The DeanBeat: EA prospers by thinking about gamers

Andrew Wilson’s reign as the chief executive of Electronic Arts has certainly been good for investors.

At EA’s annual meeting last week, shareholders didn’t ask any questions. In years past, the meeting had the inevitable queries from frustrated investors awaiting a turnaround. Wilson became the chief executive of Electronic Arts in September 2013, after the giant video game publisher suffered a couple of years in a row as the winner of “most hated company in America” award and five years of stock price stagnation. Since Wilson became CEO, the stock has nearly tripled, and EA’s value is $21.1 billion, more than its arch rival Activision Blizzard, which is worth $20.4 billion. EA’s stock price has been trading at a 10-year high for the past three months.

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The funny thing is that Wilson hasn’t been obsessed with the stock price, as far as I can see. The mantra of this former game developer, who rose through the ranks at EA Sports, is “players first.” By putting the concerns and passions of gamers above all else, EA can make the right decisions for its business. Under Wilson, EA is doing things like previewing games earlier in development, releasing public beta tests to get players feedback, and making sure that big online release don’t bring down EA’s servers. He also took financial risks, like delaying the launch of the blockbuster role-playing game Dragon Age: Inquisition, until it was ready. The result was a big score on revenue, universal praise, and numerous Game of the Year awards.

I’ve been reporting on these changes and withholding my opinion of the new EA. When a company picks a new leader, sometimes all that happens is that the company goes around in circles. You could argue that’s happening with Zynga, which appointed Don Mattrick as CEO and then, after it didn’t work out, founder Mark Pincus returned as CEO. But in the past couple of years, the evidence has been clear: EA is on an upward trajectory, and it’s time to recognize how monumental an achievement that is.

To Wilson, putting “players first” is a no-brainer. In an interview at the Electronic Entertainment Expo in June, he told me, “For us it’s not that risky. It’s listening to our community and delivering what they want. When I started making games, we would all get together in a room and say, ‘What do we want to build? What do you think the player wants?’ Then you put it in the marketplace, and you tried to see what people played. That’s how we built games. We don’t have to do that anymore. Part of building relationships with our players, part of telling them we want to hear from them, part of engaging in a conversation, is that we can do things that might look profoundly risky, but on the inside they’re simply answering the requests of the players who play our games. We’re going to keep doing that.”

With its deal with Disney to make Star Wars games, strength in sports with the NFL license, and studios such as PopCap Games, EA remains one of the most powerful companies in the console, PC, online, and mobile markets. It has 150 million monthly mobile players who spend tons of hours with EA games. On the technical side, EA has its Origin digital game distribution business and the Frostbite engine, which many different studios use to make games. With these assets, EA is poised to prosper in the $92 billion market, mainly by making games that have a cultural impact on a broad level. It has huge rivals in Activision Blizzard, Tencent, Supercell, and Take-Two Interactive. But as those companies grow, EA isn’t sitting still.

“The competition we have is competition for your best time. As human beings, we have an amount of time we allocate every day to entertainment,” Wilson said. “That might be watching TV. It might be playing games or listening to music or reading books. These days it’s shopping for a lot of people. Amazon wants your shopping experience to be interactive and fun and give you rewards. It sounds a lot like making games to me. It’s not just competition for games. The world has woken up and recognized that interactive entertainment is the best form of entertainment. All of a sudden everyone is trying to do what we do.”

Some of the credit for the changes at EA certainly go to Wilson’s predecessor, John Riccitiello, who set in motion many of the games that EA is making money from today. Riccitiello himself said at one of our GamesBeat events that the baton had been passed to Wilson in EA’s critical transition from physical to digital games, or games that you can download rather than purchase in a retail location. Wilson calls Riccitiello’s investment in EA’s underlying digital infrastructure as a “critical investment” that EA made.

“There is no question in my mind I left three-quarters of the way through that transition, and Andrew has taken the flag forward to continue that transition along with his own innovations,” Riccitiello said.

