EA CEO John Riccitiello steps down, Larry Probst appointed Executive Chairman

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Game developer and publisher Electronic Arts today announced John Riccitiello will step down as Chief Executive Officer and as a member of the Board of Directors, effective March 30. Larry Probst, who was CEO prior to Riccitiello, was appointed Executive Chairman while the Board searches for a new, permanent CEO.

EA made the announcement today via an official release, also stating that the company is considering both external and internal candidates to replace Riccitiello.

“My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year,” Riccitiello explained in his letter to EA (published by Kotaku). “It currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago. And for that, I am 100 percent accountable.”

Riccitiello also took pride in the strides the company has made in the mobile space, telling his employees: “You are number one in the fastest growing segment, mobile, with incredible games like The Simpsons: Tapped Out, Real Racing 3, Bejeweled, SCRABBLE and Plants v. Zombies.”

EA’s release cited Probst’s accomplishments when he was last CEO, also specifying his contributions to online and mobile. “As CEO, Probst successfully grew the Company’s annual revenues from $175 million to approximately$3 billion, led EA into new platforms such as mobile, online and other emerging markets and expanded its international presence to more than 75 countries.”

EA’s Nick Earl on the transition to free-to-play, relationships with mobile platforms and core gamers on tablets

Gaming giant Electronic Arts, which has seen years of success on console, PC and handheld, is seeing more and more success in the burgeoning mobile games market. The company released the highly-anticipated driving game Real Racing 3 yesterday and will launch Command and Conquer: Tiberium Alliances soon for mobile.Nick Earl headshot

Nick Earl, senior vice president and general manager of EA’s All Play label, recently spoke with Inside Mobile Apps about EA’s transition to free-to-play, its relationships with the mobile platforms (Apple and Google) and the core gamer market on tablet.

Inside Mobile Apps: What has EA learned so far from some of its freemium titles like The Simpson: Tapped Out and The Sims FreePlay?

Nick Earl, senior vice president and general manager of EA’s All Play label (pictured right): We’ve learned a lot. Top of the list is how open this model is in terms of the number of players and how big the audience can be when a game is free-to-play, even though there are a lot of opportunities if you’re willing to spend money inside these freemium games. Having [games] as this model means it’s completely open and free for millions to play on a daily basis. We’ve learned that we have to be able to support a large audience and that’s the infrastructure of the game. The operations has to be able to support large audiences and we’ve learned that on games like The Simpsons, for example, which now has now more than five million daily active users, and when we started it, we struggled. We rebuilt the infrastructure to support and maintain large audiences.

We’ve learned that the design of a free-to-play game is different from a premium game or console game where you pay upfront and get all you can eat. It requires a different style of design, that’s a core compulsion loop, that the user experience as well as the sinks where the game tends to monetize. You need to construct a game that’s going to work for the majority of people that are not going to pay at all but is still going to make sense for people who have the disposable income and desire to speed up and experience or get access to a premium item, and that doesn’t really upset the balance that exists for the entire community that are playing the game. There’s a real art to creating and designing these games.

IMA: With Real Racing 3 recently releasing, which is a free-to-play game, could you talk about the decision or the process of making the change from Real Racing 2′s premium model to the freemium model?

Earl: From the beginning, we made the decision, both EA and Firemonkeys to go freemium from the beginning for a couple of reasons. One, is that the market was moving and voting for going freemium, even though this it’s not supported by everyone because some people don’t like change. We acknowledge that and understand it. The vast majority like that there is no barrier to download a game and to start enjoying it and be a part of that community and experience. It’s clear to us that the way we we’re going to make this the most accessible and get the audience to appreciate what we believe to be a high-quality experience — free-to-play was the way to go. Secondly, we came up during the course of development with this unique, innovative multiplayer mode called Time-Shifted Multiplayer, which allows you to compete with your friends but do it in an asynchronous manner. Once we came up with that, we realized that this game is going to be more fun if there was a large audience. If there wasn’t a limit of people willing to spend $5 or $7 or $10 dollars on a game. We wanted to open it up and make it free. As we were developing, it was validating the decision to go freemium and that’s why we went all in at that point.

