsite for EA in October 1982. After a long business day at the offsite, the dozen employees and advisers who were present agreed that they would stay up that night and see if they could agree unanimously on a new name for the company.[citation needed]

Hawkins had developed the ideas of treating software as an art form and calling the developers, "software artists." Hence, the latest version of the business plan had suggested the name "SoftArt". However, Hawkins and Melmon knew the founders of Software Arts, the creators of VisiCalc, and thought their permission should be obtained. But Dan Bricklin did not want the name used because it sounded too similar (perhaps "confusingly similar") to Software Arts. However, the name concept was liked by all the attendees. Hawkins had also recently read a best-selling book about the film studio, United Artists, and liked the reputation that company had created. Early advisers Andy Berlin, Jeff Goodby, and Jeff Silverstein (who would soon form their own ad agency) were also fans of that approach, and the discussion was led by Hawkins and Berlin. Hawkins said everyone had a vote but they would lose it if they went to sleep.[citation needed]

Hawkins liked the word "electronic", and various employees had considered the phrases "Electronic Artists" and "Electronic Arts". Other candidates included Gordon's suggestion of "Blue Light", a reference from the movie "Tron".[citation needed]

When Gordon and others pushed for "Electronic Artists", in tribute to the film company United Artists, Steve Hayes opposed, saying, "We're not the artists, they are..." meaning that the developers whose games EA would publish were the artists. This statement from Hayes immediately tilted sentiment towards Electronic Arts and the name was unanimously endorsed.[citation needed]

[edit] Sharing credit

A novel approach to giving credit to its developers was one of EA's trademarks in its early days. EA was the first video game publisher to treat its developers like rock stars in an industry where developers were more prone to be treated like nameless factory workers. [citation needed] This characterization was even further reinforced with EA's packaging of most of their games in the "album cover" format of the late 1980s and 1990s. This format was pioneered by EA because Hawkins thought that a record album style would both save costs and convey an artistic feeling.[citation needed] EA routinely referred to their developers as "artists" and gave them photo credits in their games and numerous full-page magazine ads. EA also shared lavish profits with their developers, which added to their industry appeal. Because of this novel treatment, EA was able to easily attract the best developers.[citation needed]

The box cover for 1983's M.U.L.E. The square "album cover" boxes were a popular packaging concept by Electronic Arts, which wanted to represent their developers as "rock stars". Many games of the era were released in the album covers of identical size and shape.
The box cover for 1983's M.U.L.E. The square "album cover" boxes were a popular packaging concept by Electronic Arts, which wanted to represent their developers as "rock stars". Many games of the era were released in the album covers of identical size and shape.

In May 1983 EA shipped:

Three of these five—Archon, Pinball Construction Set, and M.U.L.E.—are still considered cornerstone products in the history of video games.[citation needed] Worms? is unrelated to the Worms series of turn-based artillery games; it is a computer toy in which the user trains worms—represented as lines—to move in patterns on a network of nodes.

[edit] Trip exits

After a very successful run on home computers, Electronic Arts later branched out and produced console games as well. Eventually Trip Hawkins moved on to found the now defunct 3DO company.[citation needed] In 2003 he founded a new mobile phone software company, Digital Chocolate, that also began life in the Sequoia offices and had Sequoia Capital and Kleiner Perkins as its lead investors.[citation needed]

In 2004, EA made a multimillion dollar donation to fund the development of game production curriculum at the University of Southern California's Interactive Media Division. In addition to the funds, EA staff members have been actively teaching and lecturing at the school.[citation needed]

[edit] EA under Probst

EA is currently headquartered in Redwood City, California. Following the departure of Trip Hawkins, Larry Probst took over the reins and led the company to its current size and stature. [citation needed]

Pinball Construction Set was an enormous hit for EA. The original version for the Apple II by Bill Budge was quickly ported to other popular home systems of the era.
Pinball Construction Set was an enormous hit for EA. The original version for the Apple II by Bill Budge was quickly ported to other popular home systems of the era.

