Electronic Arts is betting everything on a successful transition to the next generation of video games. And the man who has to make that happen without any major ambushes, car crashes, fumbles, or train wrecks is the guy in charge of EA’s major game studios.
Frank Gibeau is the president of EA Labels, the division at Electronic Arts that produces games including Battlefield, Madden NFL, Need for Speed, The Sims, and Star Wars: The Old Republic. Major studios such as DICE, BioWare, EA Sports, and PopCap Games report to him. It’s a big job, and, after years of struggle, it may be that EA is finally getting big results. At the recent Electronic Entertainment Expo trade show in June, EA came away with accolades for Titanfall (which it is publishing for Respawn Entertainment); Battlefield 4, which is coming this fall to current-generation and next-generation consoles; and the zany Plants vs. Zombies: Garden Warfare.
Gibeau is often named alongside chief operating officer Peter Moore as a candidate for EA’s chief executive officer job. The company is searching for a replacement for John Riccitiello, who left in March, and longtime former EA CEO Larry Probst is executive chairman. But EA is running on autopilot in part because of executives like Gibeau, who has worked at EA since 1991. We caught up with him for an in-depth interview. Here’s the first of two parts of that wide-ranging discussion. (See part two here).
GamesBeat: I thought you guys probably had the best lineup I’d seen from EA in a long time at E3. How did that come together?
Frank Gibeau: Well, I’ve been working my ass off for two years on it. [Laughs] We started planning for the next-generation systems about two years ago, putting together the core technologies and the teams. A lot of our best engineers, artists, and creative directors have been working on it quietly since last year. When you reach a transition, you get to try all kinds of new stuff. We had this crazy Garden Warfare idea that people started getting fired up around. We had the relationship with Titanfall coming together. We put together a tight plan for technology, talent, and product. E3 was the big unveil we’d been working toward. It was a great time.
GamesBeat: It seemed like there was a strategy before to do a common, universal engine. It didn’t work so well with Criterion, but it seems to have come together with Frostbite.
Gibeau: I was around for that. I was on the publishing side of the business when we bought Criterion. The idea was that RenderWare would power all of our games in the last transition. The problem was that it wasn’t ready for prime time. It hadn’t shipped any games. The tools, the pipelines, the tech just weren’t mature or complete. Then I took that learning because in my role as the head of the studios, I had to make sure we understood how we were going to manage the technology.
We understood the architecture of these machines was very different from last time. Looking at the opportunities there, we went after Frostbite [Battlefield] and Ignite [on the sports side]. We created two technology paths and invested early and got them to the point where we were able to ship games on them. We weren’t fighting the engines as we were developing. In the last cycle, the engines weren’t done. Guys were fighting the tools. They weren’t spending any time polishing the games while we were starting new [intellectual property]. So we wanted to de-risk the technology piece as much as possible.
That was the key learning. You nailed it — we blew the last transition because we relied on RenderWare. It didn’t work. It set us back for multiple years. I was not going to repeat that mistake.
GamesBeat: Digital games was a very big mantra for a while under John Riccitiello. Is that still the case, that digital matters in big ways and that you’ll continue to experiment to make it grow up as big as physical?
Gibeau: It’s not an experiment. It’s a full commitment. We burned the ships and marched inland. [Laughs] About 76 percent of our revenue this quarter was digital, not disc-based. We’re off to the races.
The digital capabilities of the next-generation consoles are extremely powerful. The business is going digital. Mobile. Asia. A significant part of the business is in Asia. Does that mean retail is going away? No. But it’s not an experiment. It’s what we’re all about.
The quarter was a bit of an anomaly because we didn’t put out any blockbuster console titles, but our biggest retail partner, measured by dollar volume, in Q1 was not Best Buy or GameStop. It was Apple. That’s never happened before. John Riccitiello started us on this course, but we embrace it, we support it, and we’re going to take it to new heights.
GamesBeat: EA is releasing its first quarter earnings today – what can you tell us about the results?
