Xemu's Long-Winded Game Industry Ramblings :: DICE '08: Electronic Arts

Gamer, but also a business guy. Studied business and econometrics at Cal. President of EA in 1997, started EA Partners. Private equity for past 3 yrs with Elevation Partners.

New Economics of Game Development. Rising Cost. Puts pressure on everyone. Leads to consolidation. Creative failure results. This failure undermines the entire process, from consumer to publisher. So, we need a new model.

Rising cost of game development. Like to dream about 2 guys in a garage financing a game on their own Visa cards. Platform diversity is a problem. Used to be 3 platforms, now over 12 (or over 200 if you count mobile platforms). One measure is content density, increasing from CD to DVD to Blu-ray. Another is team size, going up to 200 people to make a AAA franchise today. That’s counting outsourced art, 3^rd party technologies, etc. Another cost: localization and geography. EA Soccer 08 had 94 SKUs, 8 platforms, 16 countries, 20 languages. Conclusion: this puts you in a tough position. Cost of failure is high. Needs to be at least 2 major platforms and 2 major markets. So you better have 50 million to make it... puts the developer right on the edge.

This causes consolidation. Still many strong independent devs and smaller publishers. But market share is moving to the largest 5-8 publishers. Devs getting acquired every day. Huge list from EA, activision, THQ, etc. Maybe a scary topic but you can’t ignore it.

Creative Failure at the top of the list of risks. Flowers in a hothouse – a few degrees change and flowers die. So top talent can be stifled, or can choose to leave. Biggest investment fear is talent leaving, which takes the value from the business. From EA experience, this fear is well founded. Acquisitions that didn’t work: Bullfrog, Origin, Westwood. EA blew it. The core of failure was the belief that we could be one family with one culture, one management style to fit all, that people could be assimilated. Top down approach. Key creative decisions escalated to the top when they should have stayed with the teams.

Creative Success: Distinctive (EA Canada) and Maxis. Creative leaders had their careers enhanced afterwards: The Sims, Spore. Here the leaders took responsibility for themselves, kept the baton of creative leadership and financial responsibility. EA did not meddle in culture or the creative process. Their team, creating their product. These two companies took over EA? Made larger plays than they could have done by themselves. Instead of enslaving, empowered.

The “label model”. What was the difference between Maxis and Bullfrog? Based on the concept of the city-state. Developer retains those principles of creative and financial responsibility. More like the NFL with each team and their own culture, not synchronized swimming. Pandemic culture different than Sims or FIFA or EA Finance. EA Sports, The Sims, EA Casual, EA Games. City States within those labels: Pandemic, BIoWare, Mythic, Maxis, etc.

DICE in Stockholm – extremely well managed. Leadership roles beyond his own studios. Franchise has flourished. New franchises there in 2008.

Criterion – Maybe frustrations but they make payroll, have financial strength, and their games will be everywhere in the world. Their idea, Burnout Paradise, becomes a worldwide hit.

Mythic – Better a city-state than a vassal state. Building award winning products to change the nature of gaming, taking on the worlds biggest subscription game this summer.

BioWare – Primary concern on creative independence and ability to grow. About the future.

Pandemic – Great at creating new franchises like FSW and Destroy all Humans. They used to literally finance off of credit cards and that just can’t be done any more. Deal isn’t done yet so unknown how it will turn out but seems to be working.

EA Blackbox – not an acquired studio but same culture differences from EA Canada / Burnaby.

Redwood Shores – one floor kid friendly with the Sims, next floor up is pure horror for Dead Space.

Rockstar is a good model of this at another publisher. Valve is highly independent – they aren’t going anywhere and make a great example for all of us to aspire to. And of course, Blizzard, won’t be affected one way or another by their owners.

The new model – Hey publishers, the “direct command” model doesn’t work . You can’t come in and take away their autonomy and replace their names. That’s a huge mistake. Come in and empower them. Hey developers, may be tempting to go for the biggest dollars but what is more important is to find someone you can trust and will support you for the long haul. Trust.

Q: What are you doing with Renderware? Not a lot. Team is still intact and building tools like physics alternatives and other new techs. Renderware happened mostly while he was gone but the team is still around.

Q: Whats your take on the creation of new original IP? Is it economically viable for indy developers, and if not what is big publishings role? Incumbent on all of us who make sequels to make them as fresh and innovative as original IP. If done right it is just as sweet… 13 / 20 years on Madden we’ve gotten this right. Commited to EA doing this but it is tough. That said, delighted by the opportunity to bring in new IP and to have the studios that can bring more new properties in than any other publisher. Dragon Age, Dead Space, Mirror’s Edge, Spore, Boom Blox. Pleased to see more competitors doing the same. New more story driven IPs are going to raise the profile of this industry. In us he sees the future Spielbergs, but if you are on your own and funding a 40 or 50 million properties it can be really rough. Garage model is hard. If you’re smart you hedge that risk.

