Electronic and Arts

Electronic Arts logo

Introduction

Electronic Arts Inc. is a global technology-leading gaming/entertainment company. EA develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers. EA has more than 300 million registered players around the world (EA, 2020).

This critical web article will explore the transformative impact of Electronic Arts Inc. This article will explain what is Electronic Arts with a short description, and their historical background. Then, it will provide the analysis of its business model and Electronic Arts’ industrial ecology. At the last, it will give a discussion of its transformative impacts through the perspectives of society, economy and politics.

 

What is Electronic Arts?

Electronic Arts logo circa 1984

Image: Electronic Arts logo circa 1984 by Pete Jelliffe is licensed under CC BY 2.0

Electronic Arts Inc. is a global leader in digital interactive entertainment. As of 2018 to May 2020, in terms of revenue and market value, it is the second largest gaming company in the Americas and Europe globally just after Activision Blizzard (Jordan, 2018). EA develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers. EA has more than 300 million registered players around the world.

In fiscal year 2018, EA posted GAAP net revenue of $5.15 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™, Need for Speed™, Dragon Age™ and Plants vs. Zombies™ (EA, 2020).

EA has many game studios (its subsidiaries) that make and design games for it. The most famous one is EA Digital Illusions Creative Entertainment (DICE). DICE has made many famous game IPs for EA, such as the most famous Battlefield series. Battlefield 3 is the most meaningful cross-generation game.

 

Historical Background of Electronic Arts

Trip Hawkins (1982-1990)

The company was established and registered on May 27, 1982 by former Apple employee Trip Hawkins (Fleming, 2007). It was a pioneer in the early personal computer game industry and promoted the designers and programmers responsible for its games as a “software artist”. EA released many personal computer games and some productivity software, all of these games and productivity software were developed by external individuals and groups, until Skate or Die! in 1987 (Wolf, 2012). At the first, Trip Hawkins named his company as Amazin’ Software, but he wanted to recognize software as an art, so he wanted to change it to SoftArt. But Dan Bricklin from Software Arts asked them do not use the name. Therefore, in October 1982, he called to discuss with their first 12 employees, and finally decided to change it to Electronic Arts (Fleming, 2007). In the 1980s, Trip Hawkins’ EA dedicated to launching products for the home computer Amiga. In 1988, EA launched F/A-18 Interceptor, a flight simulator game specifically for Amiga, which had advanced filled polygon graphics at the time (Sawyer, 1998).

Amiga 500

Image: Amiga 500 by Matthew Ratzloff is licensed under CC BY 2.0

Trip Hawkins said that its color graphics and sound capabilities make it the ultimate home computer and declares, “The Amiga is capable of causing a rebirth of the explosion in home computers.” (Woutat, 1985).

The video below will explain what is Amiga:

 

Video: LGR – Amiga 500 Computer System Review

 

Larry Probst (1990-2007)

Electronic Arts started producing games for Nintendo Entertainment System in 1990. A year later, Trip Hawkins resigned as CEO of EA and was succeeded by Larry Probst, who subsequently founded 3DO. In 1995, Sony’s PlayStation entered the North American market. This is a cheaper and more powerful game console than 3DO, but the price is lower (Snow, 2005). This makes 3DO lose its competitiveness. Electronic Arts gave up to support 3DO but PlayStation. In 1995, Electronic Arts the European Computer Trade Show award for best software publisher of the year (Next Generation, 1995). As the company continued to expand, they chose to purchase space in Redwood Shores, California in 1995 to build a new headquarters (Simon, 1995), which was completed in 1998 (Fleming, 2007). At the beginning of 1997, Next Generation identified Electronic Arts as the only company that has profited from video games in the past five years (Next Generation, 1997).

 

Andrew Wilson (2013-now)

Andrew Wilson was appointed as the new CEO of EA in September 2013 (Makuch, 2013). EA obtained the Star Wars universe game developer license from 2013 to 2023 by Disney. EA began to distribute new Star Wars projects throughout its multiple internal studios, including BioWare, DICE, Visceral Games, Motive Studios, Capital Games and external developer Respawn Entertainment (Sarkar, 2013).

Star Wars Jedi: Fallen Order

Image: Star Wars Jedi: Fallen Order, image by Jesse Vaisanen under CC BY 2.0

In July 2015, the stock value of Electronic Arts reached a peak of US$71.63, surpassing the record of US$68.12 in February 2005. This is also a 54% increase from the $46.57 at the beginning of January 2015. This is partly due to the restart of EA’s ‘Star Wars: Battlefront’, which was released one month before than the release date of ‘Star Wars: The Force Awakens’ (Grubb, 2015).