Gibeau: I think the quarter is notable because 76 percent of EA’s revenue came from digital goods and services – primarily from mobile games as well as Battlefield 3 and FIFA 13. We didn’t have any major releases in the quarter but the digital percentage tells a story about how the company, the games, and the consumers have changed. Battlefield 3 has been in the market for more than 20 months and online players are still pushing it to the top of the charts.
Also, for the first time in EA’s history, Apple was our biggest retail partner. Again, that tells a story of the success of our mobile games with titles like The Simpsons Tapped Out, The Sims Free Play, and Real Racing 3.
GamesBeat: We’re seeing some imaginative use of the Frostbite engine in Plants vs. Zombies: Garden Warfare. I would have never guessed that was coming.
Gibeau: PopCap has been a great company for us. They have a very different culture than any other type of studio that we had inside. Obviously, they have some crazy intellectual properties. On top of it, we put some EA guys from our Vancouver studio into the PopCap organization, and they worked together to come up with this idea. When they first brought it forward, frankly half of us hated it. [Laughs] Another half of us saw the potential in it. I greenlit the game because I thought it was fun and because it was time to try some different things, to take some risks. The combination of EA console developers and the PopCap creative direction and brands, it is really working out.
GamesBeat: What about the Modern Warfare pun? How did that happen?
Gibeau: That was part of the initial pitch. It was Plants vs. Zombies: Garden Warfare — Plants vs. Zombies as a shooter. I was there. Half the room was like, “This is the dumbest idea I ever heard in my entire life.” The other half was like, “Wow, this is really cool!” We brought in some consumers, gamers, and showed it to them. They helped us edit it a little bit and refine some things.
GamesBeat: When a console transition comes along, it’s always been very hard for companies to try to do it in a graceful way. If the tech comes together, that makes it a lot easier. It is hard to have to keep people doing old-gen games while you get people on next-gen games. That would increase your costs.
But if you have a common technology, that seems to reduce costs. It sounds like that’s an explanation for why can try to go through the transition without raising your expenses a lot.
Gibeau: Frostbite has been the core difference. When you have a proven technology base with tools that work and you’re able to move teams around, because they’re all trained on the same engine, it makes for efficient and low-risk development. That was a critical decision, to invest in that early on and put the resources in. It causes stress in other parts of the business because a lot of our top guys were working on next-generation behind the scenes. But that was a big breakthrough for us, for sure.
We are reiterating that we intend to exit this year with spending flat, year-over-year. During a console transition year, that has never happened. I think in the last transition, our R&D went up 30 percent. The fact that we’re cranking these kinds of games on flat spending is astonishing.
GamesBeat: To make that happen, it seems like you’re still making some tough choices. I’ve seen a lot of studios close. I don’t know if they might have lived on in another time or another place. Can you talk about some of the decisions you have to make so that this flat spending can happen?
Gibeau: The studios that we have at EA — Maxis, PoCcap, BioWare, DICE, Criterion, the EA Sports studios, the Firemonkey guys — they have proven and sustained a high level of performance over many years. It’s a testament to the great creative leadership and talent there. They also have been able to understand and anticipate the market in ways that have been very insightful.
Some studios, though, were not always in a position to be able to maximize the opportunity. We got out of position, for one reason or another, in a given locale, or the skill set inside that organization wasn’t something that was going to be able to make the transition from one set of technologies or one market. They couldn’t make the transition from a social to a mobile environment, or make a transition from PlayStation 3 to PlayStation 4. We’re constantly going through and evaluating that.
Now, in every one of the cases where we shut down a studio because the strategic fit wasn’t there, or the opportunity wasn’t there, and we needed to think about our resources in a more perishable way, we would transfer the talent. Folks in a given studio were given the opportunity to move to another part of Electronic Arts and join new teams, join new IPs. Technology and talent don’t always fit with where the future is going. We make decisions to get us into the best position possible. But we always look at the individuals inside those studios, and we’re able to move them around and get them into position. If you look at DICE or EA Sports, there are folks from other studios. That’s one of the key things for EA: to keep our talent base diverse but always constantly growing.
