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“Accountable” Riccitiello steps down as EA CEO

Monday, 18th March 2013 20:36 GMT By Staff

EA CEO John Riccitiello has resigned, effective March 30, citing personal responsibility for the publisher’s lowered guidance and missed financial targets.

Tricky Ricci

John Ricitiello graduated from the Haas School of Business with a B. Sci. He served in leadership roles at The Clorox Company, PepsiCo and Häagen-Dazs International before taking on his first CEO position and Wilson Sporting Goods and later Sara Lee Corporation.

EA took Riccitiello on as COO in 1997, but the executive left to found an equity firm. EA wooed him back in 2007 to take on the CEO position.

During Riccitiello’s tenure EA has reshuffled its labels system more than once, gradually focussing on fewer, bigger hits and mobile gaming; it introduced Origin, a PC digital distribution client; launched a number of equality initiatives; remained committed to fostering fledgling IP such as Dead Space; acquired PopCap; and introduced cross-studio tech initiatives like the sharing of DICE’s Frostbite 2 engine.

EA’s two most important franchises, FIFA and Battlefield, grew enormously under Riccitiello’s guidance.

Riccitiello commanded a salary of $800,000 and has an estimated net worth of $10 million.

Riccitiello’s resignation was accompanied by and apparently the consequence of the publisher’s failure to meet financial targets in the last quarter, causing it to lower its guidance in January.

Larry Probst will manage a transition period until a new boss is found, with EA vetting both internal and external candidates. Probst is fairly well qualified to helm one of the industry’s biggest ships; he’s been chairman of the board since 1994 and serves as CEO from 1991 to 2007, and began EA’s assault on mobile and online.

“We thank John for his contributions to EA since he was appointed CEO in 2007, especially the passion, dedication and energy he brought to the Company every single day,” Probst said.

“John has worked hard to lead the Company through challenging transitions in our industry, and was instrumental in driving our very significant growth in digital revenues. We appreciate John’s leadership and the many important strategic initiatives he has driven for the Company. We have mutually agreed that this is the right time for a leadership transition.”

In an extended and less formal statement, Probst said Riccitiello has “compiled a history of great leadership” in his 12 years of service.

“John’s tenure at EA has been marked by bold decisions, a big vision for online games, a passion for product quality and an enduring respect for the people who work here. John made an indelible mark on our culture and shaped many of our most successful leaders. We wish him the very best in whatever he decides to do next,” he said.

“EA’s strategy and future are rock solid. Our business is built on more than a dozen powerful, globally recognized brands. We are clear leaders in the fastest growing category in games – mobile – and we are positioned to lead on the next generation of consoles. Most importantly we have deep reserves of talent – new faces and industry veterans who form the core of EA’s leadership.”

“EA expects that its revenues and earnings per share for the current quarter will be at the low end of, or slightly below previously issued guidance provided in its press release dated January 30, 2013,” the publisher said in an accompanying statement.

EA will announce its fourth quarter and fiscal year 2013 results on May 7. In the wake of Ricitiello’s announcement, the publisher’s stock has jumped 2.6% in after-hours trading, according to GamesIndustry. It continues a general upward trend from just below $14 to nearly $19 since early January,

Industry analyst Colin Sebastian issued a note to investors, as reported by Gamespot, describing Riccitiello as a “controversial” CEO, and assuring them the executive shuffle is justified.

“We believe timing makes sense for a CEO transition at the end of the fiscal year, and ahead of next generation console launches and a strong [second half of 2013] title lineup (Battlefield and EA Sports). We believe EA is well positioned for the console refresh cycle, and the company has made progress in building a digital platform and more recently controlling expenses. However, we note that inconsistent financial performance, some high profile title flops (e.g., Star Wars: The Old Republic) and employee turnover were issues that impacted the CEO’s credibility.”

Sebastian suggested COO Peter Moore and EA Labels president Frank Gibeau as potential replacements for Riccitiello.

According to Polygon, Riccitiello will receive 24 months of salary continuation and continued vesting of unvested stock options until November 30, 2013. Here’s his full resignation letter.

