Torn Between Two Masters

"I don't think the investors give a sh*t about our quality," says John Riccitiello, Electronic Arts’ CEO.

He’s right.

Oh, I know this is one of those quotes that will be dragged through the mud, locked in the stockades and have lettuce thrown at it from torch wielding villagers, but as is often the case we least want to hear that which is most true. Despite the tone and the brazenness of the quote, he’s dead freaking right.

So, let’s parse a bit here, because taken out of context from the absolutely fascinating interview at VentureBeat, the quote is pretty easy to read in a completely inaccurate way. But, lest one think EA's CEO is setting the stage for equivocating on the uncertain quality of EA’s games, this is in many ways the opposite: an affirmation of the effort tempered by the realism that EA is a business, and investors only care so much about quality in the company’s games as far as that quality makes them money.

Beyond that, they don’t give a sh*t.

Set the stage - VentureBeat alum Dean Takahashi opens the interview with salvos aimed at questioning EA's commitment to quality, and Riccitiello does what all good executives do, which is obfuscate just enough to get to his talking points and answer the questions he wished the interviewer had actually asked. On the heels of a question that pressed the EA CEO on how people should judge the success of his quality initiative, the conversation's tension finally bubbled over into a nice headline.

Here’s the full quote:

*VB: No, I’m thinking more of investors and shareholders. Maybe they can’t tell as easily. The stock hasn’t moved in any great directions.

*JR: I don’t think the investors give a sh*t about our quality. They care about our earnings per share. They wait for it to happen. We had three years where we didn’t make our expectations. If I were an investor, I would wait and see. That’s fine with me.

I don’t want to play Monday Morning Quarterback on Dean’s interview, because according to his profile he’s got twenty years of experience. He certainly earns a score for doggedness by trying to get JR to betray a chink in his artificially blasé attitude about Take Two. But, I frankly love the Riccitiello that’s come out swinging on every question. Even if it is just a distraction.

The most interesting thing about this interview is for me the bluster that hides the real story. In a piece where EA’s CEO is handing out chewy quote-morsels like Scooby Snacks, you can tell an important question has been asked when he becomes suddenly quiet and reticent. Perhaps no answer is more intriguing than his response to the question of Bioware’s sale to EA, a purchase that netted Riccitiello millions of dollars as a shareholder of Bioware's parent company. His answer: No comment. It’s not a conflict of interest.

Ok, John, glad you cleared that up for us.

Again, he’s probably right. It's extraordinarily unlikely that any laws were broken, or at least so broken that a plausible defense couldn’t be established. But, when Riccitiello doesn't want to talk about it, then there's probably a good reason. The purchase of Bioware, a cash-rich transaction quick on the heels of his ascension to CEO, having just been the CEO of Bioware's parent company, remains a murky deal that probably followed the letters of the law if not the spirit. But, put it back into context of the investor quote, and you are reminded that this is a guy who understands the first rule of business: your investors want to be rich. As long as that mandate is achieved, very little else matters. Not even quality.

Riccitiello's responses, the investor remark among them, are a line drawn in the sand; a reminder to gamers and the press that EA’s quality initiatives are writ in water. In a recent interview with Julian Murdoch, Riccitiello said, "At the end of the day, I don't want to be judged on what people think of our business strategy - I want EA to be judged on the quality of our games. I think that's what consumers care about most."

Taken in the context of this latest interview, it's clear that the efforts to push the artistic quality of the company's product are not a mandate from above so much as an initiative by a CEO who is actually showing some interest in games.

This sets up the other reading of the quote, which is a veiled threat. Because, just as Activision has figured out, quality is a luxury and not a necessity for success in the video game industry. In the hierarchy of people to whom John Riccitiello is responsible, this is a reminder that the modern business ethos values investors over consumers, and what they want having a financial stake in the company is not what you want when you are standing at the counter buying the latest Madden. Riccitiello serves at least two masters, and his push for quality is balanced against the need to build a sound balance sheet.

Such is business when you measure revenue with a capital B.

