Riccitiello's tenure at EA had some highs, but it ultimately will likely be remembered more for the lows when all is said and done. But where exactly did EA start going wrong? And can the company turn itself around?
It's going to be a while before the dust settles on Monday's executive shakeup at Electronic Arts. And the debate is likely going to last a lot longer than that. John Riccitiello's departure Monday afternoon from the company he steered for the past six years certainly wasn't filled with warm fuzzies. The press release was filled with boilerplate comments and a lack of any real information or affection. And the slipped-in sentence that the company would report earnings at the low end of guidance - or even possibly below it - certainly didn't add any fondness to the farewell. Riccitiello's tenure at EA had some highs, but it ultimately will likely be remembered more for the lows when all is said and done. EA has gone head to head with Activision on a few fronts in recent years, and has lost every time in the arena that investors care most about: profits. (We can debate the creative impact of some of those titles all day, but make no mistake, this was a decision that was made entirely on the basis of EA's financial performance.) It's tough to say exactly where things really started to go wrong for Riccitiello and EA. Some point to The Beatles: Rock Band – which was widely expected to be a monster hit, but fell short of expectations. Others note the gamble on a rebooted Medal of Honor series, which both failed to find an audience or impress critics. Still others points at last year's Star Wars: The Old Republic, reportedly the most expensive video game ever created, which fell flat soon after its launch and forced EA to transition it to a free-to-play model – an embarrassing move for a title that management spent years promoting as a World of Warcraft killer. Ultimately, though, Riccitiello's downfall probably had little to do with any one of the company's games. It was more about his slowness in reacting to change. EA has been the flag bearer for big console games and ignored the digital space for far too long. By failing to see that sea change coming, Riccitiello probably sealed his fate long ago. All of that said, you can't talk about John Riccitiello without also noting some of his victories at the company. His recruitment of Vince Zampella and Jason West was the stuff of industry legend, no matter how messy it got. He brought Bioware into the fold, which gave EA new franchises such as Mass Effect and Dragon Age. He's genuinely liked by many of the company's employees. And he started off his run at the company with a philosophy that many of today's developers long for – let the company's various labels operate more autonomously. He also oversaw the 2008 bid for Take-Two Interactive – one that ultimately fell short, but that (had he been able to pull it off) would have been a big boost to the company's bottom line. In 20/20 hindsight, one wonders if that was a turning point for the company's current financial state. Riccitiello's failure to pull EA out of its slump is particularly painful for the man who's taking over for him temporarily. Larry Probst handpicked Riccitiello to run the company when he stepped down from the CEO slot in 2007. Now Probst (who had stayed on as chairman of the board) is in that CEO role once again – and while he's likely only there for a temporary period this time, he's taking the reigns at a turbulent time. The SimCity debacle is generating bad PR, though investors haven't seemed to mind the problems so far. The earnings for the current quarter are looking grim. And we're going into a console transition at a particularly rocky time for the industry. Riccitiello may not have been the person to move the company to the next level, but whoever ultimately fills that role is going to have a very hard job ahead of them.
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