Probst considered himself a man of principle and has refused to follow the M-rated example set by Take Two Interactive, whose violent Grand Theft Auto franchise became the dominant brand in many key demographics from 2000 through 2003.[citation needed] As a result, Probst was heavily criticized by Wall Street analysts, who believe that because of this policy, EA's stock price is lower than it should be.[citation needed] In late March 2005, Electronic Arts issued its first ever mid-quarter profit warning blaming hardware shortages and lower than expected fourth quarter sales.[citation needed]

Not that M-rated games are new to EA: in 1999 EA approved its first M-rated game, System Shock II for the PC. Recently, Probst has changed his overall stance on M-rated games, and now EA has several titles that compete in the M-rated, adult game arena.

On February 1, 2006, Electronic Arts announced that it would cut worldwide staff by 5 percent.[2]

On June 20, 2006 EA purchased Mythic Entertainment, currently working on Warhammer Online.[citation needed]

In February 2007, Probst stepped down from the CEO job while remaining on the Board of Directors. His handpicked successor is John Riccitiello, who had worked at EA for several years previously, departed for a while, and then returned.[citation needed] Riccitiello previously worked for Elevation Partners, Sara Lee and Pepsico.

Also, in 2007, EA announced that it would be bringing some of its major titles (such as Madden 08, Need for Speed: Carbon, etc.) to the Macintosh. EA has released Harry Potter and the Order of the Phoenix, Need for Speed Carbon, Battlefield 2142 and Command & Conquer: Tiberium Wars for the Mac. All of the new games have been developed for the Macintosh using Cider, a technology developed by TransGaming that enables Intel-based Macs to run Windows games inside a translation layer running on Mac OS X. They are not playable on PowerPC-based Macs.[3]

[edit] EA development strategy

Much of EA's success, both in terms of sales and with regards to its stock market valuation, is due to its strategy of platform-agnostic development and the creation of strong multi-year franchises.EA was the first publisher to release yearly updates of its sports franchises- Madden, FIFA, NHL, NBA Live, Tiger Woods, etc. - with updated player rosters and small graphical and gameplay tweaks. [4]Recognizing the risk of franchise fatigue among consumers, EA announced in 2006 that it would concentrate more of its effort on creating new original Intellectual Property.[5]

[edit] Criticism

EA is often criticized for buying smaller development studios primarily for their intellectual property assets, and then making the developers produce mediocre games on these same franchises. For example, Origin-produced Ultima VIII: Pagan and Ultima IX: Ascension were developed quickly under EA's ownership, over the protests of Richard Garriott[6], and these two are considered by many[7] as not up to the standard of the rest of the series.[8][9]

EA is also criticized for shutting down its acquired studios after a poorly performing game.[10] [11][12]The historical pattern of poor sales and ratings of the first game shipped after acquisition suggests EA's control and direction as being primarily responsible for the game's failure rather than the studio. Magic Carpet 2 was rushed to completion over the objections of designer Peter Molyneux and it shipped during the holiday season with several major bugs. Studios such as Origin, Westwood Studios, and Bullfrog had previously produced games attracting a significant fanbase, and when they were closed down many top designers and programmers refused to stay with EA and formed rival studios. Many fans also became annoyed that their favourite developers were closed down, but some developers, for example the EALA studio, have stated that they try to carry on the legacy of the old studio, in this case Westwood Studios. EA has also received harsh fire from labour groups for their dismissals of large groups of employees during the closure of a studio (see below). Such was the case with the game GoldenEye: Rogue Agent. [13]

After releasing many products, the lack of support is notable in many games, assured by the fact that EA declared openly that they would no longer support relatively new but still buggy titles, like Need for Speed: Most Wanted, Need for Speed: Underground and some of the latest Command & Conquer[14] games.