EA has known for a long time that you don’t have to be liked by the elite gatekeepers of gaming cred to turn a fancy profit. It’s just as easy to hock movie tie-ins and slapped together franchises as it is to try and be inventive with games like Spore or Dragon Age. While Riccitiello isn’t saying what people will assume, which is that his dedication to quality is paper thin, the truth is that it could be if he's forced to make a choice.

And, his real bosses, the investors, won’t care either way as long as the money flows.

Comments

Riccitello is smart. He realizes that they need 'quality games' to punctuate a large catalog.
Rather than try to out indie the indies, buying them works just as well.

I can't help but notice EA's presence continue to shrink in my games library. I don't have anything against them as a company, but the quality of their games has been a motivating factor for me finding other companies to give my money to.

Investors may not care about quality, but lack of sales will kill them. I don't see how maintaing high quality standards and looking after investor interests are not the same thing.

For the first time in over a decade, I'm starting to have respect for EA and I think it's all thanks to Riccitiello.

The guy really speaks ''gamer'' to me and is a the long-needed face that EA sorely lacked. Team him up with Peter Moore, a long time favorite of mine and this company is ready to rock.

The recent change of EA in managing (or not, actually) the companies they buy gives hope for less of a conglomerate, power hungry company but rather one that acts as a financial backbone for developers instead of an executioner of creativity.

Their latest games really prove my point:
Burnout Paradise is an unparalled change in a franchise for EA. They really turned it upside down
Battlefield Bad Company: ok it was developed by Dice but it is a tremendous single player effort and that's unexpected
Army of Two: well that sucked but for the right reasons. It was not a rehashed franchise. they tried something new with it

and they have more new IPs in the oven than ever before.

I don't know if Riccitiello is at the heart of those changes but he certainly helped in some way and it's by winning the gamers over with quality titles that EA will also end up being profitable for its investors.

Investors and Customers are the same. If one is happy, it's because the other is as well.

Botswana wrote:

I can't help but notice EA's presence continue to shrink in my games library. I don't have anything against them as a company, but the quality of their games has been a motivating factor for me finding other companies to give my money to.

well isn't that peculiar; just when I say I found that EA's quality has 'embiggened' in the last year or so, your comment says the exact opposite.

Botswana wrote:

Investors may not care about quality, but lack of sales will kill them. I don't see how maintaing high quality standards and looking after investor interests are not the same thing.

High quality standards mean more production time which means less profit if people buy the same amount of the game as they would with six months less polish. And considering the charts people don't always, or even usually, buy games based on quality.

Seems pretty obvious to me.

The whole problem of crappy games would be solved if it could be proven that high quality games are more profitable and worth the extra money spent.

EA is starting to move in a better direction, I don't think they have tried to give us a licensed game this year, probably because someone found a chart showing that movie games are not as worthwhile as pursing original ideas.

BF:BC was so close to being an awesome game, and Army of Two, while being a sh*tty poor mans Gears of War, at least was a new IP.

I honestly think EA can make great games, if the investors can be shown that it will make them more money.

Tangent!
How many of the best games out there were developed by studios that were not public at the time?

I know the Half-Life, Doom, and Unreal franchises were all done with private money, as was BioWare.

interstate78 wrote:

The recent change of EA in managing (or not, actually) the companies they buy gives hope for less of a conglomerate, power hungry company but rather one that acts as a financial backbone for developers instead of an executioner of creativity.

I'm not sure if this applies, but I think the EA situation is similar to Disney under Michael Eisner. He nickeled and dimed his way through the 90s, cutting the budget to the parks, slashing traditional animation save for endless, uninspired rehashes to established IPs. He made a lot of money. But after a few years, the fans noticed a change in the way the Mouse House was doing business. It was business that was impersonal, after profits. Business that didn't care about the cornerstone magic that enchanted the Disney brand.

EA's previous policies seem to have stripped consumer good will from the brand. Now that they're serving as essentially an umbrella brand, providing support towards development houses and keeping mostly hands-off, gamers are ecstatic over the fact that a huge company is understanding that you can't just turn game development into a McDonalds style codified handbook.

