Former executive condemns EA and its ‘bankrupt’ strategy

Electronic Arts isn’t doing very well at the moment, and Electronic Arts would have you believe that’s all the economy’s fault. However, former EVP Mitch Lasky has a more damning reason for EA’s failings — it’s the fact that Electronic Arts has totally dropped the ball. 

“While Activision was setting sales records with Call of Duty: Modern Warfare 2, EA had no major hits,” writes Lasky, “although, in fairness the COD:MW2 revenue was probably just filling in a sinkhole at Activision created by a music game business that has fallen off a cliff. EA is in the wrong business, with the wrong cost structure and the wrong team, but somehow they seem to think that it is going to be a smooth, two-year transition from packaged goods to digital. Think again.

“The old EA model was a basically a three-legged stool: 1) a profitable, recurring sports business (Madden, FIFA); 2) franchise games that produced big hits on a less frequent basis (The Sims,Need for Speed, Command & Conquer); and 3) a collection of digital assets (e.g.: Pogo & JAMDAT, and now Playfish) and distribution/partnership titles (e.g.: Rock Band & Left 4 Dead). Of those, the only stool leg left intact is the third one. Without the digital assets and the EA Distribution titles, they’d be in even more serious hot water.”

Lasky says that EA executives weren’t bold enough to scale back certain games to cut long-term costs, and that its sports licenses have been “hamstrung” due to the increased money involved. However, it’s the EA Games division that is the company’s biggest failure, according to the former EVP.

“From Spore, to Dead Space, to Mirror’s Edge, to Need for Speed: Undercover, it’s been one expensive commercial disappointment for EA Games after another. Not to mention the shut-down of Pandemic, half of the justification for EA’s $850MM acquisition of Bioware-Pandemic. And don’t think that Dante’s Inferno, or Knights of the Old Republic, is going to make it all better. It’s a bankrupt strategy.”

Incredibly scathing stuff. Make sure to check it all out on Lasky’s blog.