Dear Larry,

I hereby offer my resignation as CEO of Electronic Arts effective with the end of our Fiscal Year 13 on March 30, 2013.

This is a tough decision, but it all comes down to accountability. The progress EA has made on transitioning to digital games and services is something I’m extremely proud of. However, it currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued in January, and we have fallen short of the internal operating plan we set one year ago. EA’s shareholders and employees expect better and I am accountable for the miss.

I have been at the helm as EA’s CEO for six years and served as COO for nearly seven years starting in 1997. I know this company well, and I care deeply about its future success. I leave knowing EA is a great company, with an enormously talented group of leaders and the strongest slate of games in the industry. I could not be more proud of our company’s games, from Battlefield and FIFA, to The Simpsons: Tapped Out and Real Racing 3. We have built many great franchises that will serve the company well in FY14 and beyond. In particular, I am confident that the investments we have made in games for next-generation consoles will put EA in a strong leadership position for many years ahead.

In offering my resignation, my goal is to allow the talented leaders at EA a clean start on FY14. I look forward to working with you in the coming weeks on an effective leadership transition. I’m extremely honored to have led this company and proud to have worked with all the great people at Electronic Arts.

Sincerely,

John Riccitiello

Missed targets
In EA’s recent financial calls, its reliance on EA Sports, Battlefield and mobile has been repeated often enough to become a mantra – because few of its other recent releases have quite hit the mark. It was particularly disappointed in Medal of Honor: Warfighter, choosing to put the franchise on hold for a while as a result of poor performance.

Meanwhile, even those titles which scored well with critics, like Crysis 3 and Need for Speed: Most Wanted, haven’t made a major splash, although it’s worth noting that Dead Space 3 topped the US charts this month. The publisher has constantly defended its major investment in Star Wars: The Old Republic, but the MMO has since gone free-to-play.

Moving into the future, EA’s triple-A business model will be further challenged by increased next-generation costs. Its upcoming release state has been kept quiet thanks to the secrecy surrounding new platforms, but we’re expecting a new Battlefield, Dragon Age and FIFA in reveals over the course of the year, as well as Army of Two: The Devil’s Cartel this month and Insomniac’s FUSE next quarter.

Breaking news

46 Comments

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  1. OmegaSlayer

    boom

    #1 1 year ago
  2. Johnny Cullen

    Peter Moore. It’s going to happen.

    It’ll be announced with a new tattoo on his arse.

    #2 1 year ago
  3. TD_Monstrous69

    @1 goes the dynamite, and @2 wouldn’t shock me in the least. Also, wouldn’t discount Frank Gibeau from the running either.

    #3 1 year ago
  4. The_Red

    @2
    It won’t stop at EA. Soon Peter Moore will take over the world!

    #4 1 year ago
  5. Johnny Cullen

    @3 Gibeau will be in Moore’s current (I said old role before – I already have him in the CEO mentality!) role. Watch Patrick Soderlund take up the EA Labels presidency in place of Gibeau.

    #5 1 year ago
  6. SplatteredHouse

    now, are we any more likely to see a new Mirror’s Edge from the Battlefield people?
    I agree with this comment http://kotaku.com/5991181/ea-ceo-john-riccitiello-steps-down?post=58368759 EA seen at it’s best, and thanks to outside interference, also it’s worst under his watch.

    #6 1 year ago
  7. YoungZer0

    Danny Bilson for EA, now!

    #7 1 year ago
  8. SameeR_Fisher

    WOW now that was something.

    I wonder if that will change EA’s mentality of micro-transactions, forcing action, mass appeal and all of that, I wonder if they will try to change a bit.

    #8 1 year ago
  9. No_PUDding

    I just hope this has been on the cards for a little while.

    It seems a little close to several EA PR faux-pas, to appear anything other than reactionary.

    I am sure stuff like this isn’t made public for quite a while, so while making comments on ‘monetisation’, for example, John would have known he was stepping down.

