EA Relying on Video Game Sequels

[jmc]

http://www.nytimes.com/2005/08/08/t...ogy/08game.html
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[bball_1523]

Re: EA Relying on Video Game Sequels

well can you please give us a brief summary?

[luv_mist]

Re: EA Relying on Video Game Sequels

SAN FRANCISCO, Aug. 7 - Electronic Arts, the world's biggest video game maker, plans to release Madden N.F.L. '06 on Tuesday. It is the 18th annual version of an increasingly lifelike game that lets players be the quarterback of a pro football team, and that sells millions of copies each year.


In this year's edition, a slice of the field lights up to give the quarterback better vision and throwing precision when he makes a pass. It also lets players follow the athletes' off-the-field activities.
But Steve Perry, 35, once an avid Madden fan, won't be lining up to buy the game. He said he dropped the habit several years ago, after his daughter was born and he tired of spending $50 to get an update of a title he already owned.

"I'm not willing to jump along and buy a new one each time," said Mr. Perry, who works in sales for a newspaper in San Antonio. "I'm not going to fall prey to that."

His complaint underscores a potential problem for Electronic Arts, which has suffered financial setbacks this year. Increasingly, industry analysts and game reviewers are wondering if the company's dependence on sequels is a sign that it is losing its creative edge.

By year's end, Electronic Arts plans to release 26 new games, all but one of them a sequel, including the 16th version of N.H.L. Hockey, the 11th of the racing game Need for Speed and the 13th of the P.G.A. Tour golf game. The company also relies heavily on creating games based on movies like the James Bond and Lord of the Rings series, rather than developing original brands.

"There's a feeling of franchise fatigue. Gamers are wondering, 'Do I need to buy this game again this year? I just bought it last year,' " said Mike Hickey, an analyst with Janco Partners, an investment firm in Denver, who has a sell rating on the company's stock.

The reliance on sequels and licensed media properties, he said, is "dampening the creative spirit."

Lawrence F. Probst III, chairman and chief executive of Electronic Arts, dismisses that view. "The teams that work on the franchise properties have a great deal of pride in constantly looking to improve the product," Mr. Probst said. Besides, he said, sequels, because they have a steady following among consumers, appeal to Wall Street investors.

He added that the company had a goal of putting out at least one entirely new game every year, and had several major original games in its pipeline.

To be fair, sequels are a stock-in-trade of the industry; 9 of last year's 10 top-selling games were follow-ons. Grand Theft Auto: San Andreas, the No. 1 title from Take-Two Interactive Software, for example, is the fifth version of that game. Reliance on tried-and-true sequels makes it possible to have a steady revenue stream in an unpredictable business.

Mr. Probst's defense, however, has not pushed aside worries about the company's continued growth. It recently reported a first-quarter net loss of $58 million, while sales dropped 16 percent compared with the same period last year.

The issue of creative fatigue emerges as Electronic Arts and the rest of the video game industry, while on a high-growth trajectory over the long term, have hit a cyclical soft spot. Consumers have slowed their buying of video games in recent months in anticipation of the release of two new video game consoles - the Xbox 360, scheduled for release from Microsoft later this year, and the PlayStation 3, due out from Sony next year.

Electronic Arts, based in Redwood City, Calif., recently lowered its full-year revenue estimates to $3.3 billion to $3.4 billion, from $3.4 billion to $3.5 billion, in part blaming a delay in the release of its game The Godfather, which will not be sold until next spring. The eagerly awaited game, based on the mobster movies, was supposed to be out over the holidays, when the game industry makes about 50 percent of its annual sales. But the company said it was still making improvements. The sizable financial effect of that delay is precisely the kind of trouble Electronic Arts avoids by putting out sequels. The company has been profitable over the years because it has been able to smooth out the volatility of its business with games that sell year after year.

With games based on soccer, racing, basketball and college and pro football, it can churn out dependable sequels, which are often much cheaper to create than brand-new games, which can cost upward of $10 million. Sequels are also somewhat easier to market because they already have a following.

Many analysts say that Electronic Arts's strategy and dependence on sports games - which account for about 30 percent of its revenue - is smart. "Their sports business gives them a leg up on everybody else," said Michael Wallace, an analyst with UBS. "It's the closest thing there is to recurring revenue in this business."

