Unbranding the Sheep: The Cost of Innovation vs. The Reward of Convention

If you asked two different types of people about Electronic Arts’ CEO John Riccitiello, you would get two different answers. One group – gamers, or at least those that look past the yearly Madden release – would speak highly of him. Since taking over in 2007, he mended the damaged relationship between the company and it’s workers after they successfully sued the previous regime for unpaid overtime to the tune of $14.9m, and made it a point to up the quality of EA’s games, which has resulted not only in quality editions of their longstanding series such as Madden, NHL, their best NBA Live effort in years, but also greenlighted the releases of new IPs such as Dead Space and Mirror’s Edge.

Investors, on the other hand, are not happy. After Riccitiello lowered his earnings projection for fiscal year 2010, analysts have had a field day with him, and he could be made to answer to those shareholders for his inability to properly forecast earnings, as well as EA’s relative stagnation on their share price. After all, even Riccitiello himself noted that investors, “don’t give a shit” about game quality, as long as it hits the bottom line.

On the other side of the divide is Activision CEO Robert Kotick. To gamers, Kotick is the enemy. It’s not just the fact that he doesn’t play video games, something which would make him unqualified to make them according to most gamers. He has specifically gone on record as saying that his company’s whole philosophy is to “exploit” games only if they have the potential to become $100m franchises, and has shown this by shoving enough Guitar/Band Hero games and DLC down our throats to cause the entire music game genre begin to collapse upon itself. Furthermore, he is also on record as saying he wants to, “take all the fun out of making video games”, which would, again, to gamers, result in games that aren’t very fun to play, either.

Investors don’t care. Despite Activision’s modest share price ($10.84 as of this writing, but up almost $2 from this day a year ago), their games sell exceptionally well. For charts ending on January 9th, the console versions of Call of Duty: Modern Warfare 2 have sold a combined 15m+ copies, which is extremely impressive for a game that had been on the market for only nine weeks. To someone investing their money in a company, and wants a payback, that’s all that matters.

The trials and tribulations of both CEOs are just a surface look into where the video game industry is headed. On further inspection, there’s a lot to be said. For the discerning gamer, not a lot of it is good.

I mentioned Dead Space and Mirror’s Edge earlier. Dead Space was a game with a massive marketing push, including a comic and a DVD, and positive critical reception, but only sold 1.8m copies worldwide1 since it’s release in November of 2008. That sounds good until you remember that that’s less than half of what the Playstation 3 version of Call of Duty: World at War – considered a “weak” series entry – sold alone. It’s also a whopping 2.26m less than the XBox and PS3 versions of Madden NFL ’10 have sold in almost the same timespan. Mirror’s Edge didn’t do as well in the sales department (1.69m for the XBox and PS3 versions) or with critics (79 average on Metacritic), and is generally regarded by the public as being a subpar first effort, though it’s conceded that the franchise has potential. It remains to be seen if EA’s investors have the patience for these fledgling IPs to manifest themselves into franchises, but their comparatively low sales are one cause for EA’s lower than expected earnings.

This isn’t limited to huge companies like EA and Activision, either. Majesco’s end of fiscal year report is exceptionally dry reading, but two things stand out: new IPs performed poorly, including A Boy And His Blob2 (70k units) and Our House Party! (60K), whereas two lines in particular – the Mama series (Gardening Mama: 760k, and all four Cooking Mama games have combined for over 9m in sales worldwide) and the Jillian Michaels line of fitness games (Jillian Michaels’ Fitness Ultimatum 2009: 1m in sales as of Jun ’09). If you’re Majesco, do you even bother with trying other IPs? Or do you do what Take Two is doing: slashing underperforming IPs such as the NHL 2K line – giving EA Sports a monopoly on the hockey market – while focusing on sequels and licensed fare for 2010? Titles such as Bioshock 2, Mafia II, Max Payne 3 and some Dora the Explorer games are safe bets to go along with pumping out DLC to Borderlands3. Take Two’s strategy is working: despite Carl Ichan causing a shake-up of the Take Two board, their share price is at $9.37 as of January 21st, which is over two dollars better than it was at this point last year. Meanwhile, Sega Sammy Holdings continue to pump out disappointing games that frustrate and infuriate gamers worldwide, but how can we argue with their strategy when we’re purchasing them? Mario & Sonic At The Olympic Winter Games performed poorly in reviews, but has sold 4.87m copies as of this writing.

Grizzled veterans on both sides of the consumer-media divide complain about the lack of innovation in the gaming industry, stating that a focus on pumping out sequels and moving away from experimenting with new intellectual properties causes the stagnation that they so deride. Unfortunately for those that care, the hard numbers – the only ones that matter in this industry – show that this trend isn’t going to change while the sequel goose is laying proverbial golden eggs. As long as the status quo – that being, sequel after sequel after bland sequel – continues to sell, that’s what’s going to be sold.

Here’s hoping, for our sake, that men like John Riccitiello are able to prove that statement wrong. Or at the very least, that he has the chance to.

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1 – All sales information comes courtesy of VG Chartz. While I will admit that VG Chartz is not a 100% reliable source, for the context of this article, the information contained therein is sufficient. Furthermore, there is no 100% accurate source as every chart site uses different sources, but the information contained among different sources is usually similar in scope.

2 – While A Boy And His Blob is not a “new” IP, so to speak, it has been so long since a release that I’ve put it in the original category.

3 – To the credit of Take Two, Borderlands was one of the few new IPs that stood out in 2009, with sales to match.

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