Electronic Arts suffers big losses and loses CEO
Effective March 30th, EA CEO John Riccitiello will be leaving his post after a lackluster performance. Since his tenure, EA’s stock price has fallen from $61.40 a share to $17.97 as of March 22. EA has seen its consumer confidence suffer as well under his command, earning the infamous title of “Worst Company in America” in 2012 in a Consumerist poll, with a strong chance to regain the title in 2013.
In Riccitiello’s own words: “My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year. 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.”
A lot of factors have culminated in EA’s fall from grace. Under Riccitiello’s six year reign EA switched focus several times, most disastrous was an attempt to pin down the digital marketplace. Poor sales and reception of Star Wars the Old Republic, which was seen as EA’s major entry into the MMO market, was a huge blow to both Riccitietello’s overall strategy and to EA’s revenue stream. This, combined with the failure of recent Medal of Honor entries to compete with Call of Duty, the Mass Effect 3 ending debacle, Origin’s failure to grain much traction next to Steam’s marketplace, and the recent SimCity disaster, has pushed EA into a dangerous situation.
In the mean time, Larry Probts has been appointed Executive Chairman. Before Ricitello, Probts had wild success growing EA’s reach into several markets. In a press release EA said that their decision to put Probts in charge was because, “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.”
But Probts has a daunting task ahead of him. EA’s brand has long been toxic amongst gamers at the ground level. Citing everything from crushing DRM, the way EA’s games handle micro-transactions, and poor management of existing IPs, many see EA as a place where game franchises go to die. Some drastic changes will have to be made in the way EA both presents itself and how they move forward if EA wants to reverse its fortunes.