But critics are worried that even if it hangs on to the sports franchise, the company will need to take more creative risks to accelerate its growth.

Indeed, the strategy came under attack last year when Take-Two Interactive began selling its own sports titles at cut-rate prices. Electronic Arts, in response, signed expensive long-term licensing deals to give it exclusive rights to make N.F.L. games and titles using the ESPN brand and logo.

The deals - reported to be $400 million for the N.F.L. for five years and $800 million for ESPN for 15 years - have raised eyebrows among industry analysts who say the high fees could reduce profit margins. Others point out that the investments are necessary to protect the company's position.

The challenge on the sports front has increased pressure to make The Godfather the next big hit. Video game reviewers and Wall Street analysts are looking at it as a test of whether the company can create something great from scratch.

"The Godfather game is a big deal for that company," said Greg Kasavin, executive editor of Gamespot.com, an online publication that reviews games. "It if doesn't turn out good for them, it's going to be a problem."

For Electronic Arts' critics and supporters, The Godfather and two other original games - Black, a shooting game scheduled to come out next spring, and Spore, scheduled for release some time next year and created by Will Wright, creator of the Sims games - will be gauges of the company's creative prowess. From a financial perspective, however, Electronic Arts remains the unchallenged market leader, controlling around 25 percent of game sales for the major video game consoles, PlayStation 2, Xbox and GameCube.

Its 2004 revenue of $3.17 billion was more than double that of its nearest competitor, Activision, which had sales of $1.36 billion. The company's shares, which have fallen from around $70 at the beginning of March to $59 on Friday, held up even after the dot-com bust. Electronic Arts is "still far and away the best company in the video game industry," said Elizabeth Osur, an analyst with Citigroup Smith Barney. But, she said, "They've obviously lost some credibility" because the executives had to revise their earnings projections.

Mr. Wallace of UBS, who has a buy rating on the stock, said that game quality "wasn't up to snuff the last year or so," though he added that he believed that the company's creative engine was still strong. "They will certainly fix the quality issues," he said, noting that the company has historically been good at improving its titles when they become tired.

The sequels generally maintain the underlying mechanics of a game, but the degree of faithfulness can vary widely from version to version; some versions have minimal changes while others practically reinvent the game.

So far, game players seem willing to follow.

Since 1989, Electronic Arts has sold 43 million copies of Madden, with 60 to 70 percent of those sales made to repeat buyers, said Frank Gibeau, the senior vice president for marketing. And 50 percent of those who buy Need for Speed are repeat buyers, he estimated.

One repeat buyer of Madden is Nolan Cooper, 23, who graduated this year from Long Beach State University and who plans to buy the new version, just as he has for five years in a row. "I buy it for the new rosters and updated features and better graphics," said Mr. Cooper, who was visiting a video game store here recently.

He was accompanied by John Cooper, his father, who works at a U.P.S. warehouse in Sacramento. The elder Mr. Cooper offered his own theory on the sequels' successes. "If it wasn't for free agency," he said, "Electronic Arts wouldn't be doing so well."

In fact, Electronic Arts does benefit hugely from free agency, its executives say. Because professional athletes change teams constantly, game makers have a built-in reason to produce updated versions every year.

Still, the gaming audience expects something bigger, better and flashier with each iteration. At least one early review of Madden '06 was tepid. The review, published last Thursday in The San Jose Mercury News, said that the new quarterback vision feature might interest hard-core gamers but could be too distracting for casual players. At the same time, Madden '06 won the award for best sports game at E3, the video game industry trade show, held earlier this year.

Meanwhile, one of company's game producers, Phil Frazier, said that the team of 50 developers had already begun work on Madden N.F.L. '07. "The minute we finish one version, we jump right into the next one," Mr. Frazier said. "It's definitely a challenge."

Very Interesting. Will read in a bit....

[bball_1523]

Re: EA Relying on Video Game Sequels

I think I am growing tired of buying ea's madden. I don't think I will buy it this year because it just looks the same with a few small improvements and they stole the nfl away from any competition, which is just corporate garbage imo.

