IG: The way the market is right now, there are some other pretty weak publishers out there ripe for picking. Is EA looking to acquire another publisher?
JR: We're thinking of going after your website. We're going to make a hostile move for your website! [laughs] It's new and we could probably add value. [smiles]
As a company we've articulated what our strategies are. We're focusing a lot on quality and the service end of that, expanding our business on the Wii and then more broadly what we call digital services. If you look at where we are right now, I think we have a really strong slate of core products. We're #1 on the Wii right now with EA Sports Active, and that doesn't happen very often in the third-party world. Also, our services are only about 13-14% of our company right now, so that would be things like Pogo and mobile, and ad-based or micro-transaction products.
We look at M&A constantly because it's part of our public nature to look at what makes sense and evaluate what we can invest in or build or whether we can buy it, but I can't comment on anything in particular.
IG: Regarding EA's renewed focus on IP and quality, you had said there were 14 titles last year from EA that were 80 or higher last year on Metacritic. Do you feel the industry relies on Metacritic scores too much when it comes to portfolio planning?
JR: Let's be clear. I think quality and innovation is the lifeblood of the business. I think it's possible to sell a lot of a 70 rated game on occasion, but on different platforms it's different. But the best selling games in this industry last year were all 80 and above. ... I think people have misinterpreted things because Activision didn't get to be EA's scale by creating a bunch of new franchises; they got bought by Vivendi and merged. So that's one way to get big, but if you're going to get big by lighting up the consumer with original stuff, which is the more tried and true method, there are very few examples of crap blasting to the top. There's a really high correlation between quality, innovation and sales. There was clearly a hiccup in the global marketplace last fall [when Mirror's Edge and Dead Space launched]. It was the closest thing to financial armageddon I've ever seen. It got rough for a while and maybe new IP had a harder window, but that doesn't diminish our interest in it. I'm a huge believer in quality, although I don't think Metacritic measures it the best for everything we do. How do you evaluate The Sims? What do you compare it to? So we're clearly going to get some 95s and 100s, and we'll get 90s and 80s and maybe even some 70s, but what most of those reviews are going to be about is whether or not they're fans of the franchise. When people look at Madden, what are they comparing it to? I can tell you that this year's product by any reasonable standard is probably a 95, but there's sort of a discount for sequels that's introduced with Metacritic. So I don't think it's perfect, but it's a reasonably objective measure.
IG: In terms of your overall outlook for this industry in 2009, we've had a couple slow months, but do you believe 2009 will still outpace the record breaking sales from last year?
JR: I think it depends on how you look at it, but it most probably will. One is how you define the industry. NPD captures 60% but there's a lot of other stuff out there and taken as a whole, the total industry on a global basis, it would shock me if it didn't grow substantially. It's going to; it's not even a question. The more limited and narrow question is: will the packaged goods business, as measured by NPD, grow? We're in the low to mid single digits and I think that's still a reasonable estimation. We had long thought starting in April (the month lapping GTA and Wii Fit) that there would be tough comps, but then we expect it to grow again, with the launch of NCAA Football through the shank of our platform lineup. The month to month stuff is small numbers... if you had added 5 million units to the market in North America you would have had a growth in the last couple months instead of decline. It's not that much in the scheme of the industry. And I think in one month all it would have taken is a million units. So yeah, I think the industry's fine. We're going to grow this year in aggregate for certain, and probably low to mid single digits on the NPD captured, packaged goods side.
IG: Thanks very much for your time.
1 Comments
June 24, 2009
fak