IMA: On the flip side, you still have premium titles in your portfolio on iOS and Android and you’ve seen some success with games that are premuium with a price upfront and in-app purchases as well, like Need for Speed: Most Wanted and FIFA Soccer 13. Is EA still seeing success with premium mobile games?

Earl: We have not made the decision to focus exclusively on premium. There’s a place for premium with in-app purchases — we call that “paymium” to make it more confusing. There’s a place for those games and we’ll continue to evaluate each game by a franchise by franchise or game by game basis to figure out what’s the optimal way to construct a game and construct a business model for that game. The majority of games are going to be freemium going forward unless something radical shifts inside the industry. I don’t see it departing from this model any time soon.

IMA: In EA’s last earnings call, the company mentioned again how much revenue The Simpsons: Tapped Out generated. Distimo recently put out a report, which showed EA at the top spot among all top grossing cross-app store publishers. With mobile development having better margins than console development, will EA be focusing more of its business on the mobile platform?

Earl: We can’t talk about our gross profits and gross margins from system to system, but what I would say is this — we are enormous believers in the mobile platform and we’re excited about the future. If you take a look at the numbers and the trajectory, there’s no argument against how fast these devices are being adopted. We’re seeing unbelievable activation rates on a daily basis. We saw enormous numbers over Christmas. We’re seeing a whole market spring up in front of us. We’re excited about mobile. There are potentially millions of people that will upgrade from feature phones to smartphones and tablets in the years ahead. So there’s just no denying that mobile is enormously exciting to this company. And, our goal is to make the greatest highest quality games we can in front as many people as possible.

With all of that said, the company is invested in the future of consoles, and now that there’s some announcements about the next gen, we’re excited about the possibilities there and we’re also big players in the PC business and have some big franchises like The Sims that make sense for the PC — both online and offline. We’re a large publisher that has the ability and the resources to go after multiple markets and find a way to tie these franchises, so that you can play and interact with them across any device at any time, anywhere. That’s the Holy Grail here — to have the ability to access a given franchise from multiple devices, and your data moves seamlessly across sessions. That’s something EA believes in.

IMA: We recently spoke with the developer working on Command & Conquer: Tiberium Alliances, which will launch on mobile soon, featuring cross-platform play between mobile and PC. Will more EA games feature cross-platform play?

Earl: That’s something we’ll push toward. There’s a lot of intricacies around design. I don’t think you can necessarily stop playing on web and then pick up where you were on mobile, but I do think you can interact with it. I like to use FIFA as a good example of that. On your phone, you can act more like the manager and switch positions — who your players are on the starting eleven and later you can take that new roster and play a new game in all its 3D glory with your 5.1 surround sound on a beautiful HD screen. And then the next time you can open your iPad and look at all the stats that you generated from that game. We love the notion of having your data in the cloud and being able to interact with it no matter where you are and when. (more…)

Firemonkeys on Real Racing 3 going free-to-play

Inside Mobile Apps yesterday got a hands-on preview of Real Racing 3. We also spoke with Ptolemy Oberin, one of the game’s programmers and project lead at developer Firemonkeys, about the studio’s experience going free-to-play and the game’s Time-Shifted Multiplayer feature.Real Racing 3 app icon

Real Racing 3 is the first game in the Real Racing franchise that’s developed by Firemonkeys, a studio consisting of developers Firemint and IronMonkey. In July 2012, Electronic Arts merged Firemint, the developer of the first two Real Racing titles, Flight Control and SPY mouse, with IronMonkey. Melbourne-based IronMonkey was purchased by EA in February 2010, and are known for bringing EA franchises to mobile as it did with Mass Effect Infiltrator, Dead Space and The Sims FreePlay. Firemint, a Melbourne-based studio as well, was acquired by EA in May 2011.

Modifications made to Real Racing 3

The most noticeable difference going from Real Racing 2 to the third installment is the graphics. Oberin tells us that Real Racing 3 is pushing about the same graphic fidelity seen in PlayStation 3 titles such as Polyphony Digital’s Gran Turismo 5 and Xbox 360 games like Turn 10 Studios’ Forza Horizon. Oberin adds that Real Racing 3, which runs on Firemonkeys’ in-house engine Mint3D, is pushing around five to six times more polygons in the cars, and that the tracks have been upgraded graphically as well. Other graphical touches include full damage visibility on cars, multiple camera angles and real-time images on the mirrors in cockpit view.

