CASE 9 – ELECTRONIC ARTS AND THE GLOBAL VIDEO GAME INDUSTRY
ABOUT THE CASE
Video game industry is rising and competing with an edge over music, movie and television industry. For most, gaming is part of growing up especially in the United States.
One of the growth drivers was the number of household across the world that had high-speed Internet access that allowed gamers to play video games over the Internet, which is the way of achieving the goal of EA to generate hundreds of thousands, and hopefully millions, of registered users playing EA Sports products online.
The second growth driver was expected to come when Sony, Microsoft and Nintendo were to launch the supercharged, next-generation versions of their game-playing platforms.
Electronic Arts (EA) is the world’s leading independent developer, publisher and marketer of video games. EA is known in developing games for play on all the leading home video game consoles, handheld devices and personal computers and online.
EA’s Chairman and CEO Lawrence Probst believed that EA was on course of becoming the biggest and best entertainment company in the world. According to Probst, there are a lot of potential growth driver over the next five-, six-, seven- year period.
How will EA maintain their top position in the video game industry?
Electronic Arts (EA)
• Leading independent, publisher and marketer of video games.
• Its goal is to be the market leader of games.
• Won 700 awards for outstanding software in US and Europe.
• Has four brand logos namely under EA Sports, EA Sports Big, EA Games and EA Pogo.
It gives high pay and stock option to their employees.
It offers localize games in multiple platform, languages and countries.
It has regular meeting every 90 days to listen to game developers update their work. According to John Riccello, EA’s Chief Operating Officer, they double down things that work and stop things that don’t work.
It focuses on doing fewer things and doing them better and getting more leverage out of the titles it ship.
It has the policy of making games that it could be proud of which meant that it stayed away games with profanity, sex, crime and violence. The firm policy of not creating games for mature audiences.
EA have little or no order backlog since orders were shipped upon receipt.
EA’s refusal to program online functionality into its Xbox games.
EA included trash talk in its sports games which contradicts its policy.
EA’s failure on most of its online sites.
New games to be developed for the next-generation consoles.
Development of more online sites due to increase of broadband connections.
Possible new entry of competitors and decrease of buyers.
EA and the Macro environment
• General Economic Conditions
The game players were rising regardless of the economic condition of the world. The global video game market was on track to rival the movie, music and television industry. In the year 2003, video game industry represented a $31 billion global market.
• Legislation and Regulations
As EA’s chief guardians and general counsels Lawrence Probst and Ruth Kennedy hold on in their firm policy of not creating games for mature audiences, EA may not have violate any regulations In fact, they won over 700 awards for outstanding software in US and Europe.
• Population Demographics
About 250 to 300 million people worldwide were very active or frequent players of video games. And perhaps 100 million people were infrequent players. Majority of players were preteens, teens and young adults between ages 20 to 40 years old.
• Societal Values and Lifestyles
Gaming is part of growing up in United States and...
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