Electronic Arts had a miserable holiday quarter, losing $641 million, causing the company to expand its layoffs to 1,100 and close more facilities. While EA chief executive John Riccitiello acknowledged that a number of titles underperformed, the disappointing results won't stop EA from taking risks and trying to innovate, according to Jeff Brown, Vice President of Communications.
Speaking to Kotaku, Brown commented, "We can take risks because we are pretty sure our blockbusters are going to generate good revenue that allow us some cushion. So we're not living hand to mouth."
And to EA's credit, the publisher has been trying to foster innovation with new IPs like Dead Space, Mirror's Edge, Boom Blox and others. Brown expects the flow of new titles to continue. "We are working on Dante's Inferno, Dragon Age, things like that, new games, either announced or about to be announced," he said. "You will not be able to see a dramatic drop off original IP."
Still, every once in a while a project will get terminated, but that's just part of business. "At any given moment, in an operation as big as EA worldwide, there are a whole lot of people with a whole lot of ideas and they are given a bit of money to flesh them out," Brown said. "Some will work, some won't. There will be projects that will be killed no matter the economy."
EA's new risk taking approach is admirable, but likely not sustainable says Wedbush Morgan Securities analyst Michael Pachter. "If you take too many in a row you end up with no money and no franchises. Even EA got in trouble last year doing way too much. The right idea is to have your core franchises and then take measured risks," he noted, adding, "It's sad. It's easier to sell a (bad) Iron Man game or a 50 Cent game with the right license and it's hard to create a new Dead Space. The cost of potential failure (on a new idea) is too high. I think you're going to see moving forward one new game a year from a publisher, not five."
