Strengths and Weaknesses

Intellectual Properties

Live Operations

Publishing

Studios

Pipeline

IPs and Publishing

EA’s key strength is their portfolio of strong IPs. This strength coexists with the company’s core competence in publishing new games and getting them into hands of tens of millions of players every single month. Up until 2017, EA’s mobile division had been taking full advantage of the company’s strengths and core competence, racking up around one billion of downloads and roughly the same amount of revenue over an 18 month period.

Because publishing big IP titles is one of their core competencies and growth strategies, it’s quite worrisome that EA hasn’t released any new mobile titles in 2017. This introduces a risk of overall decline in downloads and thus will likely be seen as a decline in user base as well. To mitigate this risk, the company needs to invest into its live operations.

On the flip-side, it can be argued, that EA has been too aggressive with publishing big IP games every year, resulting in them having to maintain arguably an oversized catalog. While most of the games are no longer in live operations, there’s still a pretty hefty portfolio of legacy titles, which tax EA's resources to various extent. Unlike King, EA doesn’t use cannibalization as a growth strategy, since games with the same IP can exist in different categories instead of oversaturating and controlling a single category.

Live Operations

EA’s core competence is the company’s ability to publish games and just like with many other companies, EA's core competence is also the company's main weakness on mobile. While publishing bigger and better iterations of your key franchises every year or every second year is the de facto model on the console, it is not the best way to operate on mobile. What works on mobile is launching a game with a solid core loop, good retention and successful monetization and continuing to grow that game incrementally one update after another. Star Wars: Galaxy of Heroes, Sims FreePlay, Madden Mobile and SimCity: BuildIt have all shown what a steady stream of well-executed updates can do to a hit game. All of these previously mentioned hit titles are generating the same or larger amount of monthly revenue years after they were launched.

Keeping your hit games manned with the best people possible team is crucial for success on mobile. While this is a pretty simple rule to follow in theory, it's more difficult in practice. Firstly, a successful launch team always wants to create their next big hit despite the fact that the odds will always be stacked against them. Secondly, if your core competence is publishing, you always want to put the best people to work on the Next Big Hit. The best way to solve this problem is to create a bulletproof bonus model to the core team running a live service in addition to having a clear hand-over process when the core team finally moves to start their new game.

Global Network Of Talent

EA has an extraordinary ability to manage their worldwide network of high-performing studios. Capital Games in Sacramento run Star Wars: Galaxy of Heroes, Track Twenty in Helsinki is responsible for SimCity: BuildIt, Fire Monkey in Melbourne has excelled with Real Racing, Need for Speed: No Limits and Sims FreePlay while Red Crow in Charlottetown delivered Simpsons: Tapped Out and NBA Live.

Competence in building and managing a network of studios around the world means that EA is not hampered held back by the lack of talent. It is also important to notice, that the most successful studios are located outside the headquarters in Redwood Shores. This is smart on EA’s part. It is commonly known that building new games near to most of the company’s powerful executives is seldom the fastest or the most cost efficient way to operate. There's a certain amount of peace and quiet that a separate location gives a studio.

The strong network of studios has allowed EA to have a strong pipeline of new titles. Though when closely examining the current network of mobile studios, it is evident that most of them are likely having their hands full in operating a live game. Essentially EA has three options to beef up their pipeline:

1. Move top talent from live operations to start new games

Moving your best talent from a top grossing hit game to start developing a new game is always risky. The development of a new hit title takes give or take two years and the likelihood of success are relatively slim, despite the strong IP and publishing power of EA. Not to mention the skill-set required to build a new hit game is much different from the one needed to run an existing hit game.



The cost of taking this route is that your top developers are working on a new game instead of running live operations on a hit game they’ve launched. Taking this route is actionable only if you can ensure strong backfill.

2. Open up / acquire new studios



This is possibly the best option for EA, who has been successful in opening up new studios through strategic acquisitions of companies and/or top teams. As the mobile market is rapidly becoming more saturated, EA has the resources to snatch studios or hire the top teams from other gaming studios to beef up their pipeline. This strategy allows EA to start new projects without sacrificing the ongoing ones. As we know, EA is no stranger to closing down studios either, which allows them to keep a network of top performing studios only.

