2011 round-up: EA and Activision

Our look back on a year in which EA aggressively expanded into digital while Activision went all-in on Call Of Duty.


Electronic Arts

EA spent much of 2011 aggressively expanding into digital as it sought to meet its target of a billion dollars in annual digital revenue. In February it promised greater focus on Facebook, and it would follow through on that promise with the release of The Sims Social. Its successful launch - it reached 30 million users in a month - meant EA became the first bona fide challenger to the platform's leading developer. Zynga would welcome the challenge - general manager Erik Bethke saying "Its success shows how much opportunity there is in social games" - and an increasingly bullish EA said it was confident The Sims Social could overtake Facebook's most popular game, CityVille.

The publisher criticised NPD Group, the market research firm that collates US retail sales data, for only reporting digital sales every three months. As a result NPD said it would increase the frequency of its reports, revealing digital sales data on a monthly basis instead. EA's experiment with a day-and-date PSN release for the PS3 version of Mass Effect 3 met with success, accounting for more than ten per cent of sales despite its high price. It ditched paper manuals in its boxed games. It bought Firemint, Australian developer of Flight Control and Real Racing, stepped up its efforts on iOS and spread to Google+. There was the launch of Origin, too - something we've already looked at in our review of the year in PC - but there was no greater signal of EA's increased focus on digital than its acquisition of PopCap.

Announced in July, the deal cost EA an initial $750 million, though the final price could rise to $1.3 billion if earnings targets are met in the next couple of years. EA's investors might have raised an eyebrow, having not expected EA's drive towards a billion dollars in digital revenue to involve a billion-dollar acquisition, but the publisher made several canny moves to ensure the deal didn't hit its bottom line too hard. CEO John Riccitiello said "EA and PopCap are a compelling combination," hailing the Plants Vs Zombies developer's "great studio talent and powerful IP." PopCap CEO David Roberts praised EA for having "recast [its] culture around making great digital games."

While Origin's launch upset many, and with EA having cut a bullish, aggressive figure throughout the year - we'll get to that shortly - they've come in for no little amount of criticism, but as Guillaume Rambourg, managing director of Good Old Games, told us recently, that's largely down to the publisher having made the move first. "I think it's very easy to talk negatively about them," he said, "but publisher-wise they are one step beyond. I think EA, regardless of the amount of negative comments it generates, is a brave publisher for trying to make a change in the industry and that ambition deserves respect." It's a sentiment Peter Moore, promoted to COO in August, agreed with earler this month. "Transitions are hard," he said. "Companies that continue to rely on the old model as the model changes before our eyes, unless they change and invest in the future those companies eventually will die off. No two ways about it."

Activision

By contrast, Activision's year typified the sort of struggle Moore referred to, as the publisher paid the price for poor decisions and annual iterations to tired franchises. In January, it recommended the closure of Liverpool studio Bizarre Creations after it had been unable to find a buyer for the studio after Blur failed to perform to expectations. The following month, it posted a loss of $233 million for the final three months of 2010 despite the quarter having seen the launch of Call Of Duty: Black Ops and World Of Warcraft: Cataclysm, both of which set new sales records.

While its full-year figures painted a far rosier picture - digital revenues up 20 per cent to $1.5 billion, profit up 370 per cent to $418 million - the fallout was significant. Activision said it would cut 500 staff, some seven per cent of its workforce, and in an unfortunate choice of words - nothing sweetens the pill like a good pun, after all - "disbanded" its Guitar Hero business unit, cancelling development of a planned 2011 release after sales had slowed. Little wonder: Activision had released 14 Guitar Hero games across consoles, handhelds and mobiles since the series' 2005 debut on PlayStation 2.

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