Electronic Arts declined to support the Dreamcast in favour of Sony's PlayStation 2.[15]

EA has also been criticized for other aggressive business methods like the acquisition of 19.9 percent of shares of their competitor Ubisoft in what was called a "hostile act" by Ubisoft CEO, Yves Guillemot.[16] However, this has not materialized into anything hostile and Yves Guillemot later indicated that a merger with EA was a possibility.[17]

[edit] Employment policy

Electronic Arts has been criticized for employees working extraordinarily long hours—up to 80 hours per week— and not just at "crunch" times leading up to the scheduled releases of products. The publication of the EA Spouse blog, with criticisms such as "The current mandatory hours are 9 a.m. to 10 p.m.—seven days a week—with the occasional Saturday evening off for good behaviour (at 6:30 p.m.)".[18] The company has since settled a class action lawsuit brought by game artists to compensate for "unpaid overtime".[19] The class was awarded $15.6 million. As a result, many of the lower-level developers (artists, programmers, producers, and designers) are now working at an hourly rate. A similar suit brought by programmers was settled for $14.9 million.[20]

[edit] Exclusive licenses

After Sega's ESPN NFL 2K5 successfully grabbed market share away from EA's dominant Madden NFL series during the 2004 holiday season, EA responded by making several large sports licensing deals which include an exclusive agreement with the NFL, and in January 2005, a 15-year deal with ESPN, much as with Take Two Interactive's exclusive licensing deal with baseball's Major League.[21] The ESPN deal gives EA exclusive first rights to all ESPN content for sports simulation games. On April 11, 2005, EA announced a similar, 6-year licensing deal with the Collegiate Licensing Company (CLC) for exclusive rights to college football content.[22]

[edit] Online strategy

EA originally decided against allowing their games on Microsoft's Xbox Live online service due to arguments between Microsoft and EA about the distribution of revenue from online play. EA finally agreed to release games on Xbox Live on the condition that Microsoft allow the games to connect to the EA servers in order to play them online.[23]

[edit] Game quality

For 2006, the games review aggregation site Metacritic gives the average of EA games as 72.0 (out of 100); 2.5 points behind Nintendo (74.5) but ahead of the other first-party publishers Microsoft (71.6) and Sony (71.2). The closest third-party publisher is Take 2 (publishing as 2K Games and Rockstar) at 70.3. The remaining top 10[24] publishers (Sega, Konami, THQ, Ubisoft, Activision) all rate in the mid 60's.

However, EA's aggregate review performance has shown a downward trend in quality over recent years and is expected to affect market shares during competitive seasons. Pacific Crest Securities analyst Evan Wilson has said, "Poor reviews and quality are beginning to tarnish the EA brand. According to our ongoing survey of GameRankings.com aggregated review data, Electronic Arts' overall game quality continues to fall...Although market share has not declined dramatically to date, in years such as 2007, which promises to have tremendous competition, it seems likely if quality does not improve."[25][26]

EA has also received criticism for developing games that lack innovation vis-à-vis the number of gaming titles produced under the EA brand that show a history of yearly updates, particularly in their sporting franchises. These typically retail as new games at full market value and feature only updated team rosters in addition to incremental changes to game mechanics, the user interface, and graphics. One critique compared EA to companies like Ubisoft and concluded that EA's innovation in new and old IPs, "Crawls along at a snail's pace."[27], while even the company's own CEO, John Riccitiello, acknowleded the lack of innovation seen in the industry generally, saying, "We're boring people to death and making games that are harder and harder to play. For the most part, the industry has been rinse-and-repeat. There's been lots of product that looked like last year's product, that looked a lot like the year before."[28].

[edit] Editing of Wikipedia

On August 15, 2007 it was revealed that IP addresses registered to EA had made changes to their Wikipedia entry favoring EA.[29][30] The changes made included downplaying the importance of the founder of EA, Trip Hawkins, as well as playing up the importance of former CEO, Larry Probst.[29] Other changes included attempts to remove information regarding the infamous EA Spouse scandal, which involved the poor treatment of workers. In addition, several paragraphs under criticism were removed completely. [29]

EA's response was that "Many companies routinely post updates on websites like Wikipedia to ensure accuracy of their own corporate information."[31] They did not, however, address the specifics of the changes.