 

Electronic Arts’ business Model

EA is mainly engaged in the development and distribution of games for video game consoles, PCs, mobile phones and the Internet. EA has created many popular sports games, such as FIFA and Madden NFL, as well as games based on popular movies (such as Star Wars), and long-running series games (such as Need for Speed and Battlefield). Game players pay for game fees and in-game purchases for EA.

EA changed many game distribution methods in order to maximize revenue. In the past (before 2018), many EA games only paid for the game itself. There were few in-game purchases in the game, but it was necessary to spend extra money to purchase the game’s DLC. Nowadays, many EA games include DLC and the price is the same as before, but there are many in-game purchases in the game. Because Electronic Arts’ main income is by selling video games and in-game purchases. EA’s revenue comes from two sources–products and services. Product refers to the revenue generated by selling game products like Star Wars, Battlefield, etc. This part accounted for 32% of the company’s total sales in fiscal 2019. Services are the revenue from downloadable content, subscriptions, and other services that are usually accessed in games. In 2019, the division’s contribution to the company’s total revenue was 68%. The largest part is services which was 68% of total revenues in fiscal 2019 (Trefis Team, 2019).

Battlefield V in-game purchase

Image from Battlefield V in-game purchase by Zhicheng Xu

This business model of Electronic Arts has brought more revenue to the company, but it has brought them more and more negative news. Players have always liked their previous business model instead of the current one. Now players who bought the game have to buy more things in the game and spend more money.

This video can summarize how EA’s business model is ruining their games:

video by Pretty Good Gaming from YouTube

 

Electronic Arts’ Internet Ecology

Internet ecology refers to the interaction and relationship between different participants in the system (Looi, 2001). As the world’s second-largest gaming company, Electronic Arts’ Internet ecosystem includes competitors, partners, users, subsidiaries, games and owners. Because the Internet industry is interconnected, many companies maintain relationships between partners and competitors, such as Electronic Arts’ Origin and Valve Corporation’s Steam.

The diagram below shows Electronic Arts’  Internet Ecology:

Electronic Arts’ ecology

Image: Electronic Arts’ ecology. Image: Created by Zhicheng Xu

Electronic Arts’ Transformative Impact

Social and Cultural Changes

In today’s digital society, game is no longer just entertainment, but a kind of education and art. Electronic Arts realized that in the new 21st century, the most talented place is the school. In addition to recruiting employees, they can assist schools and students in schools, and give them higher education on interactive entertainment. It is convenient for them to choose the company in the future to give priority to EA and cultivate better game engineers and designers.

This will also make more people realize that game is not meant to be played. They are as important to society as films and media studies.

Electronic Arts donated millions of dollars to the USC school of cinema-television’s interactive media division. Funding will expand the school’s global leadership in computer game research and education. On March 22, 2004, EA announced that they had donated millions of dollars to USC-CNTV for giving interactive media education and creating a launch pad for the next generation of interactive entertainment. The donation is part of EA’s global education and talent development work. They will provide USC-CNTV with two new aspects of funding: The Electronic Arts Interactive Entertainment Program and the Electronic Arts Endowed Faculty Chair. The EA Interactive Entertainment Program is a three-year period Master of Fine Arts program. The plan will help EA find and train new talents (Lee, 2004).

 

Changed in politically

Before, the game was almost a pure land far away from politics, but EA connected politics with the games. In EA’s video game Battlefield V, a large number of female characters appeared here, whether in multiplayer games or campaigns. In multiplayer games, each country has multiple female characters for players to choose. In the campaign, there is a story about the Finnish mother and daughter resisting the German army. This move is about feminist’s political correctness. They have no choice. If they don’t join a female role, they will be scolded on the Internet, saying that they discriminate against women, but this is a game about World War II. According to real history, there are not a large number of women on the frontal battlefield. EA added female characters in battlefield v. They were politically correct but they were resisted by players. Many players did not buy this game now because EA doesn’t respect history (Farokhmanesh, 2018).