    #9 1 year ago
  10. Beta

    I for one was not expecting this.

    #10 1 year ago
  11. Johnny Cullen

    @7 Good call. I’d certainly love for that to happen.

    #11 1 year ago
  12. SplatteredHouse

    @8: “You are now generating more revenue on fewer titles”…”You are number one in the fastest growing segment, mobile with incredible games like The Simpsons: Tapped Out, Real Racing 3…” “EA in a position to capture industry leadership on the next generation of consoles; and I believe two of our titles – Battlefield and FIFA – will be among the top few franchises in the entire industry.” – Riccitiello’s departure letter

    That’s some rap sheet! FRANCHISES are making my (gamer) blood boil. :( I don’t mind EA. It’s just they recycle stuff yearly, and focus solely on franchises which hold, at very most, fleeting interest with me. I don’t want that, and I’m not in support of it. So much effort put in to recreating the village well.

    #12 1 year ago
  13. DSB

    It’s about time.

    If they were smart they’d go for someone outside.

    @7 I guess that would kill them off pretty fast. I approve :P

    #13 1 year ago
  14. NightCrawler1970

    I was wondering how much bonuses Riccitiello already filled? before he left EA

    #14 1 year ago
  15. manamana

    Guess his bonus wont be a microtransaction …

    #15 1 year ago
  16. Sam Clay

    @2 lol – If only I could retweet comments :P

    #16 1 year ago
  17. mistermogul

    @15 – lol, nice!

    #17 1 year ago
  18. Jet Black

    A new CEO will be available soon… Alternatively, you can buy one now via a micro transaction.

    #18 1 year ago
  19. Eddie Rodrigues

    @18 This. 10/10

    #19 1 year ago
  20. zinc

    Peter Moore steps up as CEO & announces EA’s new exclusive gaming partnership with Xbox.

    His revenge on Sony for helping to kill the Dreamcast is nearly complete…

    Maybe.

    :-P

    #20 1 year ago
  21. Phoenixblight

    @20

    WTH is that? EA is the one that pulled support from the dreamcast which is one of the various reason why that system failed.

    #21 1 year ago
  22. YoungZer0

    @21: Moore worked for Sega around the time. Also it was meant as a joke.

    I wonder if Riccitiello stepping down is a good thing, or if he’s going to be replaced by some Commodus dude.

    “Always Online, for all our major games, AM I NOT MERCIFUL!?”

    #22 1 year ago
  23. SlayerGT

    It is best to jump ship…before it sinks.

    #23 1 year ago
  24. DarkElfa

    “EA’s shareholders and employees expect better”

    What about your customers, you over-privileged cunt!

    Is that too much of a bad word? I can change it if it crosses the line.

    #24 1 year ago
  25. OlderGamer

    “It is best to jump ship…before it sinks.”

    If only! Well to be fair GT, I don’t want them to sink and fail. Just come back down to earth, listen to their users and stop trying to squeeze every damn penny from their customers that they can. Stop with franchises … and ….. you know what screw em. Your right man, I hope it sinks.

    Even if only a little bit.

    DarkElfa:

    “Is that too much of a bad word? I can change it if it crosses the line.”

    No I think ‘Over-priviledge’ sounds about right… Oh wait you meant….no, no I think that one fits too.

    #25 1 year ago
  26. Brenna Hillier

    Updated. Again.

    #26 1 year ago
  27. Telepathic.Geometry

    Sorry Brenna, a few mistakes:

    “before taking on his first CEO position (at) Wilson Sporting Goods…”

    “he’s been chairman of the board since 1994 and (served) as CEO from 1991 to 2007…”

    “from just below $14 to nearly $19 since early January(.)”

    “(its) reliance on EA Sports…”

    “has been kept (quiet) thanks to the secrecy… “

    #27 1 year ago
  28. Digital Bamboo

    “Riccitiello will receive 24 months of salary continuation and…stock options until November 30, 2013.”

    24 months extra pay at $65000+ a month for resigning. Oh yes, I’m sure that must have been a really “tough decision”. Hope the poor guy can land on his feet.