3. Third Party Publishing

The last but not the least option to beef up the product pipeline is to use third party publishing, which EA has been doing for years in form of Chillingo. Most of the titles Chillingo has published till date don’t carry EA’s IPs and are games from developers around the world. Given the current state of the market, there’s a powerful opportunity for EA to employ some of their preferred Chillingo partners to build games with EA IPs.



This option would also allow EA to compete with other big name mobile publishers such as Scopely, Nexon, Flare Games, and NC Soft. And EA has a clear advantage compared to the competition as they could offer 3rd party developer the opportunity to work on one of the company’s amazing IPs.



To learn more about mobile publishing, please listen to our podcast “The Good, the Bad and the Ugly of Mobile Publishing.”

Opportunities and Threats

Live Operations

New Games

Publishing Business

PopCap

Copy-Paste Design

Consolidate Catalog

Live Operations

EA’s biggest short and mid-term opportunity lies in the live operations of its existing Cash Cows and Stars. Unlike in console business, where every franchise needs to be updated with yearly or bi-yearly titles, in mobile, a hit game can stay on top for years. In fact, it is more likely for a hit game to keep its top position than for a new game to surpass it. King is a great example, as all but one franchise sequel the company has released during past five years have done worse than their predecessors (for more details on King, please read “Has King Peaked?”)

While Zynga, led by the former EA Mobile chief Frank Gibeau, is rebounding with the “EA playbook” there’s an argument to be made, that EA should take a closer look at (Gibeau's) Zynga’s playbook. Zynga has been able to finally rebound with a hawkish focus on its top live games instead of placing all the bets on future hits. While EA Mobile is by no means in a state where Zynga was just a couple of years ago, they still should take note of the benefits of prioritization of live operations.



While EA has done a solid job with running live operations for Star Wars: Galaxy of Heroes and Sims FreePlay, both top 50 grossing mainstays, the company could have done a far better job with its half-a-dozen other top hits, such as, Real Racing 3 and Simpsons: Tapped Out. It is clear, that these titles could be top 50 grossing mainstays, but it feels like the studios behind them are more focused on their new games instead of growing the existing hits.

New Games

Building and launching new games is a long and risky process that ties up top talent and resources for years. Strong IPs decrease the development risk by creating a target market for the developers to aim at and by lowering the marketing cost for growing the game. EA is full of strong gaming IPs that they have successfully used to build out their massive mobile portfolio.

While launching a new game with a strong IP is a great opportunity for a company, it can also be a major risk. For example, after conquering the number one spot in racing category with Real Racing from Natural Motion’s CSR Racing, EA decided to put the same studio to work on Need for Speed: No Limits. Fast forward a couple of years and both Real Racing and Need for Speed have ceded the top spot to CSR 2, and are barely hanging in top five of the racing category with Real Racing performing better than the follow-up, Need for Speed. While the both racing games' combined revenue over time is more than Real Racing would have made alone so are the costs of building, running and marketing two games. And a case can be made that if the resources of building Need for Speed would have been invested into Real Racing 3 instead, it would still have its top grossing spot in the category in every key market.

In addition to the threat of spreading resources too thin by starting to build a follow-up title, EA risks cannibalizing their existing hits with follow up titles. For example, the newly soft-launched Sims Mobile threatens perennial top 50 grossing hit Sims FreePlay. I personally don’t think that mobile users are cramming to have the same game with better graphics like console users. By releasing an updated title, EA risks losing part of its user base as it attempts to cross-promote them from the old title to the new one. As a result, the company may end up with two struggling Sims games in top 200 grossing instead of one hit Sim game in top 50. But then again, I may be wrong if the Sims Mobile is one of the biggest games of 2017.

Publishing

EA’s publishing arm, Chillingo has been suffering for several years as developers have chosen to self-publish rather than share the spoils with a publisher. But the market has finally matured and is now at a point, where developers need both significant resources and a hefty dab of good luck to break through to the top. This change of market has allowed mobile publishing companies like Scopely to flourish as they can finally pick and choose from a list of solid developers instead of working with the less successful ones. The maturity of the mobile market opens up an opportunity for EA to get back to the top of mobile publishing, where Chillingo ruled in the beginning of the decade.

