Electronic Arts . www.covermix.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. Originally, EA was a home computing game publisher. In the late 1980s, the company began developing games in-house and supported consoles by the early 1990s. EA later grew via acquisition of several successful developers. By the early 2000s, EA had become one of the world's largest third-party publishers. In May 2008, the company reported net annual revenue of US$4.02 billion in fiscal year 2008. Currently, EA'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.

History

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.

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. 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. 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.

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. While at Apple, Hawkins had enjoyed company offsite meetings at Pajaro Dunes and organized such a planning offsite for EA in October 1982. Following 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.

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.

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".

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.

Sharing credit

A novel approach to giving credit to its developers was one of EA's trademarks in its early days. This characterization was even further reinforced with EA's packaging of most of their games in the "album co pioneered by EA because Hawkins thought that a record album style would both save costs and convey an artistic feeling. 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.

The square "album cover" boxes (such as the covers for 1983's M.U.L.E. and Pinball Construction Set) were a popular packaging concept by Electronic Arts, which wanted to represent their developers as "rock stars".

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. 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.

Hawkins exits

After a very successful run on home computers, Electronic Arts later branched out and produced console games as well. Eventually Trip Hawkins left EA to found the now defunct 3DO company.

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.

EA under Probst/Riccitiello

EA is currently headquartered in the Redwood Shores neighborhood of 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.

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. 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. In late March 2005, Electronic Arts issued its first ever mid-quarter profit warning blaming hardware shortages and lower than expected fourth quarter sales.

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.

On June 20, 2006 EA purchased Mythic Entertainment, currently working on Warhammer Online.

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. 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 NFL 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.

In October 2007, EA purchased Super Computer International, a long standing industry provider of game server hosting for development studios, who were currently developing the new PlayLinc software. A week later they then purchased VG Holding Corp, the parent company of BioWare and Pandemic Studios. In November 2007, EA signed an agreement with GigaMedia for the online game, NBA Street Online.

At the 2008 Design Innovate Communicate Entertain (D.I.C.E.) Summit, Riccitiello gave a speech in which he admitted that EA's earlier strategy of buying and assimilating developers into the EA corporation was wrong. Citing Bullfrog Studios as an example of how EA's takeover had made the studio devoid of its star creative talent, Riccitiello acknowledge that EA was wrong in its way of handling and managing earlier creative teams it took control of. He then went on to state that he and EA have since learned from this mistake and allow independent developers they buy to remain autonomous to a large extent. Pointing to Maxis and recently purchased Bioware as examples of the new EA, these studios are allowed to keep their culture with little interference from EA. Whilst this gives the executives less control, it keeps the creatives happy and as a result, allow them to produce better work. Bioware's first game published under EA, Mass Effect, was released to critical and commercial success. However, it was developed and initially released with Microsoft as the publisher.

It was revealed in February 2008 that Electronic Arts had made a takeover bid for rival game company Take Two. After its initial offer of $25 per share, all cash stock transaction offer was rejected by the Take Two board, EA revised it to $26 per share, a 64% premium over the previous day's closing price and made the offer known to the public. Rumours had been floating around the internet prior to the offer about Take Two possibly being bought over by a bigger company, albeit with Viacom as the potential bidder.

Criticism

Studio acquisition and management practices

During its period of fastest growth, EA was often criticized for buying smaller development studios primarily for their intellectual property assets, and then produce drastically changed games of their franchises. For example, Origin-produced Ultima VIII: Pagan and Ultima IX: Ascension were developed quickly under EA's ownership, over the protests of Ultima creator Richard Garriott, and these two are considered by many as not up to the standard of the rest of the series.

In early 2008, current CEO John Riccitiello stated that this practice by EA was wrong and that the company now gives acquired studios greater autonomy without "meddling" in their corporate culture.

EA has also been criticized for shutting down its acquired studios after a poorly performing game. 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 labor groups for its dismissals of large groups of employees during the closure of a studio (see below). Such was the case with the game GoldenEye: Rogue Agent.

The lack of support is notable in many games, assured by the fact that EA declared openly that it 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 games.

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

Employment policy

In 2004, Electronic Arts was criticized for employees working extraordinarily long hours—up to 100 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.)". The company has since settled a class action lawsuit brought by game artists to compensate for "unpaid overtime". 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.

Since these criticisms first aired, it's been reported that EA has taken steps to positively address "work-life balance" concerns by focusing on long-term project planning, compensation, and communication with employees. These efforts accelerated with the arrival of John Riccitiello as CEO in February 2007. In December 2007, an internal EA employee survey showed a 13% increase in employee morale and a 21% jump in management recognition over a three year period.

In May 2008, 'EA_Spouse' blog author Erin Hoffman, speaking to videogame industry news site Gamasutra, stated that EA has made significant progress. Hoffman said that "I think EA is tremendously reformed, having made some real strong efforts to get the right people into their human resources department," and "I've been hearing from people who have gotten overtime pay there and I think that makes a great deal of difference. In fact, I've actually recommended to a few people I know to apply for jobs there."

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. 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.

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 publishers (Sega, Konami, THQ, Ubisoft, Activision) all rate in the mid 60's. Since 2005 EA has published three games Battlefield 2, Crysis and Rock Band that received Universal Acclaim (Metacritic score 90 or greater).

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."

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 price 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.", while even the company's own CEO, John Riccitiello, acknowledged 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." EA has announced that it is turning its attention to creating new game IPs in order to stem this trend, with recently accquired and critically acclaimed studios Bioware and Pandemic would be contributing to this process..

Editing of Wikipedia

On August 15, 2007 it was revealed that IP addresses registered to EA had made changes to its Wikipedia entry favoring EA. 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. 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.