    #28 1 year ago
  29. Erthazus

    That won’t change anything.

    #29 1 year ago
  30. Phoenixblight

    @28

    Compared to what he has been getting as a CEO that is chump change.

    #30 1 year ago
  31. mreko3230

    They are saying EA didn’t make enough money during his reign as CEO. They want MORE money- not less. I fail to see how this is going to get rid of micro-transactions. If anything, EA basically told their CEO “You didn’t do enough to squeeze out more money and you didn’t do enough to make more money on our current franchises.” If anything, they are probably upset he didn’t put MORE microtransactions in games. They are probably upset that they didn’t put them in MOH.(Putting the failure of MOH:Warfighter on the CEO is laughable. It was a bad game from the ground up)

    They are upset because Dead Space 3 didn’t sell enough copies? The Dead Space franchise has never sold a lot of copies. If it would have been up to the powers that be, Dead Space would have been jettisoned after the first game- something that I’m glad didn’t happen.

    EA will become even less likely to invest in new IPs. Even if it turns out a game like FUSE is really good, I don’t think the sales will be there to back it up. If an established IP like Crysis isn’t hitting the mark, then what chance do new IPs have? I expect EA to keep churning out the money makers like FIFA and Battlefield and investing heavily into games like Real Racing 3.

    Sad fact of the matter is, a majority of consumers are not interested in new IPs unless they can get them on the cheap. People are not willing to drop $60 on something they’ve never heard of. They are barely willing to drop $60 on established franchises. If your game is currently owned or being published by EA and your not making the sales grade (no matter how fun/good your game is)- you might be in trouble. The only chance your game has of sticking around is to tell EA “Hey guys we’ll put microtransactions in our game if you don’t sell us off or drop us!”

    #31 1 year ago
  32. Phoenixblight

    “they are upset because Dead Space 3 didn’t sell enough copies? The Dead Space franchise has never sold a lot of copies. If it would have been up to the powers that be, Dead Space would have been jettisoned after the first game- something that I’m glad didn’t happen.”

    The second Dead Space sold double if not triple then the original. Its the end of a generation of consoles and we are still in a recession along with the market being over saturated.

    #32 1 year ago
  33. Digital Bamboo

    @31 Does that mean we’ll never get another General Chaos game?

    #33 1 year ago
  34. DSB

    @31 Our games are selling less so we better start exhausting people with monetization at every turn?

    To me that just doesn’t make any sense. You don’t solve flagging sales by devalueing your product and shaking down your customers. If people aren’t interested in new IPs, then chances are that those new IPs aren’t all they should be.

    If publishers got serious about committing to quality and ventured to finally recognize their creatives as the backbone of the industry, I think they would also be in a much better place.

    Simply milking a few franchises to death while foolishly expecting the same handful of old timer CEOs to somehow magically flog their dead horse back to life, by making games less fun for everyone, is just ass backwards to me.

    If they want to turn gaming into a cheap second rate entertainment business, they can absolutely ensure that it will be, but it won’t be as profitable for everyone as it could’ve been.

    #34 1 year ago
  35. G1GAHURTZ

    Bye bye Riccitiello!

    I wonder if the next guy will be as UTTERLY OBSESSED with CoD…

    http://www.computerandvideogames.com/307689/ea-boss-wants-call-of-duty-to-rot-from-the-core/

    http://www.callofduty-community.com/modern-warfare-3/ea-battlefield-3-superior-modern-warfare-3/

    http://www.eurogamer.net/articles/2011-06-16-ea-attacks-call-of-duty-elite-strategy

    http://spong.com/article/24623/Riccitiello-On-Kotick-We-Got-His-Goat

    Looks like releasing 3 CoD wannabes per year was a stupid strategy all along…

    #35 1 year ago
  36. SlayerGT

    @OG I honestly don’t care what happens to them. Come to think of it, I can’t remember the last EA game I’ve bought. All the IP they control that I liked they’ve mistreated. On the upside, if shit hits the fan (unlikely) and they close any studios, it’d free up some talent.

