Electronic Arts is announcing that chief executive officer John Riccitiello is stepping down. The company’s board immediately appointed Larry Probst to executive chairman to “ensure a smooth transition.”
The publisher plans to begin the search for a new chief executive officer with the aid of an executive search firm. EA will consider internal and external candidates.
In a statement, Riccitiello says this is about “accountability” for the company’s current financial state. His final day is March 30.
The publisher’s stock is trading at $18.71. That’s down from a $61.40 in 2007, the year Riccitiello took over as EA CEO. EA will announce the results for fiscal 2013 on May 7.
“EA is an outstanding company with creative and talented employees, and it has been an honor to serve as the Company’s CEO,” said Riccitiello in a statement. “I am proud of what we have accomplished together, and after six years, I feel it is the right time for me pass the baton and let new leadership take the Company into its next phase of innovation and growth. I remain very optimistic about EA’s future — there is a world class team driving the Company’s transition to the next generation of game consoles.”
Riccitiello oversaw an up-and-down period for the third-party publisher. He introduced a renewed focus on original properties during the early days of his tenure before betting big on the long-delayed and expensive massively multiplayer online role-playing game Star Wars: The Old Republic from BioWare.
“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,” said Probst. “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.”
Riccitiello wrote an open letter addressed to “everyone at EA,” and you can read it below:
I am writing with some tough news. I have resigned my position as EA’s CEO. I will be around for a couple of weeks, and I hope to have the chance to say goodbye to many of you. Larry Probst will be stepping in as Executive Chairman to help smooth the transition. Larry first hired me at EA in 1997 and he was an incredible leader for the company during the 16 years he served as CEO. While he will continue to be the Chairman of the US Olympic Committee, he will also provide leadership for EA until a permanent CEO is appointed.
My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year. It currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago. And for that, I am 100 percent accountable.
Personally, I think we’ve never been in a better position as a company. You have made enormous progress in improving product quality. You are now generating more revenue on fewer titles by making EA’s games better and bigger. You’ve navigated a rapidly transforming industry to create a digital business that is now approximately $1.5 billion and growing fast. The big investments you’ve made in creating EA’s own platform are now showing solid returns. I believe EA is alone in mastering the challenges of building a platform for our games and services – a platform that will provide a more direct relationship with our consumers. You are number one in the fastest growing segment, mobile, with incredible games like The Simpsons: Tapped Out, Real Racing 3, Bejeweled, SCRABBLE and Plants v. Zombies. You have worked to put 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. And the industry’s most talented management team – Frank, Rajat, Peter, Gaby, Andrew, Patrick, Blake, Joel and Jeff — are certain to lead the company to a successful future.
I remain an incredible fan of EA and everyone who works in our world – from Stockholm to Seoul, Orlando to Edmonton, Guildford, Geneva, Cologne, Lyon, Bucharest, Montreal, Austin, Salt Lake, L.A., and, of course, EARS. My hope is that my travels and yours allow us the opportunity to talk more in the months and years to come.
In a few weeks, I will be leaving EA physically. But I will never leave emotionally. I am so incredibly proud of all the great things you have done, and it has been my honor to lead this team these past six years. After March, I will be cheering wildly for EA from the sidelines.
In the “business outlook” section of the EA press release announcing Riccitiello’s resignation, EA said that it expects revenues and earnings per share to come in at the low-end or below its previous guidance.
The most recent blight on EA’s ledger is the release of SimCity.
Riccitiello oversaw the launch of the urban-planning title, which suffered from numerous issues. SimCity’s design dictated that players have a constant connection to the online servers, but the EA servers collapsed under player demand. In the two weeks since its release, some intermittent issues still remain.
In the wake of SimCity, customers demanded that EA provide refunds, which the company refused to grant. Earlier today, EA revealed a list of games that SimCity owners can choose from for free as part of an apology for the city-building title’s performance.
EA also had a misstep with the reboot of its Medal of Honor series of first-person shooters. The publisher attempted to compete with Call of Duty with Medal of Honor (2010), which brought what was previously a World War II franchise into the modern era (as Activision did with Call of Duty). In 2012, EA released Medal of Honor: Warfighter. Both games failed to reach a wide audience, and the company announced it would put the property on hold.
The Old Republic has since gone from a subscription model to free-to-play.
Not all EA titles have slipped under the watch of Riccitiello. The company’s sports franchises are arguably more popular and lucrative than ever before. The FIFA series outpaced competition from Konami and others to overtake the massive worldwide soccer audience.
Meanwhile, Madden is a perennial hit, and all other sports games have introduced microtransactions, which bolster their revenue.
The traditional game company has also found success on mobile platforms. EA currently has two games in the top 10 best-selling paid titles on Google’s Play market in Plants vs. Zombies and Need For Speed: Most Wanted.
Probst previously held the position of EA CEO from 1991 to 2007, when Riccitiello replaced him. Probst started as chairman of the United States Olympic Committee in 2008, a position he will still hold while acting as executive chairman of EA.
The stock is up 2 percent in after-hours trading to $19.11.