DICE 2010: EA's Schappert on Surviving the Next Three Years in the Industry

John Schappert, COO of EA, is bullish on the game industry’s future, giving 5 tips for succeeding in the current market, including “Don’t abandon the consumer base, specifically the shiny [retail] discs,” while also lamenting not enough marketing spend on key titles like Mirror’s Edge and Dead Space. The headlines these days are not good - “In fact, they’re kind of depressing,” says Schappert. But he also asserts that the job loss and the flagging retail sales don’t paint the full picture. NPD doesn’t track big box retailers, international sales, or digital downloads or subscriptions, so he says it’s very hard to get an accurate shape of our industry. We’ve weathered this storm before, Schappert reminded us. “But this one’s different, it’s harder, it’s more difficult, it’s more complex. There’s a lot more platforms now.” “Consumers are being very price conscious with their money, and very selective in what they buy,” he says, admitting also that “If you’re not in the top 30, maybe the top 20, or even the top 10, you’re probably not making money,” talking of the blockbuster retail arena. But though those platforms make it tougher, it “also gives us more opportunities than we’ve ever had before,” said Schappert. With that, he divulged his top 5 tips for succeeding in this market over the next 3 years. Tip 1 – Commit Yourself to Quality. “The days of people going in, getting excited because they saw a commercial, picking up a game and going home to try it for the first time, I don’t think we have those days anymore,” he says. Schappert gave an example of EA’s FIFA series versus Konami’s Winning 11. FIFA was a venerable title since the Genesis days, but toward the later days, “We took our eye off the ball a little,” he admits. “We started focusing on cutscenes, and graphics, and CG. Then came Konami, who focused on gameplay. We found ourselves in the position of losing marketshare in an area we helped create.” And this was just an example. In general, he says, “we were over-iterating our franchises, we were asking too much of those titles, and too much of our creators.” That’s when EA made a cultural change to deliver high quality games to a consumer once. “It took a long time to regain that crown, and it taught us a lot of lessons,” he says. And you’ve also got to listen to consumers. “We can’t have teams and creators make the game that they want unless it’s also the game consumers want.” Tip 2 – Great Marketing. “Great marketing only works on great games,” he reminded us. The days of selling a poor product with good marketing are over. And yet, “we have great games, or very good games that don’t get the marketing that deserve,” saying specifically that Mirror’s Edge and Dead Space “are good examples because these are good titles, and it was during a time when we were focusing on fewer bigger hits.” “I don’t think we gave them the marketing support they deserved.” Particularly as they were launched alongside blockbusters like Fable and Gears of War, he said. Especially when launching in the holiday period, “you need to spend even more to get that share of voice.” Tip 3 – Invest in the Future – That Means Online. Connected consoles “are ubiquitous with online,” he says, “and it’s something we need to keep in mind.” Going back to his message from earlier, he restated that “people are buying fewer games than before, but they want to play them longer. We need to prepare for a long-term relationship with our consumers, and have at least a 6 month plan of downloadable content for those consoles.” Social is the hot new place, obviously, as everyone scrambles to get a slice of the Facebook and social pie. “I’m a big supporter and believer in the space,” he says, “But I do want to express a little bit of caution. Before you give up making these shiny disc-based games at retail, and jump for this new hot space, we need some caution. I think this industry is destined for consolidation.” If you look at the extremely high market valuations compared to the number of people rushing to the space, “I think we’re probably in a bubble,” he says, just like we saw with iPhone/mobile. “Fast forward to today, 18 months later,” after the launch of the iPhone. Now known brand-oriented games are dominating the iPhone. “It’s going to be about the brands people trust, and people relying on playing games cross-platform.” Tip 4 – Don’t Abandon Your Consumer Base. “Don’t abandon the consumer base, specifically the shiny discs,” he urges. “I think we often forget about how important the disc is, and we often underestimate the technical hurdles we have to go through to get rid of the disk. I don’t think in the near term, or the medium term, arguably the long term we’re going to be without the disk.” Tip 5 – Don’t Let the Critics Get You Down. ”Every generation has ushered in a larger, stronger industry than before,” he says. “We have more new consumers and more new gamers than we ever had before.” “It’s easy to get down, but we should look at the future and say we’ve done this before. There’s nothing to make us think the outcome isn’t going to be the same as it was before,” said Schappert. “Keep your head high, don’t listen to the cynics, and keep making those great games for us.”