    #36 1 year ago
  37. ps4some

    Who says nfs:mw hasn’t made a major splash? It’s still in the top 10 several months after release.

    #37 1 year ago
  38. zersus

    I hope EA change now a little (more!)!
    This CEO did a lot wrong from the view of a gamer.

    #38 1 year ago
  39. roadkill

    “EA’s two most important franchises, FIFA and Battlefield, grew enormously under Riccitiello’s guidance.” Really vg247? Really? Yeah f**k those developers! What do they know about making games!? It’s good that they had this guy to steer them. No! The developers are the ones that are making the games and not the publishers! The developers are the ones that pour their heart and soul into the stuff that we enjoy so much. Wtf vg247? How can you ignore them like that?

    edit: What about Medal of Honor vg247? Was that no made under this guy’s “guidance”? Next time try to reread your articles at least once. We could ignore so many spelling mistakes even though you could just paste the text into something like MS Word or OpenOffice and they would highlight your mistakes for you but this? This article is sloppy, incomplete and degrading!

    #39 1 year ago
  40. Patrick Garratt

    :-/

    #40 1 year ago
  41. zersus

    I totally agree with roadkill! All EA have done to my most favour developer is to scamp with “their great ideas”.

    And I have something more to say:
    I was never ever so happy not to buy a game which I would love to play! The revolution has begun! I have voted with my wallet for this; I didn’t buy Sim City like many others, I have convinced my online buddy’s not to invest in this, not to support EA in this. I may be could convicted about 8 people not to invest, just imagine if there were more people like me, rebels, unshaken, steady to their own decision not to buy something that they would love to play! Seeing him go is a relive, it is a gift; it shows me that I did right, not to support everything that EA “thing to know is great for us”. We gamers are grown up now, we can stick to our decision, we can see trough bullshit and crap, we are experienced now, we have the internet to communicate, and we have alternatives to choose from! There are a lot of other games out here we still can play, we can even choose to invest in games which need the money go get started. I will keep voting with my wallet, and I will keep talking and convincing my friends NOT to invest like I did it in the past with The Settlers 7 and Heroes of Might and Magic 6! I will not buy micro transaction/DRM crap, and I will not buy games which will force me to do so after I have already paid 50€/60$!

    Everyone who is with me, today we have earned a great victory!

    #41 1 year ago
  42. roadkill

    @41 OK I’m sorry, maybe I was a bit too harsh but this looks like b/s to me. This guy leaves the industry and every journalist starts writing something about it. If any of the talented men and women who work as game developers would leave to do something else people would hardly write anything about them. Not saying that you vg247 do that but that’s the general situation. I just don’t like publishers. Every game developer should be like Valve. They SHOULD NOT be told what to do! They should listen to their creative minds and not the minds of this a**holes “businessmen”.

    #42 1 year ago
  43. mreko3230

    @32 They only decided to make Dead Space 2 after looking at the number of people who played Dead Space 1 used. At the point DS1 had finally sold a million copies, they found that 3 million had played used copies of the game. So they felt they had a market for a second game. They wanted 5 million sold for Dead Space 3? The first 2 games combined sales barely made those numbers.

    @34 “If publishers got serious about committing to quality and ventured to finally recognize their creatives as the backbone of the industry, I think they would also be in a much better place.”

    Couldn’t agree more. Question is- are they smart enough to do that?
    And making crap games and shaking down your customers for more cash doesn’t make any sense, but in some cases, that is exactly what they are doing and are planning for more.

    #43 1 year ago
  44. Sini

    The only two things worth a fuck out of EA for the past 10 years were Fifa improving, and Battlefield 3. Everything else was either misused or shows severe lack of understanding.
    I’m glad that failure TORtanic will not be forgotten.

    #44 1 year ago
  45. GrimRita

    If he lived in the UK, he would have been given a pat on the back, a huge bonus and probably a knighthood for failure.

    #45 1 year ago
  46. Gheritt White

    ^This. So much.

    #46 1 year ago