Their latest games really prove my point:
Burnout Paradise is an unparalled change in a franchise for EA. They really turned it upside down

BP is amazing because of all the content their free patches will promise. They're adding a new mechanic (bikes) to their game. That could have easily been an 800 Microsoft Point pack, or the foundations of an expansion/side game. Instead, it's being funneled straight into the consumer's hands.

Army of Two: well that sucked but for the right reasons. It was not a rehashed franchise. they tried something new with it

And lets not forget that they actually put it back in the oven for a few more months of baking and tuning. I think that was something that really caused people to take note.

Kilroy: Even if Ricky here's taking us on a trip aboard the spin-talk express, I'm glad that he's putting the discussion in this context.

Thanks for that insight. I hadn't thought about it at all.

kilroy0097 wrote:

What motivates gamers to go out and buy games regardless of quality? Is it the yearning for something different and that the possibility of a game of change is wanted so badly they gamers are willing to pick up anything that even resembles something new?

Have you ever stood in a normal game shop and watched people buy games? They're buying blind mostly: they'll read the blurb on the back of the box, but that's it.

Deadend wrote:

EA is starting to move in a better direction, I don't think they have tried to give us a licensed game this year, probably because someone found a chart showing that movie games are not as worthwhile as pursing original ideas.

Or because Activision Blizzard got the nod instead.

Have you ever stood in a normal game shop and watched people buy games? They're buying blind mostly: they'll read the blurb on the back of the box, but that's it.

Sad but true. And it is based on that truth that investors make their decisions, IMO. If the majority of the gaming population did their homework, and researched what they are about to buy, maybe the focus on quality would be stronger.

But as Spaz pointed out with Disney, in the long term, quality will be the single thing that ensures that you stay profitable. Bad quality damages a brand, and it takes a whole lot longer to restore a brand to it's previous status than it takes to completely destroy it.

Imagine if Coca-Cola started to sell a worse version of it's current products in order to cut costs...

Although in my mind EA are making huge steps in the right direction, and I'm beginning to think of them very highly as a company, they still have a long way to go before that's the thought from most gamers. When I visit sites like Joystiq and look at almost any post about EA, the majority are talking about how they are t3h suckz0rs and one are two actually look at it with some thought.

What motivates gamers to go out and buy games regardless of quality? Is it the yearning for something different and that the possibility of a game of change is wanted so badly they gamers are willing to pick up anything that even resembles something new? Why has the quality of games gone down hill? Perhaps because the vast majority of the teen ADA population of the world could give a sh*t about the quality of the game and instead care more about other things. It's the game connoisseur, some of which exist here in this community, that demand a game that is both good looking and also plays well with a bonus of a good story or at least a believable one. Riccitello is the CEO of EA, this much we know, but honestly can any of us really know his true motivation? These are just words said in interviews. He may put on the face of a concerned CEO who cares about what the customers think and realizes quality is in short supply. He says that investors, the ones that drive the company onward with their expendable capital, care nothing about quality and only about the profit. In all good lies there needs to be some truth. So call me skeptical but until I see a major shift in the way EA operates as a publisher and an increase in actual quality of games, I'm always going to think that the all mighty dollar is what runs that company, not the interest of it's consumers. Because kids across the world will still buy the crappy over hyped games of EA just because they can and not because they should. In the end those of us that care more about the games we buy and play lose in the end.

Support THQ, Boycott EA

Zelos wrote:
kilroy0097 wrote:

What motivates gamers to go out and buy games regardless of quality? Is it the yearning for something different and that the possibility of a game of change is wanted so badly they gamers are willing to pick up anything that even resembles something new?

Have you ever stood in a normal game shop and watched people buy games? They're buying blind mostly: they'll read the blurb on the back of the box, but that's it.

Yeah, and sadly I don't think anything can really be done. We hardcore gamers are tied into various grapevines that will tell us before a game comes out whether it is quality or not, but the average joe is not. Bill Harris is trumpeting how badly this year's NCAA Football sucks as loudly as he can, but I'll bet it sells just as well as in previous years. The people enabling poor quality are mostly not the people paying enough attention to make the publishers change their ways.