PopCap

EA acquired PopCap in 2011 for as much as 1.3 billion dollars and I think it’s fair to say that PopCap's performance never came close to the high expectations set by the purchase price. PopCap’s Plants vs Zombies was one of the biggest mobile hits when top games were paid. The much-anticipated sequel showed, that while there is a strong demand for the game, PopCap had no expertise nor drive to learn how to build and run free-to-play games. Since then, PopCap has showcased further struggles with Plants vs Zombies Heroes and various Bejeweled iterations, which have all performed significantly worse than their predecessors.

While it is easy to write off PopCap as a company that wasn’t able to translate their success to free-to-play and case can be made, that a company with its roots in casual paid games can become a powerhouse in freemium games as well. Rovio is a prime example of this transformation. The maker of Angry Birds struggled for years after initial success with paid games but after finally embracing free-to-play games, they’ve been soaring with impressive double digit growth in year-to-year revenues. With the right leadership and organization structure, PopCap has the full potential to bounce back onto the top of the charts where they used to be. At this point, it’s up to EA to put them in a position to deliver on their considerable potential.

Copy-Paste Design

Need for Speed, NBA Live and especially FIFA Mobile have all suffered from a copy-paste design practices. In the case of both FIFA and NBA, it often seems like you’re playing Madden but in soccer or basketball theme. Because these sports games are in real-life inherently very different from each other, it doesn’t make sense that they share the same gameplay design.

For example, in FIFA every player on your roster can play only one position. While this makes all the sense for American football where for example the quarterback plays only that specific position, it is simply not true for soccer, where for example a midfielder can play various positions from attacking to defending and from sweeper to full-back. This practice of copying the metagame of a benchmark title has arguably cost EA the success of its biggest sports game on mobile, as FIFA continues to suffer from Madden driven design instead of giving the player the beloved Ultimate Team experience. A design that has generated hundreds of millions in digital revenues (in-game purchases) on the console.



Sharing learnings between studios is the key to overall success of the company. But there’s a difference in sharing knowledge and simply copying and pasting game design from one different title to another. While copying designs may be the quickest way to build a new game it is far from being the most sustainable way to do so. Games are entertainment services and in that sense, they need to offer authentic, new and familiar experiences to succeed. Just think how likely a TV show with a dozen of fantasy kingdoms and dragons would fair against Game of Thrones if launched today?

Consolidate Catalog

Finally, a case could be made to further clean up EA’s massive mobile catalog by cross-promoting the players from various legacy titles into games in live operation. This would likely result in a slight growth of the live titles but also as reduced upkeep costs and improved organic traffic to main titles as the players would find only one Need for Speed game when searching for it in the app store.

Prioritize and Execute

Managing a successful portfolio of mobile games is extremely difficult. On one hand, a company has to explore new products and frequently renew their advantage through disciplined experimentation. On the other hand, the company should keep its top talent on existing hits, because there’s a bigger risk in creating a new successful game as a service rather than operating an existing one.



The balancing of the precious resources has to be done systematically to avoid wasting them. This approach requires companies to invest in more promising game projects, experiment with them in a quicker and more economical way than competitors, and systematically select most successful of them to be grown into hits. At the same time, companies need to be prepared to respond to changes in the marketplace, by keeping the top 50 grossing mainstay titles manned by the top teams while maximizing the information value gained from the failed projects.

After the booming 2015, EA Mobile is running a slowly growing billion dollar business. While the company’s mobile division has been busy in building and shipping ever more impressive games, it has sometimes forgotten what the success in mobile business actually looks like. It’s not the new games with high-production values and the most known IPs that control the top of the charts and bring in hundreds of millions of dollars in revenue each year. It’s the two to five-year-old games, with a bit outdated graphics but fast loading times and nearly infinite content that keep reaping the success on mobile. Games that players have been playing for so long that they’ve become part of their lives. Games, which they will not switch for another one with better graphics.

EA has a strong portfolio of top grossing hits, which they can all grow into top 25 mainstays with relatively limited yet focused effort. This requires the company to reevaluate its approach on mobile and instead of focusing on the next big hit they should be focusing on growing the existing hits into ‘everlasting’ games. Much like what Zynga has done during the last year or so.