The game is broken down into multiple series, each featuring various events. According to Oberin, who was the project lead for Flight Control Rocket and SPY mouse, there are about 900 events in total. There are 46 licensed cars in total from 12 car manufacturers including Audi, Bugatti, Ford and more. Control-wise, users steer the car by tilting a device side-to-side and braking by pressing the screen — the gas pedal is automatically pressed down.Real Racing 3 screenshot 1

The biggest change in Real Racing 3 is Time-Shifted Multiplayer (TSM). TSM records a real person’s skill level and attributes on EA’s servers. That data is then used to program the AI opponents in races. This works because every user that plays the game will have their driving data recorded. If a user integrates with Facebook or GameCenter, they can then asynchronously race versus AI opponent that are programmed by a user’s friends. Oberin says the cars are not just ghost racers, he described the AI driving the cars as an “AI doppelgänger.”  It should be noted that TSM isn’t a mode, it’s in every race. Real Racing 3′s TSM will also be platform agonistic, meaning players can compete against each other’s TSM AI-controlled driver whether they are on iOS or Android devices. (more…)

EA generates $79M in revenue on mobile in Q3 2013, up 20 percent quarter-over-quarter

Electronic Arts non-GAAP mobile revenues from smartphones and tablets were up 20 percent quarter-over-quarter from $66 million to $79 million for Q3 2013, Chief Financial Office Blake Jorgensen said today in the company’s earnings call.EA logo

The Redwood City, Calif.-headquartered corporation’s total mobile revenues including handhelds was $99 million, up 19.3 percent from $83 million at the same time last year, and up 12.5 percent quarter-over-quarter from $88 million.

Overall, EA reported $321 million in digital revenue, up 17.2 percent from $274 million in Q3 2012.

The most notable mobile game for EA was The Simpsons: Tapped Out, which generated more than $23 million in digital net revenue for the quarter. EA also claimed it was the No. 1 publisher on iOS worldwide for 2012.

“The release of the Treehouse of Horror content was a key driver,” said President of Labels Frank Gibeau in the Q & A portion of the earnings call.

EA’s hit iOS titles Bejeweled Blitz as well as The Simpsons: Tapped Out will launch on Android this quarter, said Chief Operating Officer Peter Moore in the earnings call. Moore also revealed that driving simulator Real Racing 3 will launch on Feb. 28.

Head over to our sister site, Inside Social Games, for a full run down of EA’s Q3 2013 earnings report.

EA digital revenue by platform Q3 2013

Simpsons: Tapped Out hits 2.8 million DAU as top grossing app

Video game giant Electronic Arts’ Q2 2013 earnings report today revealed that The Simpsons: Tapped Out just reached a record-high 2.8 million daily active users after being No. 1 on the iOS top-grossing chart for the past four weeks.The Simpsons: Tapped Out app icon

EA says The Simpsons: Tapped Out also hit No. 1 in the App Store in 54 countries like the U.S., the U.K. and Germany.

According to our traffic tracking service AppData, The Simpsons: Tapped Out is ranked today No. 2 on both the iPhone and iPad top grossing apps charts. The game has been the No. 1 top grossing app for iOS for a majority of October. Additionally  The Simpsons: Tapped Out was recently updated with Treehouse of Horror content, which has helped keep the title in its top spot all month long.

You can read our review of The Simpsons: Tapped Out here.

EA shutting down Restaurant City on Facebook, iOS

Restaurant City will be taken offline from both Facebook and the App Store on June 29, according to a Wall Photo added to the game’s album today. Players are being encouraged to move to The Sims Social both with a virtual currency bonus and the ability to convert existing Restaurant City premium currency to Sims Social premium currency.

Playfish’s Restaurant City was one of the top restaurant simulation games on Facebook in 2009; it maintained that momentum through 2010 after EA acquired the developer. The game recently marked its third birthday on Facebook in April — having shrunk by more than 90% in size from its peak numbers of 5.2 million daily active users and 18 million monthly active users to today’s 310,000 DAU and 1.8 million MAU, according to our AppData traffic tracking service. The real problem seemed to come for the game around September 2011 when retention (which we can measure by taking DAU as a percentage of MAU) dropped below 20 percent. Restaurant City rallied in October around the time its iOS version, Restaurant City: Gourmet Edition, received a major update — but retention dropped again in early 2012 and Gourmet Edition fell off the top apps lists.