Purple_Haze wrote:

Although in my mind EA are making huge steps in the right direction, and I'm beginning to think of them very highly as a company, they still have a long way to go before that's the thought from most gamers. When I visit sites like Joystiq and look at almost any post about EA, the majority are talking about how they are t3h suckz0rs and one are two actually look at it with some thought.

I really don't think you can judge the opinion of Gamers as a demographic by what you read in comments sections on any site-- even this one, which is by far the best site I've ever seen when it comes to commenting. Until I came here, I thought the world of web commenting was nothing but 14 year old f***tards and a**hats and trolls. (Oh my!)

Also, It bears noting that the people who are not displeased with EA, like yourself, are far, far less likely to comment on a story about EA than the haters. The thoughtful posters are not necessarily outnumbered by the "t3h suckz0rs" crowd, they're just out-shouted. There are probably more than one or two people who actually look at it with some thought, they just don't love EA enough to bother defending it in a public forum where they'll just get abused by the sort of people who think "3" is the same as "E." It's all about passion.

oMonarca wrote:

Imagine if Coca-Cola started to sell a worse version of it's current products in order to cut costs...

You're obviously too young to remember the New Coke fiasco then...

Actually, Coke has changed their formula for the worse in order to cut cost. Years ago they used to make Coke with real sugar; now they use corn syrup. There is a distinct difference.

Dr. Pepper in the stores and Dr. Pepper made with real cane sugar. There is no comparison between the two. Every person in Texas will vouch for that. And yes I remember the Coke wars and the new Coke version and all sort of that crap. I miss the Coke from the 80's when I was growing up.

tanstaafl wrote:
oMonarca wrote:

Imagine if Coca-Cola started to sell a worse version of it's current products in order to cut costs...

You're obviously too young to remember the New Coke fiasco then...

Actually, Coke has changed their formula for the worse in order to cut cost. Years ago they used to make Coke with real sugar; now they use corn syrup. There is a distinct difference.

Just find a can or bottle of coke "hencho en mexico" and that inform anybody of the difference between Cane and cornsyrup cokes.

Deadend wrote:

The whole problem of crappy games would be solved if it could be proven that high quality games are more profitable and worth the extra money spent.

So what happens if it's proven that high quality games are not more profitable? How do we solve the CGP (Crappy Game Problem) then? Honestly, I don't want someone to do that research; I'm afraid of what the results might be.

Cramps wrote:
tanstaafl wrote:
oMonarca wrote:

Imagine if Coca-Cola started to sell a worse version of it's current products in order to cut costs...

You're obviously too young to remember the New Coke fiasco then...

Actually, Coke has changed their formula for the worse in order to cut cost. Years ago they used to make Coke with real sugar; now they use corn syrup. There is a distinct difference.

Just find a can or bottle of coke "hencho en mexico" and that inform anybody of the difference between Cane and cornsyrup cokes.

Mexican cokes are delicious.

Investors do not care about quality, I think there is no point in arguing that.

Does quality matter? Absolutely. If you're diluting your brand by constantly pushing low quality games then in the long term it will hurt. I've seen this happen time and time again. I think EA has recognized this problem and are trying to turn it around. What has turned me off is that I know their development model is not going to spur creativity, innovation, or outright fun. They're way of making games is too driven by marketing. EA is perfectly happy to be like Marvel Comics in the 90's. Quality isn't important so long as you dominate the shelves.

How is EA doing these days? Didn't Activision beat them in 2007? Hey, who has been gaming long enough to remember when EA wasn't #1? Their market position is not unassailable and Activision is proving to be a major contender.

As a gamer I don't really care who makes my games so long as they make good ones. I really like Pandemic and I hope Mercs2 did not get the "EA treatment". I've noticed EA games tend to introduce very non-fun segments into their games and hearing about a mini-game to take over a tank is not a confidence booster for me. All the same, I hope their CEO does realize that they need to change their development model in order to stay competitive. Until very recently EA had no strong IP, I think the whole Marvel Nemesis fiasco made that abundantly clear.

