EA CEO: "We Dropped The Ball" During Console Transition

EA CEO John Riccitiello

EA Chief Executive John Riccitiello

By James BrightmanSpeaking at the Goldman Sachs Technology and Internet Conference, was candid about his company’s struggles as the publisher transitioned from the PS2 and Xbox to the era of the Wii, PS3 and Xbox 360.

In the years since the new console cycle started, EA made a number of changes and went through some restructuring to bring costs down. As analysts have noted, it’s starting to pay off.

“Through this last transition to the PS3 era… for a whole bunch of reasons that are worth getting into, I think it’s fair to say we dropped the ball,” Riccitiello acknowledged. “Our IP deteriorated, our costs went up, and we didn’t really have an answer for the rise in digital.”

Of course, that answer to the digital boom is one of the reasons that EA’s doing better now. Between free-to-play social gaming and mobile offerings, EA’s definitely getting out in front of the digital wave.

Riccitiello is a big believer in the free-to-play model, noting it’s “a better model than pay to play.” And he boasted about how revenues from FIFA Ultimate Team quadrupled from $10 million to $40 million when EA decided to make the game free. The secret is getting people hooked onto the core game so that they can pay for virtual items. “As the head of our Playfish division likes to say, ‘There’s no such thing as free to play… it’s play first, pay later,’ and that’s a very compelling model,” he said.

Another part of the strategy is to leverage EA’s key brands in the free-to-play market.

“Our FIFA business is a leader on iPhone, a leader on Android, a leader on social networks, a leader on free to play. We did it with Dead Space, we did it with Mass Effect, we did it with Dragon Age, we did it with The Sims,” Riccitiello said.

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