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