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Getting into your customers’ heads: An interview with the COO of Electronic Arts Labels The success of Electronic Arts—known for games such as Battlefield, Madden, and The Sims—once hinged on managing relationships with retailers. Today, with online gaming on the rise, the company is learning how to use technology to get closer to the gamers themselves.
Gaming-platform innovations have opened up a whole new world of offerings in the interactive-entertainment industry over the last five years. The barriers for entry have come down, and small game developers can get their products in front of large audiences almost instantaneously through digital channels. Whereas Electronic Arts (EA) used to play against peers operating in a retail setting, it now must also master new platforms such as social networks, mobile phones, and tablets. In this interview, Bryan Neider, COO of EA Labels, talks about his company’s digital transformation, technology as an enabler of customer insights, and the role of the CIO.
McKinsey: What was the starting point of EA’s digital transformation? Bryan Neider: When John Riccitiello became CEO in 2007, he presented a vision to his senior-leadership team that showed our business through the analogy of a burning platform. You’re in the middle of the ocean on an oil platform that is on fire; your options are to hold fast and ride it down or jump off and face the unknowns of the ocean. John was anticipating the fundamental shift in our industry away from the packaged-goods model that made us successful and toward the digital delivery of games made possible by greater bandwidth and connected devices. It was a shift that, at the time, we were fundamentally unprepared for.
Communication and collaboration are critical to success, says Bryan Neider of Electronic Arts, particularly when the environment is changing rapidly—as it was when the company embarked on a digital transformation. Technology has been central to the company’s efforts. Telemetry and online tools, for example, help EA learn more about its customers and open a dialogue with them, allowing for continual refinements to processes and games. Although it’s easy for companies to become enamored with technology itself, Neider says, you must remember that most important are the people who design and use it.
We were also facing execution challenges—our game-quality scores were down and our costs were rising. John’s presentation that day was the inception point of EA’s digital transformation, with the objective of tearing down and rebuilding our business in ways that would allow us not only to deliver our games digitally, direct to consumers, but also to get better insights and build a much closer relationship with our customers. We have since been getting out of the “fire and forget” retail-delivery model and instead incorporating data-backed analysis into our decision making as we grow our business in delivering digital games and services. In fiscal 2013, we are forecasting digital to represent 40 percent of our overall business. As that percentage continues to grow, we are at the mercy of consumer preferences, which are almost by definition ever changing and difficult to define. So it’s immensely valuable if we can understand how consumers are responding to our products. We’re on our way; EA’s revenue coming from digital channels was up 47 percent in fiscal 2012 and will grow by an additional 40 percent in the current fiscal year. McKinsey: How has the new competitive landscape affected the way EA is organized? Bryan Neider: We needed to provide our customers with products that were relevant to them and accessible anytime, anywhere, on any device. From that came our EA Labels business unit structure, which now comprises six units grouping games that address distinct segments of the market. Within those...