EA SHOWS IT CAN DO MORE THAN JUST SPORTS WITH AN EVOLVING, INNOVATIVE STORY GAME
In unveiling their much-anticipated and long-delayed video game "Spore" in North America today, executives at Electronic Arts hope to counter critics who have faulted the Redwood City company for becoming fat and happy in recent years at the expense of artistry.
EA has been particularly chastised for milking its popular titles, such as the Madden NFL series, by making endless sequels based on licensed sports or movie content instead of creating entirely new games.
''Spore'' is poised to potentially enhance EA's image as an innovative game maker and, longer term, create a lucrative new wholly-owned franchise.
Based on initial reviews of a limited version of the game, dubbed "Creature Creator," which EA released in June, "Spore" seems likely to be well received. In the first week that Creature Creator was made available, game enthusiasts created more than 1 million organisms using it, according to EA.
" 'Spore' is a very important event at EA," said company spokesman Jeff Brown, adding that it's one of several new games the company has been working on. "A lot of people see 'Spore' as an inflection point, as a report card, on EA's quality initiative."
Mike Hickey of investment bank Janco Partners put it more bluntly.
"I think EA is desperate for a hit," said Hickey, who doesn't own EA stock. But expectations for the game are so high, he cautioned, sometimes "the buzz can overshadow the product."
"Spore" makes evolution
into a game, in which players create creatures and set them loose in virtual eat-or-be-eaten worlds. By cooperating with other creatures — or conquering them — these organisms vie for the chance to grow from single-cell entities into members of space-faring civilizations.
The National Geographic Channel will highlight "Spore" in a show scheduled to air Tuesday, looking at the science behind some of the game's assumptions. Plus, ''Spore'' and several other EA games recently have won top awards in video-game competitions.
Almost four years in the making — as opposed to one or two for a typical game — "Spore" initially had been expected to reach store shelves two years ago. Analysts said that delay greatly helped fuel anticipation over its release, as well as the fact that it was the brain-child of game guru Will Wright.
His last big idea, "The Sims," which he created through a studio he co-founded, has become one of the bestselling video games of all time. EA bought Wright's studio in 1997 and has continued to publish games from the ''Sims'' series.
Although EA won't say how much it cost to develop "Spore" — which carries a $49.99 price tag — some analysts have estimated the company sunk $50 million to $80 million into getting it ready.
Much of the credit for improving EA has been given to John Riccitiello, who quit EA in 2005 after having served several years as its president and chief operating officer, and who returned to the company in April last year to become its chief executive officer, replacing Larry Probst.
Besides making a high-profile bid to acquire Take-Two Interactive, the company behind the ''Grand Theft Auto'' game series, Riccitiello reorganized EA's operations, brought in a fresh management team, and emphasized game quality and innovation.
Change has not come easily. The company was hit hard by a transition to a new generation of video game hardware. Its sales stagnated as demand for games that run on older hardware dried up. Meanwhile, its expenses soared as it invested in developing games for newer gadgets.
In its last fiscal year, which ended in March, EA posted a $454 million net loss, due to its adoption of a different way of recognizing revenue, as well as its increased expenses and acquisitions. But its sales were up about 19 percent. And EA's push to put out a better product has a good chance of paying off, according to a note the financial services company Citigroup Global Markets sent its clients last month.
"Gamers increasingly are allocating their dollars to only the highest quality games, particularly in the holiday season," the note said, which praised EA's "renewed commitment to originality and quality under John Riccitiello's leadership."
Several experts said ''Spore'' could remain popular and continue to generate money for years.
The game is a pretty sure bet for EA, said Michael Pachter, an industry analyst for Wedbush Morgan Securities, who owns no EA stock. He added that it wouldn't surprise him if the company increased ''Spore's'' revenue by eventually charging players extra for new capabilities to help their creatures become more advanced species.
''Spore'' probably will sell at least moderately well and needs to, given the expectations surrounding it, said Doug Creutz, an analyst with investment bank Cowen and Co., who also owns no EA stock.
"It's very important," he said. "They haven't executed terribly well the last couple of years." But Creutz added, "I think they are heading in the right direction."
EA spokesman Brown said the company believes it's on the right track, too. Given the promise of "Spore" and other new games it plans to release soon, he said, "we think we're headed into a heck of a holiday."