[edit] Notable games published

By purchasing development studio Maxis, EA obtained the rights to publish the lucrative SimCity series and the spin-off game The Sims. It went on to develop its sequel The Sims 2.
By purchasing development studio Maxis, EA obtained the rights to publish the lucrative SimCity series and the spin-off game The Sims. It went on to develop its sequel The Sims 2.[32]

Some of the most notable and popular games of video game history have been published by EA, and many of these are listed below. Though EA published these titles, they did not always develop them; some were developed by independent game development studios. EA developed their first game in 1987.

See also: List of Electronic Arts games

Electronic Arts also published a number of non-game titles. The most popular of these was closely related to the video game industry and was actually used by several of their developers. Deluxe Paint premiered on the Amiga in 1985 and was later ported to other systems. The last version in the line, Deluxe Paint V, was released in 1994. Other non-game titles include Music Construction Set (and Deluxe Music Construction Set), Deluxe Paint Animation and Instant Music. EA also published a series of Paint titles on the Macintosh: Sudio/8, Studio/1 and Studio/32 (1990).

[edit] Label architecture

Electronic Arts release titles under the following labels:

  • EA Games Label
    • EA (all non-sports titles) — The simple EA brand replaced EA Games in 2005
    • EA Mythic (MMORPG titles)
  • EA Casual Entertainment Label (simple games for PC's, consoles, mobiles, and handhelds)
  • "The Sims" Label
    • Life simulation titles — Produces games with the "Sims" title (such as SimCity and The Sims)
  • EA also operates the games channel on AOL.
  • Electronic Arts Square K.K. was created during the joint venture of companies Square Co. and Electronic Arts. Just as Square Electronic Arts published for Square in the U.S., Electronic Arts Square published for Electronic Arts in Japan, releasing key EA titles in Japan. The company was 70% owned by EA and 30% owned by Square. However, EA Square did not enjoy the success its U.S. cousin was enjoying at the time. Most of the games were sports titles that were passed for similar games from other companies (Konami, even Square). Some other games were not as well received as they were in the U.S. Upon the merger of Square and Enix, EA bought Square's ownership in the company and absorbed it into its fold.

[edit] Studios

EA Redwood Shores
EA Redwood Shores

[edit] Current studios

[edit] Former studios

[edit] Corporate affairs

[edit] Logos

Current Electronic Arts logo
Current Electronic Arts logo

The Electronic Arts logo has undergone few changes in the company's history.

[edit] 1982 to 1999

The classic Electronic Arts logo
The classic Electronic Arts logo

EA's classic Square/Circle/Triangle corporate logo, adopted shortly after its founding and phased out in 1999, was devised by Barry Deutsch of Steinhilber Deutsch and Gard design firm. The three shapes were meant to stand for the "basic alphabet of graphic design." The shapes were rasterized to connote technology.[citation needed]

Many customers mistook the square/circle/triangle logo for a stylized "EOA." Though they thought the "E" stood for "Electronic" and "A" for "Arts," they had no idea what the "O" could stand for, except perhaps the o in "Electronic." An early newsletter of EA, Farther, even jokingly discussed the topic in one issue, claiming that the square and triangle indeed stood for "E" and "A", but that the circle was merely "a Nerf ball that got stuck in a floppy drive and has been popping up on our splash screens ever since."[citation needed] This was, in part, true. In the early days at Electronic Arts, nerf balls imprinted with the square/circle/triangle shapes could be found floating around the office, in cubicles and elsewhere.[citation needed]

Nancy Fong and Bing Gordon came up with the idea to hide the three shapes on the cover of every game, borrowing the idea from the urban legends concerning the placement of the bunny symbols on the covers of Playboy magazine.[citation needed] Finding the logo's hidden placement on early EA titles was a ritual for employees whenever a new cover was displayed outside Fong's cubicle.[citation needed]

[edit] 1999 to present

The original EASN and EA Sports logos
The original EASN and EA Sports logos

The current EA logo was derived from the logo used by sub-brand EA Sports. It was first used, in a different form, in 1992, when Electronic Arts introduced the "EASN" brand (later changed to "EA Sports" due to legal difficulties with ESPN). The logo was modified and adopted company-wide around 1999.

