Game Not Over Not Yet Case Study Help

Case #3 Game Not Over, Not Yet

Althoughtheir expertise lies in creating games, it’s definitely serious businessfor the video game industry. The computer and video game industry hasstruggled over the last couple of years as game makers looked for newsources of revenues and worked to hold down costs. And nipping at theindustry’s heels were companies like Zynga that saw the opportunitiesand jumped in on the burgeoning social gaming revolution. One company,Electronics Arts (EA), exemplifies the challenges of this industry,where customers are fickle and demanding and competition is intense. Asone of the world’s top three interactive entertainment softwarecompanies, EA lives and dies by its innovations. Its product lineupincludes more than 100 titles such as Battlefield, Madden NFL, FIFASoccer, Rock Band, Need for Speed, and The Simpsons. The company hascreated more than 50 best-sellers (each with more than 1 million copiessold) since 1998. In 2011, revenues were almost $3.6 billion—a decreaseof almost 2 percent from the previous year—and the company had a netloss of $276 million. The last three years have been quite challengingas the company lowered its sales and profit projections because ofchanges in the behavior of consumers and retailers. In addition, EAmissed the initial social gaming trend, but is now pushing hard todevelop digital platforms for many of its popular games. As a result,its Sims Social is the number 2 game on Facebook, behind Zynga’sCityVille.

EA continues to look for ways to prosper. Paranoia hasbeen a critical part of EA’s strategy for success. A top game titletakes anywhere from 12 to 36 months to produce and costs between $5million and $10 million. That’s a significant investment risk riding onthe company’s ability to be innovative. John Riccitello (formerpresident and chief operating officer who left the company in 2004 tostart a private equity firm but then returned in 2007 as CEO) has guidedmuch of the company’s game design accomplishments. He said, “Theforgotten aspect of creativity is discipline.” The hard part, and thepart that EA pursues relentlessly, “is identifying the right idea,assembling the best development team, solving the inevitable technicalproblems, creating a game that people want to play, getting all of thework done on schedule, getting it to market at the right time, andknowing how to generate buzz about it in an increasingly crowdedmarket.” How does EA do it?

It starts with the discipline ofunderstanding ideas. Game designers try to identify the creative centerof a game—what they call the “creative x”—so they understand what thegame is about. Then, it’s the discipline of understanding the customersby using focus groups to pinpoint desires and likes and dislikes. Andit’s the discipline of sharing best practices and technologies throughthe company’s intranet library. As one employee said, “If somebodydevelops a better blade of grass in one game, that grass will be insomebody else’s game the next day.” Then, there’s the discipline ofdeveloping the next generation of creative leaders. The company’s“emerging leaders” program gives participants firsthand experience indepartments outside their own. And there’s the discipline of studyingthe competition. Employees are encouraged to know the features ofcompetitors’ products. Then, it’s disciplined project management.Riccitello, known for his strict discipline, said, “If you’re working ona game and you miss your deadlines, you won’t be working here verylong.” Although the discipline of creativity is important at EA, youcan’t overlook the passion of the company’s game designers. Nearlyeveryone at EA grew up playing games. They love what they do and areinspired to look for new and creative challenges not only for thehard-core gamers, but for the casual gamers as well.

Discussion Questions

  1. Describe EA’s competitive advantage from each of the three perspectives on competitive advantage.

  2. Does EA exhibit the critical success factors for the new business context? Explain.

  3. Describe the types of resources EA appears to have. Do you think any of these resources might be unique? Explain.

  4. Whatethical and social responsibility issues might EA face as it developsnew games? What would be the best approach for dealing with thoseissues?

  5. What stakeholders might EA have to be concernedwith, and how might those stakeholders affect EA’s strategic decisionsand actions?

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