[Erv]

Re: EA Relying on Video Game Sequels

I seen it coming when they started buying franchises like Burnout and Timesplitters. I also think with game prices and production so high next-gen they are going to run into problems. This is a good thing, as gaming this gen has gotten way too mainstream and 10 less of their safe games floating around can only help the industry improve quality wise.

[goh]

Re: EA Relying on Video Game Sequels

This is why I said **** EA when they bought the NFL lisence. They never do anything to make their games new again. It doesn't always work when that sort of thing is tryed but at least try instead of giving out the same damn thing with minor upgrades.

""The minute we finish one version, we jump right into the next one," Mr. Frazier said."

I guess that explains it though. Maybe take 3 months off and listen to reviews and what people have to say.

"Grand Theft Auto: San Andreas, the No. 1 title from Take-Two Interactive Software, for example, is the fifth version of that game"

SA = 6th.
Always forgetting GTA: London.

[Graphik]

Re: EA Relying on Video Game Sequels

I remember why I fell in love with EA in the first place. Back during the 16 bit era, they were the ones who were innovating and creating new titles that were graphically better as well as more indepth than most of the competition.

Back when most companies were still using generic player models with only 2 skin tones to represent black and white players, EA went all out and created a realistic variety of skin tones as well as creating the hair for the player it was sopposed to represent. They were also the first to place logos in endzones and somewhat re-create a teams court as well as have the correct jerseys. When most companies were still using a fast paced, arcade style engines, EA actually tried to replicate the speed of the actual sport. And on top of that, they had more animations than any of its competitors.

This is what made me prefer EA over everything else back then. Back when nobody gave a rats behind if James Worthy had his goggles or not, EA did. Before EA, fouls and penalties in sports games were an afterthought. They not only incoporated these things, they also made each player unique and diffrent from one another. Cant think of many sports game back then that did.

If you think about it though, EA has never changed the way it does business. They've always taken baby steps and relied on sequels every since those 16 bit days. Lakers vs Celtics, Bulls vs Lakers and Bulls vs Blazzers were'nt all to diffrent from eachother. All they added was a feature or two and tweaked the game to perfection. Madden 93 is'nt all to diffrent from the last 16 bit Madden, which was Madden 97. Little tweaks here and there and that was it.

Fast foward to today, it seems that we've caught up to their way and we've now grown tired of how they handle they're business. They gave up on innovating years ago and instead take the safest road possible with each new release. Not to say that they dont innovate because they still do sometimes, its just that the innovations are few and far between. How many years can you possibly take a product before it feels stale. I've not only grown this way with just EA titles, other companies games as well fall under this trend.(Metal Gear series, Tom Clancey games, GTA series, Final Fantasy)


Out of all those companies, EA has it worse because they produce a crapload of titles each year that fall under the stale category. 25% of the entire market? My gawd, thats alot. Its about time they ditch these franchises and go with something new. You see what the MVP series and the Fight Night series has done, it revitalized a couple of series that were on the brink and now they both have new life. Seriously, I dont care if EA works in 3 year cycles with each game. Its the 5+ year games that I really cant stand. The Sims, Medal of Honor, Need for Speed(have'nt played a NFS since PS1), and half of they're sports lineup. When is enough, enough?


With that said, thats a good article. It sums up my feelings towards EA as of right now. Its sad though cause the trend will never end. EA as well as all of the video game industry knows that sequels sell because a good series is few and far between. Only thing that has me POed, is that they're buying up alot of respectable franchises just for the profit. Its not like they want to innovate them, they just recognize the opportunity to make more money. Dont be suprised in the future if EA will throw its hat in the console wars if they can see a huge revenue increase. They know that ppl will suck up whatever has they're name on it for years to come.

[mgoblue]

Re: EA Relying on Video Game Sequels

local sports talk radio had an hour on Madden today...of a 3 hour show...

I'm convinced that every one of the people buying it now would buy it if instead of a CD you got a CD shaped piece of dog poop, everyone and their grandma knows the Madden name. People don't talk about 2k, it's always Madden (well, everywhere but here). I liked 2k, but after realizing the enormity of the Madden release day, and how everyone flipped out for NCAA, I don't think any competition at all has a chance of ever unseating EA, the Madden and EA names are way too large, it's not just a game, it's a culture.

