Thu, Jan 14, 2010 | 14:39 GMT
Lasky: EA has “destroyed over $11 billion in market value”
Ex-EA EVP Mitch Lasky written a damning assessment of EA’s recent full-year warning on his blog, noting that over $11 billion of the publisher’s market value has been lost in the last three years.
“It’s… amazing that the board continues to support the existing management team through this debacle,” said Lasky.
“Since JR took over, the company has destroyed over $11 billion in market value. Certainly, some of that was the economy and the general erosion of value on NASDAQ, but Activision… has experienced far milder effects from the recession.”
Lasky, who served under both previous CEO Larry Probst and Riccitiello when he returned to the company three years ago, claimed that he planned to move EA more swiftly towards a digital mode when JR came back, but was derided by colleagues at the time.
“They literally couldn’t imagine going to Wall Street with a message of increased profitability rather than top-line revenue growth,” he added.
“They wanted to make the transition to digital while continuing to grow the packaged goods business. Ironically, they saw their looming innovator’s dilemma as clearly as any company in the video game business back in 2006. They just weren’t bold enough to act on that knowledge.”
There’s more! EA’s business model? It’s three legs minus two to the bad, apparently.
“The old EA model was a basically a three-legged stool: 1) a profitable, recurring sports business (Madden, FIFA); 2) franchise games that produced big hits on a less frequent basis (The Sims, Need for Speed, Command & Conquer); and 3) a collection of digital assets (e.g.: Pogo & JAMDAT, and now Playfish) and distribution/partnership titles (e.g.: Rock Band & Left 4 Dead). Of those, the only stool leg left intact is the third one. Without the digital assets and the EA Distribution titles, they’d be in even more serious hot water.”
It’s a must-read. And it’s pretty grim. Do it.
12 
Posted in: EA, Hot, Trade
Tags: John Riccitiello, Mitch Lasky
12 comments
#1
mescalineeyes
14/01/10, 2:19 pm
that article is a must read.
#2
Johnny Cullen
14/01/10, 2:20 pm
Radiohead’s Knives Out comes screeming to my head when I read this.
#3
Hunam
14/01/10, 2:20 pm
I like the shacknews write up where they point out that Lasky has basically not been on fire since EA anyway.
“Lasky puts a lot out there that deserves a moment to digest. While several of his points ring true his relationship must also be considered. Early in the blog he describes how he saw all this coming and recommended a massive shift and restructuring of the company that would have avoided these problems. It casts a “told ya’ so” tone to the piece. And while we will never know how things might have worked out had he stayed, his subsequent track record at Benchmark Capital that includes EngineYard, Grockit, Hiplogic, Riot Games, and Vivox has met with only varying degrees of success”
#4
mescalineeyes
14/01/10, 2:21 pm
at least its not coldplay.
#5
Doc Robotnik
14/01/10, 2:22 pm
“Of those, the only stool leg left intact is the third one”
Erm… last time I checked FIFA was doing pretty well.
http://www.mcvuk.com/news/37067/EA-FIFA-owns-75-of-footy-market
#6
Quiiick
14/01/10, 2:33 pm
“Certainly, some of that was the economy and the general erosion of value on NASDAQ, but Activision… has experienced far milder effects from the recession.”
Compare it to Ubisoft stocks! They performed far worse than EA.
#7
Eregol
14/01/10, 2:43 pm
Considering current economic conditions it isn’t surprising that EA have lost value.
And seeing as EA have continued to acquire and develop new IPs, it’s doubly true.
EA used to be quite vilified in the games industry. Now they are being champions and Activision are vilified.
I say good on EA for putting new IPs first. Once the economic recovery is underway worldwide then I’m sure their value will bounce back.
#8
izduracis
14/01/10, 2:51 pm
Lasky can whine all he wants, but from a consumer’s (avid gamer’s) point of view (mine) EA has gone from being the ultimate bottom-line-profit evil of publishing (happily handing down the reigns to Acti) to a flexible publisher that takes risks and is generally pretty damn sensible.
That’s opposed to Bobby fucking Kotick who thinks an artistic industry needs to be run like a conveyor belt, the tosser. Anyway the results of the EA partners program and the move away from annual NFS releases and attracting Criterion to the franchise were clear signals that EA’s back on the right track; I’m sure the financial indicators will begin to reflect that soon enough.
#9
Quiiick
14/01/10, 3:00 pm
@ izduracis
Great post! I agree 100%.
#10
Freek
14/01/10, 3:34 pm
EA had to change, relying just on failing franchises like NFS was going nowhere. So they took a hit now, but in the long run having a healthy IP library can only be a good thing. But it’s not an easy choice to make.
#11
Eregol
14/01/10, 3:36 pm
No company ever got anywhere without taking risks.
You don’t get successful playing it safe all the time.
#12
Johnny Cullen
14/01/10, 3:37 pm
“at least its not coldplay”
Mean.