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

Notable games published

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.

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 black and white animation tool called Studio/1, and a series of Paint titles on the Macintosh: Studio/8 and Studio/32 (1990).

Label architecture

Studios and subsidiaries

Current studios

Former studios

Corporate affairs

Logos

1982 to 1999

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.

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." 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. Other customers saw the logo as a stylized "ECA".

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. 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.

1999 to present

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.

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: The logo is different with every game, taking on certain visual aspects of the game it is presented with. However the EA letters always remain the same and the logo always remains a circle.

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"

References

^
^ untitled
^ Electronic Arts Q4 & FY2008 Financial Results
^ Companies - Electronic Arts
^ GameSpy comments on EA's yearly update strategy
^ EA moves towards new IPs from Gamesindustry.biz
^ Electronic Arts cuts staff by 5 percent from GameSpot
^ EA ships four Mac games from MacWorld
^ EA - Action, Fantasy, Sports, and Strategy Videogames
^ http://blog.wired.com/games/2008/02/riccitiello.html
^ http://www.nytimes.com/2008/02/19/arts/television/19game.html?_r=1&oref=slogin
^ http://www.joystiq.com/2008/02/27/bioware-founders-were-not-done-yet/
^ Top: EA Makes Offer to Buy Take 2
^ Take-two Interactive: Analyst "Convinced" That Take-Two Will Be Swallowed
^ Rumor: Viacom To Buy Take-Two?
^ "The Conquest of Origin", page 2 from The Escapist
^ Many believe Ultima IX was unfairly maligned because of rushed development schedule
^ Ultima VIII received poorly by fans
^ Ultima IX received poorly by fans
^ Wired GameLife, EA's CEO: How I Learned To Acquire Developers And Not Screw Them Up, Feb 8, 2008
^ EA Closes Down Warrington Studio - Another development studio shut down - Softpedia
^ EA shuts down DICE Canada - News at GameSpot
^ GamePro | EA to Shut Down Origin Systems
^ Layoffs and Restructuring at EA LA news from 1UP.com
^ EA dropping online support for 'older' games | PS2 News | GamePro.com
^ Ubisoft CEO Speaks on Takeover - TotalGaming.net news, 22 September 2005
^ Ubisoft president 'still considering' EA acquisition - Joystiq
^ The original ea_spouse blog entry at LiveJournal
^ "Employees readying class-action lawsuit against EA" from GameSpot
^ "Programmers Win EA Overtime Settlement, EA_Spouse Revealed" from Gamasutra

^ Further reading

"Player 4 Stage 4: But is it Arts?", a history of the early Electronic Arts
Innovation: Does Size Matter? from Gamespot.com
Original "EA_spouse" blog on workers of EA
Aftermath of "EA_spouse" blog
"Game makers see workplace changes" from News.com
What's The 'Coolest Job Ever'? Electronic Arts' Summer Interns Tell Their Story
Article on interning at EA on ITworld.com
The Escapist Article on EA's relationship towards Origin : Varney, Allen. The Conquest Of Origin, Origin created worlds, EA shipped games, EA won.. Retrieved on 2006-09-25.
EA Sports Sponsors Iran

External links

Electronic Arts' official website
Electronic Arts at the Open Directory Project
Electronic Arts profile on MobyGames

Electronic Arts, Inc. at Google Finance
Electronic Arts, Inc. at Yahoo Finance
Electronic Arts, Inc. at Hoover's
Electronic Arts, Inc. at Reuters
Electronic Arts, Inc. SEC filings at EDGAR Online
Electronic Arts, Inc. SEC filings at the Securities and Exchange Commission

v • d • e Major information technology companies

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v • d • e

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Activision · Adobe Systems · Akamai Technologies · Altera · Amazon.com · Amgen · Amylin Pharmaceuticals · Apollo Group · Apple Inc. · Applied Materials · Autodesk · Baidu · Bed Bath & Beyond · Biogen Idec · Broadcom · C. H. Robinson Worldwide · CA, Inc. · Cadence Design Systems · Celgene · Cephalon · Check Point · Cintas · Cisco Systems · Citrix Systems · Cognizant Technology Solutions · Comcast · Costco · Dell · DENTSPLY International · Discovery Holding Company · Dish Network Corporation · eBay · Electronic Arts · Expedia, Inc. · Expeditors International · Express Scripts · Fastenal · Fiserv · Flextronics · Focus Media Holding · Foster Wheeler Corporation · Garmin · Genzyme · Gilead Sciences · Google · Hansen Natural · Henry Schein · Hologic · IAC/InterActiveCorp · Infosys · Intel Corporation · Intuit · Intuitive Surgical · Joy Global · Juniper Networks · KLA-Tencor · Lam Research · Lamar Advertising Company · Leap Wireless International · Level 3 Communications · Liberty Global · Liberty Media Corporation · Linear Technology · Logitech · Marvell Technology Group · Microchip Technology · Microsoft · Millicom International Cellular · Monster Worldwide · Network Appliance · NII Holdings, Inc. · Nvidia · Oracle Corporation · PACCAR · Patterson Companies · Paychex · PetSmart · Qualcomm · Research In Motion · Ryanair · SanDisk · Sears Holdings Corporation · Sigma-Aldrich · Sirius Satellite Radio · Staples Inc. · Starbucks · Steel Dynamics · Stericycle · Sun Microsystems · Symantec · Teva Pharmaceutical Industries · The DirecTV Group · UAL Corporation · VeriSign · Vertex Pharmaceuticals · Virgin Media · Whole Foods Market · Wynn Resorts · Xilinx · Yahoo!

Electronic Arts

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