[edit] In-game logo introductions

  • late-1990s to 2001: Originally an explosion sound effect accompanying the letters for "Electronic Arts" flying into formation, followed by an electronic voice. The sound effects have changed in certain games (sounds of the letters whipping past, for example)
  • 1999 to 2003: An outlined circle flips and forms the modern EA Games logo. Accompanied by a synthesized ping sound.
  • 2002 to 2004: EA Games logo appearing on screen, accompanied by the voice "EA Games, *whisper* challenge everything".
  • 2005: Silver EA logo appearing then fading away
  • 2006 to present: Dark-gray disc with white EA logo appearing then fading. Several variations are possible

[edit] Slogans

  • "We see farther." – Founding tag line
  • "EA Sports, to the game!"
  • "EA Sports, it's in the game." – a shortened version of their original slogan "If it's in the game, it's in the game."
  • "EA Games, challenge everything."
  • "EA Sports, BIG"

[edit] See also

[edit] References

  1. ^ SEC EDGAR Filing Information
  2. ^ Electronic Arts cuts staff by 5 percent from GameSpot
  3. ^ EA ships four Mac games from MacWorld
  4. ^ GameSpy comments on EA's yearly update strategy
  5. ^ EA moves towards new IP's from Gamesindustry.biz
  6. ^ Ultima VIII and IX rushed into production
  7. ^ Many believe Ultima IX was unfairly maligned because of rushed development schedule
  8. ^ Ultima VIII received poorly by fans
  9. ^ Ultima IX received poorly by fans
  10. ^ http://news.softpedia.com/news/EA-Closes-Down-Warrington-Studio-38110.shtml
  11. ^ http://www.gamespot.com/news/6159448.html
  12. ^ http://www.gamepro.com.au/index.php/id;476539124;fp;4;fpid;4
  13. ^ http://www.1up.com/do/newsStory?cId=3137918
  14. ^ http://www.gamepro.com/news.cfm?article_id=127348
  15. ^ http://www.gamesindustry.biz/content_page.php?section_name=pub&aid=3482
  16. ^ Ubisoft CEO Speaks on Takeover - TotalGaming.net news, 22 September 2005
  17. ^ http://www.joystiq.com/2007/05/29/ubisoft-president-still-considering-ea-acquisition/
  18. ^ The original ea_spouse blog entry at LiveJournal
  19. ^ "Employees readying class-action lawsuit against EA" from GameSpot
  20. ^ "Programmers Win EA Overtime Settlement, EA_Spouse Revealed" from Gamasutra
  21. ^ http://www.gamespot.com/news/2004/12/13/news_6114977.html
  22. ^ http://sports.espn.go.com/espn/sportsbusiness/news/story?id=1945691
  23. ^ http://news.bbc.co.uk/1/hi/technology/3703109.stm
  24. ^ Top 10 publishers according to Game Develop magazine
  25. ^ Analyst: EA brand tarnished
  26. ^ EA brand "tarnished" according to analyst
  27. ^ EA innovation crawls along at "snail's pace".
  28. ^ EA CEO John Riccitiello: More innovation is needed in videogames
  29. ^ a b c "EA staffer plays history revisionist on Wikipedia" from Joystiq.com
  30. ^ "EA Staffer Attempts to Alter Wiki History" from ShackNews.com
  31. ^ "EA responds to Wikipedia revision controversy" article from GamesIndustry.biz
  32. ^ "The Sims overtakes Myst" article from GameSpot

[edit] Further reading

[edit] External links

Business data
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