Battlefield V Screen shot

Image: Screen shot by Zhicheng Xu

 

Summary

In conclusion, Electronic Arts, as the world’s second-largest game company that they have indeed brought many good games and works to players since its establishment, and their contribution to society is also extremely valuable. But in this money-oriented society, everyone wants to make more money, so EA has changed their business model. What in-game purchase brings to players is not a better gaming experience but a worse. But they need more money to maintain the company. EA is buying other game companies to become their subsidiaries to make and sell games, so they need more money, and the source of their income is the players. Hope that Electronic Arts can follow their users’ suggestions and improve a better business model.

 

References

Next Generation. (1997, June). Next Generation. “So Who’s Getting Rich?”, p. 43.

ElectronicArts. (2020, 11 20). About EA. Retrieved from Electronic Arts: https://www.ea.com/about

Farokhmanesh, M. (2018, May 24). Battlefield V fans who failed history are mad that the game has women in it. Retrieved from The Verge: https://www.theverge.com/2018/5/24/17388414/battlefield-v-fans-game-women-world-war-2-history

Fleming, J. (2007, February 16). We See Farther – A History of Electronic Arts. Retrieved from Gamasutra: https://www.gamasutra.com/view/feature/130129/we_see_farther__a_history_of_.php

Grubb, J. (2015, July 10). Electronic Arts’ stock price is at an all-time high. Retrieved from Venturebeat: https://venturebeat.com/2015/07/10/electronic-arts-stock-price-is-at-an-all-time-high/

Jordan, J. (2018, March 16). Earnings report roundup: Game industry winners and losers in Q4 2017. Retrieved from Gamasutra: https://www.gamasutra.com/view/news/315575/Earnings_report_roundup_Game_industry_winners_and_losers_in_Q4_2017.php

Lee, N. (2004, April 01). Electronic arts game design program at USC CNTV. Retrieved from Association for Computing Machinery: https://dl.acm.org/doi/10.1145/1008213.1008222

LGR. (2010, 10 10). Amiga 500 Computer System Review. Retrieved from YouTube: https://www.youtube.com/watch?v=XVZrL4k1los

Looi, C.-K. (2001). Enhancing learning ecology on the Internet. Computer Assisted Learning, 13-20.

Makuch, E. (2013, September 20). Andrew Wilson named EA CEO. Retrieved from Gamespot: https://www.gamespot.com/articles/andrew-wilson-named-ea-ceo/1100-6414557/

Next Generation. (1995, June 15). PlayStation Dominates European Show. Next Generation.

Pretty Good Gaming. (2018, May 11). How EA’s Business model is RUINING their games. Retrieved from YouTube: https://www.youtube.com/watch?v=bRFg2VBVcaY

Sarkar, S. (2013, May 06). EA and Disney sign exclusive deal for rights to Star Wars games. Retrieved from Polygon: https://www.polygon.com/2013/5/6/4306022/ea-disney-star-wars-games-exclusive-rights

Sawyer, B. (1998). In A. Dunne, B. Sawyer, & T. Berg, Game developer’s marketplace (p. 182). Albany, NY: Coriolis Group Books.

Simon, M. (1995, February 23). EA Plans To Leave San Mateo / Game company moving to Redwood Shores. Retrieved from Sfgate: https://www.sfgate.com/news/article/EA-Plans-To-Leave-San-Mateo-Game-company-moving-3044369.php

Snow, B. (2005, December 09). Industry Bio: Trip Hawkins. Retrieved from engadger: https://www.engadget.com/2005-12-09-industry-bio-trip-hawkins.html?guce_referrer=aHR0cHM6Ly9lbi53aWtpcGVkaWEub3JnLw&guce_referrer_sig=AQAAAGwIV2_EhoqLlJ0Avm_D6Bz0yz26qQh2iCuTRF3VM9wZQBLpB2Q9Kbes_vMoj2QkkrigybbQzJAwwLQGcE8IpjofciA4aMQj6Pmgq-QBegUysbv5PPouA

Trefis Team. (2019, October 18). What Are Electronic Arts’ Key Sources of Revenue? Retrieved from Forbes: https://www.forbes.com/sites/greatspeculations/2019/10/18/what-are-electronic-arts-key-sources-of-revenue/?sh=70913eb01bd9

Wolf, M. (2012). Hawkins, Trip (1953- ). In M. Wolf, Encyclopedia of Video Games : The Culture, Technology, and Art of Gaming. (p. 282). Santa Barbara: ABC-CLIO.

Woutat, D. (1985, July 22). Commodore Pins Its Hopes on the Amiga : Contends It’s Not a Home Computer. Retrieved from Los Angeles Times: https://www.latimes.com/archives/la-xpm-1985-07-22-fi-6188-story.html