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EA's CEO Resigns... Timing is Everything.

by on19 March 2013 2228 times
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Timing is everything, at least that is what they used to tell me when I would ask for new hardware or upgrades for equipment. This is a very simple rule that extends into many corners of life and is a core part of almost every business strategy. If we take this as true then what are we to think about the timing behind EA CEO John Riccitiello’s resignation?

Riccitiello was EA’s CEO from 2007 until his resignation this year he has presided over more than one commercial success and failure so can it simply be that he resigned because things are going bad right now?  Believe it or not this is actually very likely. Taking a look over the last couple of years we can see a very disturbing pattern that could be attributed to bad leadership. One of the first items that come to mind is the fiasco about privacy when using EA’s Origin service.

For those of you that do not remember this one let me explain. Not all that long ago EA decided to update their terms and conditions. In this update included verbiage that gave EA the right to collect personal information and to pass this off to anyone that they chose to. It created quite a backlash in the gaming community especially as these terms were not visible unless you downloaded and installed the EA Origin Client (which is not completely unheard of). EA did change these, but the damage was done.
Going back before that, EA had a string of DRM (Digital Rights Management) issues that annoyed many consumers and made EA games a popular target for piracy. One of the biggest titles was Spore which is still one of the most downloaded games of all times simply because EA limited the total number of activations to three. Again it was a decision that hurt EA fairly badly and opened up the market not only for other game developers, but for other distribution services.

EA also suffered a blow when their EA Sports division lost their strangle hold on football and basketball games. This was a rather ugly class-action suit that involved accusations of price fixing and anti-trust claims. EA lost this suit in an ugly and public manner which further eroded consumer trust and confidence in the game publishing giant. Not to mention that EA will not be able to renew their exclusive agreements with the NCAA and others after 2014 meaning EA will lose a significant amount of revenue from one of their cash cows.

While there are more fiascos and troubles to pile at Riccitiello’s feet these three are enough to make many CEOs rather nervous. Still, are these issues (and a few others) enough to make you retire?  The answer to that is; probably not. What could force this change is if you were trying to get your company bought or invested in and failed to pull it off.

In 2012 we watched as EA became a cheerleader for Microsoft almost out of the blue. We saw them consolidating, restructuring internally and in general making themselves look very attractive on paper. The question was (and still is) who were they courting? One of the leading contenders in our book was, of course, Microsoft. The partnership there was interesting and, to us, appeared to be a little more than a simple friendship where one company was helping the other. At the time there were multiple game development studios that were not happy with Microsoft and how Windows 8 was working to lock out content distribution systems like Steam and others. Even EA was in danger of finding themselves out of the game (although this did not end up happening) and yet Riccitiello was front and center praising Windows 8 and the whole ecosystem that Steve Ballmer wanted with Windows 8. At the time there was talk of a deal between EA and Microsoft which would have given EA something of a boost over other developers/publishing companies.

The truth of these rumored agreements was never confirmed so all we have is speculation on them, but the timing is very important here (as we have said). The fate of Windows 8 is far from certain as its adoption levels are about what we saw with Windows Vista in the same time frame and the gaming industry is still out on if there is any benefit to moving to Windows 8 at all. This uncertainty would be a good reason for Microsoft (and many other potential buyers/investors) to back off and wait.

Although it is unlikely that we will ever know the real reasons behind Riccitiello’s resignation (maybe he was just bored at the job) we do know that he is quoted as saying “It all comes down to accountability” in his resignation letter which would seem to point to something more than a few hiccups in the market. EA is probably looking at a few rough years ahead even without the need to pick out a new CEO. They are a company that does not look good to the average consumer right now and is almost despised by a large portion of the gaming community for the way they appear to completely disregard what players want from their games (less restrictive DRM is one). Now that the top man has fled the building it can only heighten uncertainty about EA and drive stock values down… Oddly enough this could make them look even more attractive to a potential buyer… then again we did say that timing is everything.

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Last modified on 25 March 2013
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