GamesBeat: It seems to lead to interesting choices. I talked to Ocean Quigley [the creative director on the most recent SimCity, who just left EA for a startup]. He said that after his third SimCity-related game, he felt like he had to step outside Will Wright’s shadow and do something different.
Gibeau: That was a happy parting. He’s great. At some point in your career, you look for a diversity of challenges. You want to try different things. He had a tremendous career at Electronic Arts and built a lot of games for us. He wants to try something different, and good on him to go do that.
GamesBeat: What did you take away from the server problems that hurt the launch of SimCity?
Gibeau: In retrospect, our biggest takeaway is that we are lucky that SimCity has an enormous number of loyal fans. That first week after launch was really rough — an experience nobody wants to live through again.
Since then, we’ve sold more than 2 million units, and the number of people logging in and playing is holding steady. SimCity is a success. However, underestimating demand in the first month was a major miss. We hope that the game and the service we’ve provided since then meets the fans’ high standards.
GamesBeat: How do you prevent that from happening again?
Gibeau: Look, launching online games isn’t easy — particularly the ones that attract millions of fans on day one. Some of the biggest and best-run companies in our industry have stumbled on this. That’s not an excuse. It’s just evidence that serving AAA games online is hard.
When service is disrupted, you move quickly to fix it and get the players back in their game. You learn from your mistakes and hope you don’t make the same ones twice. We analyze our operation to understand where it broke down, and we set new standards so it doesn’t happen again.
But the fact remains: This is complicated. Every online game is different. As long as the games are getting bigger and better, and while the audiences are scaling rapidly, there’s going to be a high degree of risk in the first week of launch.
GamesBeat: EA got voted the Worst Company in America? How do you respond to that and try to change that perception, if it is indeed a widely held opinion?
Gibeau: We take it very seriously and want to see it change.
In the last few months, we have started making changes to the business practices that gamers clearly don’t like. In the spring, we dropped our online pass program for consoles — both next-generation and current-generation. We listened to the feedback on SimCity and decided that The Sims 4 would be built as a single-player, offline experience. We announced some new intellectual properties at E3 and will unveil more new games in the months ahead.
We’ve launched an initiative to help players transition to the new consoles. We weant to make moving day a lot easier by allowing players to carry forward their achievements. And there’s much more to come. The point is we are listening, and we are changing.
GamesBeat: Some of your successful studios seem to have a DNA to them. BioWare, EA Sports, and DICE. They’re expanding now because they’ve done well. How are these teams different from some of the ones that are not as lasting?
Gibeau: When I started up the EA Games division with that collection of studios, the key insight for me was to move from a highly centralized studio organization to a decentralized organization. My belief is that you get the best games from small teams with strong cultures. The developer culture is critical in getting quality and to intellectual properties that sustain. In the case of each of those studios, they were given the opportunity to continue to invest in their culture, to expand and bring new talent in.
The trick is not to let them overexpand and get too big. They should only take on projects that they have the right amount of talent and technology and leadership to be able to execute at high quality. The worst thing to do is to grow them too fast. If you look at how DICE has grown over the last four or five years, they’ve incrementally added things each time and gotten bigger and bigger. They’ve gotten to a position now where being able to take on the Star Wars property alongside Battlefield … we believe that we have the right bench. We have the right people and the right technology to be able to do that without losing the magic that DICE has about its culture and the quality that it goes after.
It’s an iterative process. You do it cycle over cycle. If you look at the DICE culture, it’s the same buildings, the same name, the same core leadership team. They’ve been through multiple product cycles together. That’s the other key thing about getting to great games. Small teams, tight cultures that are able to build multiple games over multiple years, so that they get better and better and they learn where their gaps are.
