Problem
Case Study: Electronic Arts | Inside Fantasy Sports
Electronic Arts is the third largest and one of the most profitable players in the video game industry. Exclusive contracts with professional sports teams have enabled it to dominate the sports gaming market. Can EA stay in the pole position as gaming shifts to mobile in a crowded and contentious market.
Founded in 1982 by William "Trip" Hawkins, an early director of strategy and marketing for Apple Computer, EA gained quick distinction for its detail-oriented sports titles compatible with the Nintendo and Sega platforms. Although EA has also received good reviews for its strategy and first-person shooter games, it left its heart on the ice, diamond, court, or any other playing field long ago. According to former EA Sports marketing chief Jeffrey Karp, EA wanted to be "a sports company that makes games."
Ad Revenue In, Ad Revenue Out
Word of mouth may still be the most trusted form of advertising, and EA has always depended on fans to spread its gaming gospel. But in a highly competitive-and lucrative-gaming market, EA knows better than to skimp on brand building: it spends two to three times as much to market and advertise a title as it does developing it.
The realism of EA's graphics set it apart from competitors long ago, but the energy and talent used to depict that realism might be wasted if EA games didn't include the one element fans most want to see: their favourite players from leagues such as the NHL, NBA, and NFL. However, top athletes aren't cheap, and neither are their virtual depictions. EA spends $100? million annually to license athletes, players' associations, and teams. It's a complex dance: FIFA Soccer for iPad, for example, requires hundreds of different licences from a total of 22 club leagues, 500 teams, and 15,000 players. The investment pays off, however; in 2016, FIFA 17 was the top-selling video game in the world.
Past Glory
EA's past devotion to sports games has been a winning asset. But a funny thing happened on the way to the bank-over the course of a few short years, the gaming market radically changed. The way games were played in the past is not the way they are played now.
Blame the Wii. Or blame Apple. Or downloads. Or Android and social media platforms. Or blame the success of Activision Blizzard's massively successful World of Warcraft (WoW) that dominated EA's failed Star Wars: The Old Republic, which was intended to compete with WoW for gaming dollars. Successive generations of iPhone and iPad improved iOS gaming, and Apple's App Store suddenly became a self-sufficient gaming platform faster than you can say Angry Birds. Android apps are keeping the smart device playing field on the move and increasingly popular. Facebook also came into its own as a destination for simple but time-swallowing games. This kind of gaming was worlds away from EA's graphics-intense, true-to-life realism traditions, and it forced the company to some serious reckoning on its future.
Playing for Keeps
Former CEO John Riccitiello stepped down in the face of management failures and tumbling market value. Although historically a leader and an innovator in the gaming space, EA may have become more of a trend follower than a trend setter under his waning days at the top. When arch rival Activision found market success with its game Call of Duty, Riccitiello tried to copy their success with similar products. But consumers showed fatigue with first-person shooter military-themed games. EA also failed to remain current with market trends, making a failed foray into online gaming with SimCity and not keeping pace with rivals in gaming hardware. Another threat emerged with the announcement that computer code from third-party servers could infiltrate some of the EA gaming platforms. And then unwanted bugs appeared in Battlefield 4 and the market turned against EA games made for aging console players.
Task
Which of the control systems and techniques can be most useful to EA's next round of business decisions, and why?