Q: EA making big bets in casual and mobile, is that a new entry point? Good things about those games is that they bring in new audience: Pogo is women over 35. The Sims they thought would be casual, over 60% female audience. Often takes 2-5 years to make a property but these games are much more suited to iteration and risk taking. Very hard to do with a major console what they can do with Battlefield Heroes, with a free /microtrans model. Metacritic is great for a clean benchmark for traditional games, but hard to use it for things like Harry Potter or Shrek. First HP game in 1999 was spectacular, sold 11 million copies, but it got a 54. Force fit of a model that doesn’t apply.

Q: Best practices within the city states, and how do you cross pollinate? Well, we’re working on it. To pick one best practice it would be strong leaders running the studios. Talk to Bioware or Pandemic and they will say its going well, but ultimately EA *will* screw something up. So it’s important that those leaders can call him up and say “something is not right”. Someone just did that the other day with a marketing element on Burnout. If you get into a pitch with a creative idea, don’t let the publisher rain on your parade – fight for your vision.

Another best practice – running labels at EA are really product sensitive people who listen well. That listening is key, if you have more ego than the people making the products that is a bad situation. We’re the support staff, not the heroes making the game.

Another problem – pitching to 20-30 people is terrible. Most people have no idea and feel like they just have to say something. Keep it small, 2-3 people. Getting better at EA, maxed out a 4-5 people in the room for recent reviews. Trust creative leaders opinions of one another. Can’t bury someone with the output of 50 teams but sending builds so that everyone sees 2-3 others for peer review. Great creative leaders want feedback.

Q: This is a huge sea change for an industry leader like EA. A few years ago described as a collection of service bureaus with centralized creative services. So this is a huge shift. How do you describe this to the financial community when the business has always been about incremental margin improvements? By and large, central platform technology driving savings is an illusions. You should invest in tools and tech but it’s a huge mistake we’ve made again and again to force tech down a studios throat. Belief on paper that that saves money but in practice it doesn’t. Good theory there but it wasn’t borne out by facts and experience. Strong leaders being responsible means they will be able to deliver. We trust but we don’t trust everyone – takes a while to build that trust. Now we’re at a point where we’ve got that. Not saying you throw all that out but it is not as big as it used to be. If we weren’t doing this a lot of the creative leaders wouldn’t be with EA and all those new properties wouldn’t be there either , and that isn’t helping the shareholders build value.

Q: How, in the city state model, do you plan to deal with failures? For example, with Medal of Honor Allied Assault it did well but all the sequels declined, while internally nothing changed. When does someone say “stop” and send in the SWAT team? How do you deal with these and course correct, what are the canaries in the mine you look for? One of the hardest questions we have to deal with is failure. Every one of us has failure within our studios. Categorize failure into a couple of different types to help respond. When a team takes smart and calculated risks about innovation it is our job to stand behind those teams. We may not hit the ball out of the park 100% of the time. Like Neil Young and Majestic. Great execution of a tough challenge but couldn’t get it done. Spore may be the greatest creative risk ever made in the industry. Belief is that it will rival Sims or World of Warcraft. But it might not. 100% behind the team that is creating that and we will live or fall together.

But another kind of failure where what you have is a great creative idea but the team is more creative than they are capable. Great on paper and pre-pro but down hill from there, mediocre metacritic rating. Our industry has become more unforgiving. Second Road Rash game was a success with invisible barriers on either side of the road, and everyone was fine with it – but you can’t design stuff like this today. A lot harder to find bugs in 80+ rated games today. If you don’t have the execution, what do you do? You can help support and reinvest in the team to help close the gap, to build new AAA developers. Resurrected Need for Speed at least twice in this exact way. First as Hot Pursuit, then as Underground – both huge successes. Sometimes we don’t have the talent to make that happen though, merge teams or change schedules, etc. Not the easiest of things but that’s the right general approach. So with Medal of Honor that is sort of where we are now. Airborne concept was clever, sold reasonably well, but maybe didn’t deliver as well as they wanted. So looking at ways to support that team in the future.

Third kind of failure with teams that are hellbent on a bad idea and an irresponsible one, and don’t have the execution chops. This is the vast majority of actual games that get built are this. Amateur Hour. You want these great leaders, and you have to make those judgements. That’s when you make cutbacks. There may have been individual brilliance but it just wasn’t working.

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