Electronic Arts Smart To Keep Taking Risks With New Game Concepts (ERTS)


video game publisher Electronic Arts (ERTS) has been having a tough time: In its most recent earnings call, the company announced a series of cost-cutting measures — including 1100 layoffs and a much narrower product portfolio — in the wake of disappointing profits.

Two ways for EA to go from here: Retrench and focus on proven, if fading, franchises like Madden NFL. Or throw long and try to innovate, gambling precious resources on new game concepts and new intellectual property that may or may not pan out.

Looks like EA is at least open to the later. Kotaku hears EA CEO John Riccitiello told his staff at a company-wide meeting last week to keep taking chances on new game ideas.

Good to hear. As Heath Terry of FBR Capital Markets noted, the company’s flagship division, EA Sports, has been losing share every year since 2003. And despite cutbacks, EA still has more staff, resources, and institutional experience to leverage that most anyone else in the space but Activision (ATVI). If things for EA are to turn around, the company needs new hits, new franchises. Whether it achieves that goal is a whole other question, but it’s good EA is still looking for them.

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