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Electronic Arts and Riccitiello

· Video games,unity3D

It's no secret that I've been vocal about what I see as a waste and just dumb decisions in executive leadership in the game industry.  What I find very interesting about the really really bad decisions is that it was able to spill over into VC;s and game industry investors.

Bing Gordon, runs sFund that is mentioned here.  http://venturecompany.com/blog/2013/03/kpcb-mea-culpa/ He also was the primary VC behind Zynga.  LP's should be waking up and smelling the losses.  But they will probably keep these guys in power and accept the millions more in losses.  When will it stop?

Electronic Arts and Elevation partners is another prime example of how investors and Limited partners have been swindled out of hundreds of millions.  I would guess that it's over a billion in losses total now.

How this cannot be "illegal" is beyond me.  You start a VC firm, then go to work for a company that buys out one of the firms investments for an ungodly amount and personally benefit from it.

From the article:

"Not only may the deal strengthen EA, but Riccitiello will probably personally benefit from the deal. He remains an investor in the Elevation Partners fund, and could stand to make $4.9 million on the deal following the distribution of the profits to fund shareholders, according to a filing EA made with the Securities and Exchange Commission Thursday"

Like Georges from the venture company, I've been vocal about my dissatisfaction with the lack of good VC performance, especially when related to the game industry.  The VC model and this model is broken. Now it happens for the 3rd time with respect to Electronic Arts.  The fiasco of a launch of the Sims being reported as the probable reason.

I am going to start putting my predictions in my blog from now on, as Georges has been doing.  Here's my take on the state of EA from 4 years ago:

Excerpts from those blog posts

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EA and Riccitiellos Plight 4 Years, 4 Months ago

Karma: 50  

EA loses $310 million for 1 quarter. Ouch.

OK, I'm going to be a blunt and rant a little here. I've been critical of the game industry costs of development for games for quite some time now. In order to make good profit you need to find efficiencies. We have taken that model and been using it for a few years now. It's either that or keep losing until the company is broke. Investors in EA are not going to be happy. But heck, EA can pump out the next Madden and make coin for it. More power to them. But the business will not have significant growth unless they can find alternate streams of revenue. Social Gaming, Online gaming, digital distribution, virtual goods, etc.

But they are growing stagnate and complacent. Stagnation will kill a company. I wonder if he remembers the old phrase from EA "mutate or die". He seems to have some good common sense and is promising to do just that. See this article:

http://www.gamasutra.com/view/news/20900

Also,

Also, another blast from the past!. EA.com spent 200 million back in 2001 to get online, I heard it was closer to $500 million to get online in the end.

Riccitiellos said the same thing back then. He wants to focus on games that have higher profit potential.

Problems is you don't know what is going to hit really big. Might as well make profit current IP and on the little ones that do profit until you find that hit. How hard is that business plan?

I hope EA shareholders see this, how long before EA can wake up and see the shifting winds? Behemoths like EA are starting to look like the old Behemoths of the past that aren't very nimble and just bleed money.

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Maybe 4th times a charm for Riccitiello?  Maybe we'll see him back in a year or two with another "bill of goods", er em, game company to sell EA. Isn't the saying, "fool me once, shame on you, fool me twice shame on me".  What about 3 or 4 times?

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