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In the last quarter, EA made 77 percent of its revenues from digital revenues such as in-game purchases, subscriptions, game downloads, and Internet services. But there’s more happening at EA than good stewardship of a ship that is already on course.

Wilson is turning EA into a destination for the artists of the industry. Patrick Söderlund, executive vice president at EA Studios, has scored victories in recruiting Amy Henig, the creative force behind the Uncharted series, to work on a new Star Wars game. That hire, in turn, helped convince Jade Raymond, a former studio chief at Ubisoft and a veteran developer of numerous blockbusters, to join EA this summer to both run EA’s Visceral Games studio and create a brand new studio with an original game in Montreal.

“When I looked at different opportunities and talked to Patrick, where EA is at with Frostbite, with the solid financial situation, with all the great talent around the world, with the new focus that Patrick and Andrew have been taking for the company, with the new product direction in general, with the desire to develop more games in the action-adventure space, it was clearly the best opportunity,” Raymond said in an interview with GamesBeat.

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The CEO has lost some key EA leaders, such as longtime exec Frank Gibeau, most recently head of mobile. But Wilson hasn’t missed a step. He replaced Gibeau with Samantha Ryan, a former Warner Bros. game leader, as head of EA Mobile. The talent is going to EA in part because of the leadership at the top. EA has a deep bench, with leaders such as Soderlund and No. 2 boss Peter Moore. But, once again, Wilson gets some of the credit for making EA a magnet for the right people. And his bench is getting more diverse, with more women in executive roles. That’s important for EA, as the definition of a gamer — the stereotype of the lonely male teenager — has changed. The average age of U.S. gamers is 35, and 48 percent are female.

In mobile, the audience is even more diverse and more global. EA is fighting many battles on many fronts, going head to head against Activision. But mobile may very well be where Wilson’s EA wins or loses, as mobile is becoming the industry’s biggest, most global segment. Regarding mobile, Wilson said, “Wherever our players are, that’s where we want to go. That’s why we’re building for Apple devices. That’s why we’re building for Android devices.”

And if gamers want virtual reality, Wilson will give it to them.

“There’s a core motivation that players have to immerse themselves into an experience, to escape into an experience,” he said. “VR is an opportunity to do that. But as you know, there’s five or six players right now. Our job is not to pick one of them. Our job is to build a technology layer that can facilitate distribution of virtual reality experiences irrespective of how they come — whether it’s goggles, whether it’s augmented reality, whether it’s a room you step into, whether it’s a pod like Total Recall. We’re trying to build at a core engine layer to facilitate that type of experience.”

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The leadership at the top is translated down through the organization. EA is taking risks and doing things that the old EA didn’t do. The new Rory McIlroy PGA Tour had a zany Grand Canyon golf course. Soderlund’s team signed up a tiny studio making an interesting yarn-based console game dubbed Unravel. EA added women to its FIFA 16 soccer game.

These are small, but perceptible, differences at EA. And Soderlund said that the publisher is being careful to be creative, not just corporate.

“For me it’s about fully understanding that we’re an entertainment company. We’re not a financial institution or a platform company,” Soderlund said. “Our job in the world is to entertain. Right now, EA is a place where the creator in general has a lot of respect and a lot of gravitas. That comes not only from Andrew, but from the publishing teams and everything else. I’ve been here a long time, and I’ve never seen the different parts of EA collaborate so well.”

We’ll see how it goes from here. But EA’s newest games, such as Mirror’s Edge Catalyst to Star Wars Battlefront, are getting fans excited about EA games again. During E3, EA games were viewed 53 million times, including 22 million views on social platforms for Battlefront alone. When EA announced a new Mass Effect game at E3, the audience went bananas. And that’s a welcome change.

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The trick is to know what fans want, when they want it, and when they’re about to change their minds. Unlike some of the risk averse companies in the industry, Wilson hopes to surprise fans with brand new games as well.

“We understand that there will come a day when people get up and want to play something completely different,” he said. “We have to prepare for that day. We have to start building and investing against new IP that might feel like a big risk today, a big creative risk, but it ultimately might be the next blockbuster. That’s an important part of our strategy.”