In unveiling their much-anticipated and long-delayed video game "Spore" in North America today, executives at Electronic Arts hope to counter critics who have faulted the Redwood City company for becoming fat and happy in recent years at the expense of artistry.
EA has been particularly chastised for milking its popular titles, such as the Madden NFL series, by making endless sequels based on licensed sports or movie content instead of creating entirely new games.
''Spore'' is poised to potentially enhance EA's image as an innovative game maker and, longer term, create a lucrative new wholly-owned franchise.
Based on initial reviews of a limited version of the game, dubbed "Creature Creator," which EA released in June, "Spore" seems likely to be well received. In the first week that Creature Creator was made available, game enthusiasts created more than 1 million organisms using it, according to EA.
" 'Spore' is a very important event at EA," said company spokesman Jeff Brown, adding that it's one of several new games the company has been working on. "A lot of people see 'Spore' as an inflection point, as a report card, on EA's quality initiative."
Mike Hickey of investment bank Janco Partners put it more bluntly.
"I think EA is desperate for a hit," said Hickey, who doesn't own EA stock. But expectations for the game are so high, he cautioned, sometimes "the buzz can overshadow the product."
"Spore" makes evolution
into a game, in which players create creatures and set them loose in virtual eat-or-be-eaten worlds. By cooperating with other creatures — or conquering them — these organisms vie for the chance to grow from single-cell entities into members of space-faring civilizations.
The National Geographic Channel will highlight "Spore" in a show scheduled to air Tuesday, looking at the science behind some of the game's assumptions. Plus, ''Spore'' and several other EA games recently have won top awards in video-game competitions.
Almost four years in the making — as opposed to one or two for a typical game — "Spore" initially had been expected to reach store shelves two years ago. Analysts said that delay greatly helped fuel anticipation over its release, as well as the fact that it was the brain-child of game guru Will Wright.
His last big idea, "The Sims," which he created through a studio he co-founded, has become one of the bestselling video games of all time. EA bought Wright's studio in 1997 and has continued to publish games from the ''Sims'' series.
Although EA won't say how much it cost to develop "Spore" — which carries a $49.99 price tag — some analysts have estimated the company sunk $50 million to $80 million into getting it ready.
Much of the credit for improving EA has been given to John Riccitiello, who quit EA in 2005 after having served several years as its president and chief operating officer, and who returned to the company in April last year to become its chief executive officer, replacing Larry Probst.
Besides making a high-profile bid to acquire Take-Two Interactive, the company behind the ''Grand Theft Auto'' game series, Riccitiello reorganized EA's operations, brought in a fresh management team, and emphasized game quality and innovation.
Change has not come easily. The company was hit hard by a transition to a new generation of video game hardware. Its sales stagnated as demand for games that run on older hardware dried up. Meanwhile, its expenses soared as it invested in developing games for newer gadgets.
In its last fiscal year, which ended in March, EA posted a $454 million net loss, due to its adoption of a different way of recognizing revenue, as well as its increased expenses and acquisitions. But its sales were up about 19 percent. And EA's push to put out a better product has a good chance of paying off, according to a note the financial services company Citigroup Global Markets sent its clients last month.
"Gamers increasingly are allocating their dollars to only the highest quality games, particularly in the holiday season," the note said, which praised EA's "renewed commitment to originality and quality under John Riccitiello's leadership."
Several experts said ''Spore'' could remain popular and continue to generate money for years.
The game is a pretty sure bet for EA, said Michael Pachter, an industry analyst for Wedbush Morgan Securities, who owns no EA stock. He added that it wouldn't surprise him if the company increased ''Spore's'' revenue by eventually charging players extra for new capabilities to help their creatures become more advanced species.
''Spore'' probably will sell at least moderately well and needs to, given the expectations surrounding it, said Doug Creutz, an analyst with investment bank Cowen and Co., who also owns no EA stock.
"It's very important," he said. "They haven't executed terribly well the last couple of years." But Creutz added, "I think they are heading in the right direction."
EA spokesman Brown said the company believes it's on the right track, too. Given the promise of "Spore" and other new games it plans to release soon, he said, "we think we're headed into a heck of a holiday."
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