Investors may not care about quality, but EA should care about it's future. They cannot afford to continue to damage their brand and expect to maintain a strong presence in the market. I actually do believe they're making positive steps with their company but I remain wary. Large corporations do not change easily.

tanstaafl wrote:
oMonarca wrote:

Imagine if Coca-Cola started to sell a worse version of it's current products in order to cut costs...

You're obviously too young to remember the New Coke fiasco then...

Actually, Coke has changed their formula for the worse in order to cut cost. Years ago they used to make Coke with real sugar; now they use corn syrup. There is a distinct difference.

I actually was the one who liked New Coke, and remembered the sneaky Coke II that came out in the mid to late 90s. I always thought it was cut costs but increase sales, and your margin goes up and investors are happy. Like videogames- cut costs, shovel out crap because you know people will buy it anyway (360 and PS2 launch titles I am familiar with, the Wii shovelware I've no experience with), sales push the shares higher, investors are happy, gamers are puzzled. Army of Two's sales probably weren't as high as expected considering they took into account the bad impressions people got from the review copies late last fall, and attempted to re-work the unknown from an unknown IP. I'd actually rather be playing OneChanbara vorteX on the 360 than many games out there, but that's the reason (among thousands of other reasons) I don't have a game publishing or making company. It would not last long, and nobody would invest.

This is why I didn't take any Economics courses. Ever. Dollars = Duh.

I think pure capitalism can be summarized by the following:

f*ck quality, it's all about the margin!

Bear wrote:

I think pure capitalism can be summarized by the following:

f*ck quality, it's all about the margin!

Quality does factor in in many markets. THE INVISIBLE HAND MUST RULE!

Investors don't care about quality, they care about profit. If gamers don't buy sh*tty games, profits will drop and investors will care.

How do we make gamers not buy crappy games?

Why all the hate here? So, investors want to make money… That’s a bad thing? That’s why they’re investors. They don’t care about high or low quality as long as a profit is turned. THEY DON’T CARE ABOUT THE INNER WORKINGS OF THE BUSINESS AT ALL. If I invest in tires, I’m not going to give a sh*t what kind of rubber they use, or if they use 3 rows of tread or 4. I’m an investor, I want to make money. However, without investors these companies wouldn’t have the capital to make games. So they make investors happy and make (some) quality games at the same time. It’s either that, or no games at all… And I'm not saying quality doesn't matter, I'm saying the "how to" of a business are rarely an investors concern.

How many games will be released in 2008 as compared to 1998, or 1988? The argument that games are crap today is ridiculous. You have more AAA titles, most of which are awesome, combined with many indi and smaller budget hits (like SOASE) than anyone but a full time college student living in the dorms with no job and skipping classes has time to play. Yeah, sure, there are a hundred movie tie-in titles that suck, but you know what, the people who buy these crap games don’t care! Most don’t think they’re crap! Or they wouldn’t sell millions of copies. No matter how cheesy the Ironman game may be, there are plenty of people who enjoy being Ironman if even only for a few hours, regardless of graphics and gameplay.

Business and making money is good. Games are the best they’ve ever been (unless you add in nostalgia as a factor, which means you suck!). Are you seriously complaining?

Reminds me of the story of Mercedes-Benz.

In the 1990's, they came 3rd in a major US customer satisfaction survey for the quality of their products and after-care. Then some bright spark in the higher echelons decided that their cars were 'over-engineered' and that there was plenty of fat to be trimmed.

Result ? Their cars are now shockingly prone to malfunction, and in 2004 they came 9 places from the bottom in the same survey. A new Merc of any kind is certainly not something I would choose if I was buying a car, but yet people still buy them because of the name.

And that level of blindness is for people making decisions about dropping £30k minimum on a car. Now imagine the level of thought employed for spending £30 on a video game, often not for yourself.