Now, we do say no from time to time when a studio says, “I want to try a new genre. I want to try to add another project.” We go through a consulting process with them. Who’s the executive producer? Who’s the lead engineer? Who’s the creative director? If we feel like we don’t have good answers, then we pause and we wait until we get into a position where they can do that.
GamesBeat: I’ve been a Call of Duty fan for a long time. But Battlefield 4 is the first game I’ve seen from you guys that really scaled up everything — character, gameplay, graphics. I wonder how that’s happened. Can you contrast that to Medal of Honor, where it didn’t happen?
Gibeau: It goes to some of the things I just pointed out. The core team on Battlefield 4 was on the original Battlefield: Bad Company. They went from Bad Company to Bad Company 2 to Battlefield 3 to Battlefield 4. Each time they learned something about storytelling, about multiplayer, about Frostbite as we went through Frostbite 2 and Frostbite 3.
In each one of those cases, we took incremental steps forward. We understood what we did really well and doubled down on that. We figured out where we had gaps. Some of the level design things we learned in the single-player game on Battlefield 3 and how the story comes together, we embraced those changes and brought them forward in Battlefield 4. It’s that cohesive leadership team through all four of those versions. It’s a common technology that keeps getting better. You learn from the last project, and you bring it forward.
It’s also having an attitude about respecting the competition but taking them on. That competition with a company like Activision has been awesome. It drives us to try and achieve at a high level. When we started on Bad Company, we always thought we would try to catch these guys. We didn’t think we would do it in one version, but we knew we eventually would. That’s our pursuit, constantly.
GamesBeat: Medal of Honor just didn’t have the same magic, then?
Gibeau: I don’t think it had the same team dynamic. It didn’t have the same number of iterations behind it. The leadership on the team was different. Ultimately, I think Battlefield had more differentiation, and it had a tighter and better culture. That’s what I think led to the difference there.
GamesBeat: It’s easier to make the decision to double down on Battlefield. At some point, though, it also seems like you run out of people, if the strategy is only to double down like that.
How do you look at things like opportunity costs in that context? If you have 30 people, what would you do with them? Should you put them into enhancing Battlefield’s DLC nine months down the road or something?
Gibeau: You ultimately have a finite number of leaders and a finite number of talented people. You have to make sure that they’re deployed in a way that gives them the best opportunity to succeed. My philosophy has been to get into a position where you have the right team size and the right amount of time to deliver on quality.
Doubling the team doesn’t get you — you can’t deliver a baby twice as fast. There’s a point in time where too many people get on a project, and the law of diminishing returns sets in. Quality declines if it becomes too hard to manage. You’d rather have a smaller team with a longer period of time to work on a game.
When we think about opportunity costs, we think about the strategy in front of us as a company. What are we trying to do? What new ground can we break? Should it be a new IP? Should we try a new platform? Should we go into a new genre? Again, we take that team dynamic and team composition very seriously. If we have 30 people, we’ll look at it — does it make sense to make Battlefield Premium? Does it make sense to start up a mobile-game team? That’s the constant process we go through.
The good news is, you can start new projects with a small team to figure out if there’s a hot prototype here. Then you can pile on folks there to take it to scale. If the prototype doesn’t work, you move on to something else. It’s kind of kill early, kill often, and then only the strongest ideas survive. That’s when you can start to scale up your production. We have a fairly rigorous greenlight process. We have a methodology that’s served us well.
GamesBeat: EA has stuck with mobile over the years. You made the big acquisition of Jamdat and stayed with it and grew through the iPhone and Android era. What makes that something that’s a worthwhile investment alongside things like Battlefield, where it’s easier to see that it’s EA’s kind of thing?
Mobile seems like it’s always had this promise waiting sometime in the future. It’s also difficult in other ways, with something like 800,000 apps out there. The firepower on each title doesn’t necessarily translate into the same guaranteed result in the market, where you can shoot to No. 1 and stay there 10 years in a row. Every six months the top mobile ranks have changed.