As a genre, restaurant sims still show some growth on Facebook and mobile when they first launch. The games lack staying power, however — we still see Restaurant City as the second-largest game in the category on Facebook after Zynga’s Café World, which is also in decline.

As a company, EA is apparently struggling to maintain its position as a top developer in social and mobile. It’s slipped to the No. 4 position of top developers on Facebook by DAU and wooga is about to overtake it for the No. 2 position on MAU. On mobile, the developer pulled two titles from the App Store for poor performance in as many months this year. EA has also lost a lot of its staff to Zynga in the last 12 months and is now rumored to be facing layoffs, though the company has denied it. EA reports its Q1 2012 results next week.

This story originally appeared on our sister site, Inside Social Games.

EA Loses Barry Cottle to Zynga, Promotes Playfish’s Segerstrale

Barry Cottle, who oversees EA’s mobile and social games, has left the company to take a position at Zynga as executive vice president of business and corporate development.

It’s another key executive loss for EA, which has seen other high-ranking alums like John Schappert, leave for Zynga. We’ve seen several other ex-EA employees below the corporate level also migrate, suggesting that the corporate culture between the two rivals isn’t so different. Even though Cottle has served EA for more than four years, he barely spent six months in the role as EVP of EA Interactive – Social, Mobile and Online Gaming, which he took over when EA shuffled its executives in August 2011.

Zynga expressed excitement at the hire in statements provided in a press release. EA hasn’t responded to request for comment as of press time. At this point, it’s unclear who will fill Cottle’s shoes at EA.

Update: EA has updated its corporate roster with Playfish founder Kristian Segerstrale as EVP of Digital. In an Action letter to employees filed today, EA CEO John Riccitiello says that the company will now fold EA Interactive into all its divisions in a restructuring effort to be detailed at a Town Hall meeting on February 2. Frank Gibeau and Peter Moore retain their positions as president of EA Labels and COO, respectively, with Moore taking on leadership of a new Customer Experience Group. Rajat Taneja remains CTO with an emphasis on building up EA’s proprietary platform, Origin.

“This reflects our new reality,” Riccitiello’s statement reads, “everyone and everything is digital.”

Update 2: An EA spokesperson clarifies that the new structure of EAi is not hinged on Cottle’s departure and Segerstrale’s new role is significantly different than the one Cottle left behind. “In fact,” says the spokesperson, ” it further reflects the changing structure that as the parts of EAi integrate into other areas of EA, Segerstrale is focused on a wide-reaching new role that helps to define parts of our new digital business.”

EA’s Next Version of Tetris Will Experiment With an Optional Membership Model

Big Fish’s subscription-based gaming app may have gotten yanked out of Apple’s app store over the Thanksgiving weekend. But, as we were hearing from other developers, it looks like subscription-style gaming products are still coming to the iOS platform.

Electronic Arts gave a holiday preview of several upcoming titles today and one of them, Tetris, will have a special membership program called Tetris Club that will give players premium content and bonuses. The game will have a special Tetris Club, costing $2.99 per month or $30 a year. It will give discounts on the game’s T-Coins, exclusive content and 15 percent in line and coin bonuses.

As for the game’s design itself, EA dramatically improved the user experience. The game now has a Marathon One-Touch mode that gives players a range of options on where to place Tetris blocks, or tetrominos. Instead of rotating the piece around several times and waiting several seconds for it to drop down in the appropriate place, you’ll see two to four options for where the block could end up. When you choose one, the tetromino quickly slots into place. It makes the gameplay a lot smoother.

There’s also another mode that gives players special power-ups, like one that allows a tetromino to smash into another line of blocks, breaking them up.

EA is the midst of a big transition from paid apps to the freemium model. Several of the other titles we saw today like The Sims are going freemium, with in-app purchases of premium currency. This is in line with a huge trend we’ve seen this year with about half to two-thirds of the top-grossing titles in the store being free apps (as opposed to paid ones).

