Q&A: Electronic Arts’ new COO Peter Moore on EA DICE’s shooter coming in a successful second, the necessity of a hit-driven industry, ongoing Valve dispute, and more.
Peter Moore’s purview at Electronic Arts expanded recently, as the executive stepped up from his old gig as EA Sports president to his new role as the COO of the entire company. At Gamescom 2011 this week, GameSpot sat down with Moore to get his take on some of the broader industry trends he must now concern himself with. Along the way, Moore weighed in on the hit-driven nature of the gaming industry, the apparent decline of the traditional brick-and-mortar gaming business, and whether Battlefield 3 needs to topple Call of Duty: Modern Warfare 3 for EA to consider the shooter a success.
GameSpot: Is the industry becoming increasingly hit-driven? And what’s the likely outcome when every publisher is making fewer bets and pushing each one harder to become a blockbuster?
Peter Moore: I think the industry has to become hit-driven. We’re not different than Hollywood, which relies on its big hits to cover its misses a little bit. That doesn’t stop a company like us from trying different things with new intellectual properties. But at the same time, it’s still a business so you need to put some bets where you feel really good, whether that’s a FIFA, or obviously a big bet like Battlefield 3 or Star Wars [The Old Republic]. I’d argue in the case of Star Wars, that’s new IP because we’ve never seen the Star Wars universe brought to life in an MMO like this that we’re proposing here.
I don’t know if that’s any different. I’ve been in the industry 12 years and we’ve always relied on the big hits to cover those little mistakes that didn’t quite land like we hoped they were going to land. I think you’re seeing more and more polarization on the big hits landing well, anything in the middle hitting the ground with a thud and not doing anything, and then a strong catalog business, interestingly. We’re seeing in the past few months, games that are £10 you can pick up that were £30 or £40 six or nine months prior, so gamers who have waited have an opportunity to save a lot of money that way.
GS: The packaged goods market has been shrinking in recent years, offset somewhat by the tremendous growth of digital revenue streams. Do you expect boxed retail sales to make a comeback, or are that segment’s brightest days done for?
PM: I don’t think it’s done for. And you’re right that it’s starting to decline, but not massively. This is not 20-30 percent per year. This is not the music industry, which went in about two years from a powerful CD-based business to quite frankly one that was about digital downloads. Retail around the world and particularly in the UK has learned the lessons of music. They play a very important role still in bringing consumers in and educating consumers. And most importantly, they’ve embraced digital. If you go into any major game specialty retailer, whether it’s Game in the UK or GameStop in the United States, you see the ability to buy digital download cards–what we call poster cards–that are a major part of the revenue now. They have figured out how to play in this eco-system.
Look, we’re still going to sell tens of millions of discs this year, and so much of our digital business still springboards off those discs. In that particular respect, I think it’s a nice blending. The packaged goods business will decline over the years as we’ve ultimately seen with music and even movies. More and more people simply stream a movie to their home. In the US, Netflix is what we typically all use. But at the same time, I still have my Netflix DVDs there. I don’t think we’re anywhere close to there yet in games. It’s a hybrid almost, right now. It’s a very strong packaged goods business that will over a period of time start to slow down, but you’ve got digital picking up very nicely to pick up the slack a bit there.
GS: With EA Sports, you emphasized a service-oriented approach to the games to keep players regularly engaged with updates, the Ultimate Team modes, spin-off releases for your main franchises. How are you changing that approach to apply to EA as a whole?
PM: I think the idea of a game being a 365-day-a-year experience is something we certainly got going with FIFA Ultimate Team. If you play FIFA, you know we’re always looking at throwing new players at you and encouraging you to play and check into Ultimate Team every single day. The other thing we learned in the past year was that if we had a web application that would allow you to manipulate your team, even though you had to go home and play on your Xbox 360 or PS3 to bring it to life, we think that’s incredibly important.
When you look at the broad portfolio, you apply that across all games, and many games are already there. I think the biggest difference that I’ve seen in the industry in the last few years is this is not now shipping a disc and saying, “That’s it. We’ll move onto the next one.” Now you’re looking at live operations teams that stay with a game as long as the consumer’s there, and that might be two years after the game is shipped. So that’s a big difference now: a game as a service rather than a game as a hard-coded disc that you just move on from. It’s a whole different story.
GS: The big holiday fight is shaping up to be Battlefield 3 vs. Call of Duty: Modern Warfare 3. How are you going to measure whether Battlefield 3 was a success? Do you have to outsell Call of Duty, or is simply selling a truckload and coming in a lucrative second place good enough?
PM: No. It’s less about being second place. This is about taking market share. This is really about a long-term strategy in what we think is a very important shooter segment that has driven over the last few years multiple billions of dollars of revenue into the industry.
If you look at last year, you might argue that Call of Duty took maybe 90 percent of the market share. We think we can knock that down to 70 percent this year. We don’t have to outsell Call of Duty to have a very successful year. This is a long-term strategy to be a major player, if not ultimately a dominant player in this industry. But it starts this year.
Again, we’ve got a precedent. If you remember, FIFA and Pro Evolution Soccer used to be as recently as three or four years ago, head-to-head in a lot of markets, with PES as the dominant brand. We invested enormously in both the quality of the game, the marketing, a real focus on getting the game right, and being there for gamers and building a community around it. It’s no different than what we intend to do in the shooter category.
GS: Is the role of EA Partners changing in the company? Is it in danger of falling to the side in order to focus on higher margin businesses?
PM: Not necessarily. I think you saw two titles [earlier this week] from EA Partners that allowed us to be able to invest with independent developers to give them a platform for their IP. I haven’t had a chance to go in yet and see Secret World, but I intend to do that with the guys from Funcom and see where we’re at there.
We’ve got a very vibrant ecosystem and we’re always scouring the world for content in development that we really like, that we can make an investment in, help that developer get it over the finish line, and provide them a publishing engine. That has never changed from when it was EAD, EA Distribution. I don’t know how many years the company has been doing this, but it’s something we’re very proud of. You have the big hits, the Rock Band type thing or Kingdoms of Amalur, and then we’ve got stuff we enjoy bringing to market.
We work with developers we like, and we work with IP we think is very interesting. And we’re a big company that can put that stuff in the mix pretty easily and get after it. To your point, it’s not as high a margin as something we develop ourselves, but that’s not really the point. I think we have an obligation at times to give some of these great developers an outlet, and that’s something we need to do.
GS: Is there any update on the negotiations with Valve to get games like Battlefield 3 on Steam?
PM: It’s pretty simple, and I think we’ve said it pretty consistently over the last few weeks. If we’re allowed to deal with our consumers directly, being able to transact directly with our consumers, fix issues directly with consumers, then we’ll be happy to sit down with our good friends at Valve and resolve some of those differences. But if their terms and conditions and policies don’t change, then we’ll focus on the other hundred download retailers we see in the marketplace and our own platform of course, Origin. It’s important for us to have a direct conversation with our consumers, particularly on the PC platform, which is an open platform and should be kept that way.
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