Hmm, I think I've just proved that untrammeled capitalism is detrimental to the purchaser....

Games are the best they've ever been ? Graphically maybe, but only a few titles in the last couple of years stand out as great games.

If I was an investor, I would actually care about how the company did business. To go with your tyre example, I'd be caring if our corner cutting caused a series of defects and landed us with a class action suit - and generally I believe that few investors like to leave money in companies with a reputation for shoddy production.

Business and making money is good ? Depends who you are, and what things you put to the back of the queue to promote them to the front.

My perception of EA, for example, is now prejudiced by these sh*te sports titles that they pump out every year (NHL and possibly FIFA 08 excepted). They're always busted, and more than not have the overwhelming stench of 'this will do, I guess' about them.

And I'm not saying quality doesn't matter, I'm saying the "how to" of a business are rarely an investors concern.

That's the bigger meta problem with modern investors today. As long as the company makes money, investors don't care if their products are garbage (to use your tire analogy, remember what happened with Firestone a few years back?), they don't care if their workers are treated like crap, if they use Chinese sweatshops, if they're dumping toxic chemicals into the river or if they're being anti-competitive. That needs to change. People need to stop looking at a business that's making them money, covering their eyes going "I see nuzing!" when that business is shown to be doing bad things. Otherwise, they are complicit in their actions and are no better than the CEOs who make those poor decisions. Obviously, EA releasing buggy, broken games isn't the same thing as a corporate polluter or a company that exploits third-world labour. But anyone who invests in EA company and is OK with a 1% bump in revenue for a quarter at the expense of key products being pushed out early and consumers being screwed over is just being greedy. Profit shouldn't trounce ethics and even though it may be the common way things are done now, it doesn't make it right.

Though I don't like some of what Riccitiello's doing (i.e. refusing to admit when they've lost with Take-Two and his questionably ethical BioWare transaction), I have to admit that some of EA's more recent products have been a big improvement and with stuff like Dead Space and Mirror's Edge coming, it looks like they're trying to take some more risks. EA's former CEO Larry Probst almost proudly proclaimed when asked that he wasn't a gamer and I always shook my head at that going "How can you possibly know how to run a games publisher when you don't play games?" His last few years at EA showed how he was having a hard time keeping up as many of their key franchises had sliding review scores and lower ROI. Riccitiello is apparently a huge gamer and that's great for their company because he can much better understand the ever-changing mindset of his customers. I think EA will become a much better company with him at the helm and in a couple of years, I think they'll end up passing on the "Evil Empire" title to someone else (I'm betting Activision.)

davet010 wrote:

Games are the best they've ever been ? Graphically maybe, but only a few titles in the last couple of years stand out as great games.

If I was an investor, I would actually care about how the company did business. To go with your tyre example, I'd be caring if our corner cutting caused a series of defects and landed us with a class action suit - and generally I believe that few investors like to leave money in companies with a reputation for shoddy production.

So Class Action suits have no affect on profits now? Maybe if you work in the mortgage or airline industry...

davet010 wrote:

Business and making money is good ? Depends who you are, and what things you put to the back of the queue to promote them to the front.

As an investor, I do care that companies put out quality merchandise, because as far as I can tell that's the only way to ensure the long term health of a business. If you deal in crap, it will come back to bite you in the butt.

However, I'm also of the mind that the great is the enemy of the good. If you have a product that's good enough and is making money, I can't really fault you for not bothering to go to the expense of improving on it.

Sure, there will be businessmen who cut corners, produce shoddy merchandise and still make money. Somehow I can't put all the blame on him, though. Somebody's making that shoddy merchandise profitable, after all. You don't make money unless you're selling people something they want. This is a fundamental law of economics.

Even so, I'd much rather have this business model than some pie-in-the-sky up-with-people model where we somehow expect everyone to behave in a way that benefits others regardless of cost to themselves. I've seen enough of the world to know people just don't think like that-- even (perhaps especially) the ones who say they are.

I've studied my history well enough to know what you get when someone decides a free market isn't good enough. It ain't pretty.