[bball_1523]

Re: EA Relying on Video Game Sequels

I think sports games is the only genre of EA that I dislike. I really like The Sims series because the production crew actually do change the gameplay alot, BUT the expansion pack prices are ridiculously OVERPRICED (should be around $10-15 depending on how much new stuff there really is). But the difference between sims 1 and 2 is huge.

I don't HATE sequels, I just hate it when companies don't add much to the sequel. The GTA series has huge improvements. It may have the same style of gameplay (freeform, mafia type), but it has improvements in almost all areas, from more freedom, more missions, more extras, more everything. The difference between GTA 3 and GTA:sa is huge. I have a hard time playing the older gta because it just doesn't have all the new treats SA has to offer, like riding bikes, flying airplanes, doing licenses, interacting with the crowd, parachuting, gambling, the list goes on.

See all sequels should have a TON of new content, if not a whole new game. Not just small tweaks here and there... MADDEN

[mgoblue]

Re: EA Relying on Video Game Sequels

I think sports games is the only genre of EA that I dislike. I really like The Sims series because the production crew actually do change the gameplay alot, BUT the expansion pack prices are ridiculously OVERPRICED (should be around $10-15 depending on how much new stuff there really is). But the difference between sims 1 and 2 is huge.

I don't HATE sequels, I just hate it when companies don't add much to the sequel. The GTA series has huge improvements. It may have the same style of gameplay (freeform, mafia type), but it has improvements in almost all areas, from more freedom, more missions, more extras, more everything. The difference between GTA 3 and GTA:sa is huge. I have a hard time playing the older gta because it just doesn't have all the new treats SA has to offer, like riding bikes, flying airplanes, doing licenses, interacting with the crowd, parachuting, gambling, the list goes on.

See all sequels should have a TON of new content, if not a whole new game. Not just small tweaks here and there... MADDEN

one point, sports sequels only get a year's development time...the GTA sequels have like 3 years or something, so keep that in mind

[Graphik]

Re: EA Relying on Video Game Sequels

one point, sports sequels only get a year's development time...the GTA sequels have like 3 years or something, so keep that in mind

I can understand sports sequels being the toughest to innovate given the short amount of dev time they have. But even with that knowledge, EA games dont change very much in a 3+ year period. If you compare the strides made in games like GTA over three years to 3 years of the Madden series, the diffrence in development is staggering. What makes this case even worse is that games like GTA add on when EAs games take out many key features.

[mgoblue]

Re: EA Relying on Video Game Sequels

I can understand sports sequels being the toughest to innovate given the short amount of dev time they have. But even with that knowledge, EA games dont change very much in a 3+ year period. If you compare the strides made in games like GTA over three years to 3 years of the Madden series, the diffrence in development is staggering. What makes this case even worse is that games like GTA add on when EAs games take out many key features.

true...it all goes down to EA's philosophy, innovate a bit, but don't leave stuff broken

2k games were really innovative, but also ended up having major bugs at times (franchise mode usually had these, i remember one really bad 2k Hockey one)

one reason I suppose the GTA games could evolve so much in 3 years, is because that's more than enough time to create a new base engine, 1 year isn't enough to really do that in a sports game, you need more than 1 year, so when the base of your system is somewhat constant, it limits drastic improvements. I think it's really unfair to sports game developers to compare them to games like Doom and Quake, which can be done "When they're done", no deadlines for John Carmack.

[ludacris06]

Re: EA Relying on Video Game Sequels

People are so late. All EA does is buy developers and force them to chuck out sequels of their best games.

Heck, EA doesn't even have to make Madden 07 any different than 06 because it's the only football game.

[RubenDouglas]

Re: EA Relying on Video Game Sequels

You can only GET SOOO BIG before you start to gradually decline. EA is still banking soo much cash. Expectations seem to be way too high. Do they expect to make more and more profit each year?

More innovation is definetly needed because the fan base is now bigger and diverse and theyll expect all sorts of things.

[VanCitySportsGuy]

Re: EA Relying on Video Game Sequels

EA knows most consumers are loyal and buy each game every season.

When that happens there's little motivation to give it there all.