Gibeau: They change, but you can have a hit in mobile that can sustain for two years. In the case of The Simpsons and The Sims, we’re seeing some of the highest results we’ve ever seen in the revenue on those projects, and they’ve each been in the market well over a year.
There’s a couple of things to note about the mobile business. First, we got into it early on because we believe that as a company, the best thing we can do is be platform agnostic. We go where the audience is. We go where we can build great games. On mobile devices, that’s never been more true than now. We’re seeing console game levels of return, financially, on these projects. We’re seeing audiences that are vastly bigger. Our creative teams are intrigued by designing games for mobile devices. The touch screen, the technology — the technology on the next wave of tablets is going to be near-console-level in terms of graphics performance.
You have to design for a touch screen. You have to design for short sessions. You have to design with the mindset that it’s going to be mobile. But EA has always been platform agnostic. Mobile, for me, is an unbelievable platform for gaming. It’s driven most of the growth since the last cycle changed over. We were a $20 billion business back in 2004 or 2005. Now it’s north of $60 billion. A lot of that growth has been the opening up of Asia, but it’s also been the opening up of mobile at scale as a gaming platform.
Our view is, we want to build FIFA experiences, as a universe or an ecosystem, across all platforms. We’ll have them connect and interoperate. If you wake up and grab your mobile device, you can have an interaction with the world of FIFA through your smartphone. Later in the day, you might play it on your PC or your console. That’s all happening now. The idea that customers have multiple games in their lives and they like their games to persist across all of them — we think that’s an essential truth going forward. It’s what we’re betting on and what we’ve built our organization around.
Nothing is going to slow down mobile for a while. The adoption rate of the technology is growing. The penetration rates are still low on a global basis. They’re growing fast, but there’s still a lot of room to grow the business. The capabilities and the trade-out of them are constantly renewing and refreshing. It’s not like the social business, where you hit a wall and there aren’t many more desktop PCs to get on. As these get faster and faster in terms of their capabilities, it moves more into our sweet spot.
In a world where there’s 800,000 apps, that’s where brand power and intellectual property and having a network matters. EA is in a good position for that. You’ve heard of FIFA or Madden or The Sims or Plants Vs. Zombies. The fact that we can stitch all that together inside a network gives us an unfair advantage in a world of proliferating titles.
GamesBeat: Half the people who attend GDC now are indie developers. There are so many more than there used to be. What is the future of big publishers such as EA amid so many indie developers and indie games? Can you take advantage of them?
Gieau: Independent developers are driving a lot of the innovation in the mobile channel. And I don’t think you can overstate how big that is. Mobile and tablets have lowered the barrier to entry for a lot of the most creative people in the industry. As a result, it’s a really great time to be an indie. You’d have to go back to the early days of gaming to find a time when there was this much accessibility and creativity pouring into our art.
EA’s Chillingo studio assists independents in developing and publishing their games for mobile and tablets. Chillingo assisted Rovio with Angry Birds [before EA owned it] and helped Zeptolab get Cut the Rope to market.
At EA, a growing percentage of our revenue comes from mobile blockbusters like The Simpsons Tapped Out, Real Racing 3, and The Sims Free Play. The teams making those are among the most talented in the industry.
But when it comes to developing and serving AAA games for PC and console, the number of indies that can year-after-year put games in the top 20 is relatively small. Blockbusters like Battlefield, FIFA, Call of Duty and Assassin’s Creed require large teams and budgets.
It’s like fielding a Formula One team. There are lots of talented drivers out there and great engineers who can design fast cars. But the capital required and talent required to compete on that level dramatically reduces the field.
It’s now clear that AAA games and mobile will co-exist. Some people went to E3 saying that the tablet killed the console. Most have stopped saying that now. Everyone I know plays both. Mobile games and consoles are on terrific growth trajectories. I think that independent developers will continue to flourish. Indie games on mobile and tablets will continue to get more sophisticated and the audiences will continue to scale massively. As that happens, developers of AAA titles will learn how to integrate the creativity we’re seeing from the independents.