Electronic Arts’ Mobile Revenue Climbs 12% Year-Over-Year to $55M in Second Quarter

Electronic Arts’ mobile revenue climbed 12 percent year-over-year to $55 million in the second quarter ending in September. Meanwhile, revenue on the Nintendo DS platform declined 13 percent to $7 million while PSP revenue was unchanged from the same quarter a year earlier at $17 million.

The company said smartphone revenue increased 87 percent year-over-year, according to non-generally accepted accounting principles, which exclude factors like acquisition-related expenses and stock-based compensation. Smartphone revenue helped offset declines in the feature phone business, EA said.

In the earnings call, EA pointed out games like SPY Mouse, which came from the Australian gaming studio it recently acquired called Firemint and the big soccer-related FIFA franchise. Electronic Arts said PopCap Games, the Seattle-based company it recently acquired in a deal worth up to $1.3 billion, is set to grow about 30 percent year-over-year. Before it was acquired, PopCap said it made about $100 million in revenue in 2010, so this would ballpark it at $130 million for 2011. PopCap is behind hits on iOS like Plants vs. Zombies, Chuzzle and Bejeweled Blitz.

Overall, net digital revenue rose 45 percent year-over-year to $234 million, on a non-GAAP basis. EA’s net loss widened 69 percent to $340 million from $201 million in the same quarter a year earlier. Shares rose 11 cents to $24.50.

Electronic Arts Moves Moore Up to COO; Cottle to Oversee Mobile, Social Gaming

Electronic Arts shuffled its executives today with EA Sports’ head Peter Moore taking over as chief operating officer. He is filling the position that John Schappert left open when he left the company for rival Zynga.

Barry Cottle, who had been executive vice president of EA Interactive, becomes head of that division, which oversees all of the company’s mobile and social gaming initiatives. PopCap Games, which the company just agreed to acquire for up to $1.3 billion including earnouts, will also fall under its umbrella.

EA BioWare will split off from EA Games and be run by Ray Muzyka, the BioWare co-founder. It and the three other labels, including EA Sports and EA Play, will be overseen by Frank Gibeau, who becomes president of EA Labels.

Electronic Arts said last week that its mobile revenue climbed 10 percent from the same quarter a year ago to $57 million in the first quarter ending on June 30. Those numbers were on a non-GAAP basis, meaning they aren’t according to generally accepted accounting principles which would factor in acquisitions costs and stock-based compensation. The entire company pulled in $999 million in net revenue, up from $815 million a year earlier, according to generally accepted accounting principles. Net income more than doubled to $215 million from $96 million.

Here’s EA chief executive John Riccitello’s comments:

Today we announced some changes in EA’s organization that reflect how we create and distribute our games, as well as how we nurture the talent of our employees.

This is the first material re-organization since we established EA’s label structure in 2007. Our progress since then has been incredible. We executed against three transformational strategies: (1) Fewer, Better, Bigger, (2) Expanding our digital businesses, and (3) Tighter cost management. Our quality has risen dramatically. We’ve built an $800m+ digital business while pushing down operating costs. Not all of it was easy but looking back, it was exactly the right structure and priorities for the challenges we faced.

Now, we are switching from defense to offense. We’re focusing on building our intellectual properties/franchises into year-round business. We’ve established our own platform, Origin, and we continue to grow our digital business.

We are already seeing big returns on our investment in change. That’s why this is precisely the right time to update our organization. A few highlights that were announced today:

Peter Moore is now our Chief Operating Officer.
Frank Gibeau will serve as President of the EA Labels.
Our Label structure is expanding to four – EA Games, EA SPORTS, EA Play and BioWare.
Barry Cottle is heading up EA Interactive which now includes Playfish, Pogo, EA Mobile, our partnership with Hasbro, the online and mobile business in Asia and soon, PopCap.
Two final thoughts on the reorganization:

First, I think it’s a great reflection on EA that we are able to tap so much world-class leadership from within our own ranks. The depth of talent and leadership in this company is inspiring.

Second, as I look across EA and back on its history, I come to an important realization. The people who succeed here are the ones who map their creative vision over a deep understanding of what our consumers want. Our Label structure reflects that strategy. It creates a close partnership between developers and product marketers that connects the creative process to our consumers.

This is an exciting time. The opportunities are growing exponentially and EA is growing and changing to capture them.

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