EA Chief: “Investors don’t give a sh*t about quality”

July 22, 2008 – 2:14 pm

Read this quicky over at GamesIndustry.biz:

“I don’t think the investors give a sh*t about our quality. They care about our earnings per share. They wait for it to happen. We had three years where we didn’t make our expectations. If I were an investor, I would wait and see. That’s fine with me,” Riccitiello explained.

Strangely, as a MMORPG subscriber, I’ve always felt like an investor of sorts in the game I was playing. My monthly fees helped pay for server maintenance, expansions, customer service, keeping the lights on, etc. Yet, quality has always been first and foremost on my mind.

I guess it really comes down to investment vs. risk vs. reward vs. benefit.

A shareholder invests money and if the company tanks, so do all their investments. He or she only sees a reward if the company does well and never sees any sort of interim benefit (aside from marginal dividends).

I on the other hand might play a game for 10 months, investing $149.90, and if the game tanks or takes a sharp turn for the worse I am also out that money. I will never see that money again, no matter how well the game does. For me, the reward is having a great time at it. The benefit is hoping it is fun enough to continue playing (and investing in).

Technically, I suppose an investor and a gamer are two different beasts if you compare them strictly by financials. The gamer is always in a depreciating situation monetarily because the game will never give him or her a financial reward (unless you count eBay). Then again, the gamer isn’t as concerned about financial rewards. They just want to have fun and that is all the reward they need.

There are a lot of ways to look at this. What do you think!? Aside from the fact that when you (Mythic) get gobbled up by a large, publicly-traded corporation you have a way more complex situation on your hands. What do you think Mr. Riccitiello’s statement says about EA’s interest in Warhammer Online? Damn the quality as long as we can get a good ROI (return on invetment)? I would think a CEO’s responsibility is to his shareholders more than the creative whims of his studios.

What does it say about gamers interested in WAR? Should they play the “wait and see” game too?

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Post tags: EA Mythic, opinions, Warhammer Online

16 Responses to “EA Chief: “Investors don’t give a sh*t about quality””
I’m actually incouraged by what he’s saying here. He says the investors would be happy for us to realease terrible games in exchange for short term profits but I’M NOT. Well, good for him.

By Steven Hutton on Jul 22, 2008
DARN! “Incouraged”? What the heck is that? Encouraged. Seriously. That’s just shameful.

By Steven Hutton on Jul 22, 2008
@steven: lol

Quality games equal (most of the time) more sales, which leads to higher earnings.

So investors do care about quality, just in a roundabout way.

As for WAR, it goes both ways really:

Game out now, earn money now, investors happy now, may not be happy down the line

or

Game delayed, make money later, investors upset now, may be happy down the line due

By Werit on Jul 22, 2008
It’s his job to keep his shareholders happy. I read what he’s saying here as meaning that he bridges the gap between what they want (profit) and how to get it (ie. producing quality games)

I thought he was very aggressive in that interview though. I presume that’s what he’s like. Doesn’t bode all that well for any studios that don’t produce the goods.

By Spinks on Jul 22, 2008
What about the “wait and see” approach? I guess that part comes down to your willingness to take a risk. A safe investor does his research before putting out the cash (in this case, it might be waiting for the game to launch and reading some reviews). A riskier investor goes with his gut.

There’s that saying “with great risk comes great reward.” But also, potentially great disappointment/failure.

By Snafzg on Jul 22, 2008
p.s. good points all. I’d just like to point out that smart investors could earn a lot by watching the news and short if the thing looks like its going to tank from nasty reviews. As far as waiting forever for it to come out.. there are limits. At some point the increased quality and the payoff because of it due to incubating and “polishing” longer doesn’t pay off. And its at that time you cut the unnecessary stuff and release. Simple as that.

By Thallian on Jul 22, 2008
Well, you don’t get to be in charge of a big company like EA without being a bit of a go getter. (He said, choosing his words carefully).

Honestly, I reckon most investors would throw away a quality game for SHORT TERM profits. “What are we at THIS QUARTER?” but then I’m always suspicious of big biz.

By Steven Hutton on Jul 22, 2008
Put yourself in the shoes of an investor. Give a game company large sums of money then wait anywhere up to four or five years before you see any kind of return. Close to release you’d be pushing that thing out the door too, bugs be damned. Get us money now and fix the bugs after people are paying for the game!!

That’s the investor side. I’ll let other hardcore guys pay for the game to make the investors happy. I’ll pay when it’s enjoyable to play.

By Blackwings on Jul 22, 2008
I was just thinking today that I really hope he sees big returns in his quest for excellence — it could be a say day for the industry if he didn’t.

By boatorious on Jul 22, 2008
With an MMORPG quality and success (and therefore investor happiness) go hand in hand. Blizzard created a quality product and have reaped the financial rewards, whereas apart from the initial purchase of Age of Conan, Funcom have made no extra money from me, and from what I have read I am hardly alone in that. It will be the same with WAR, if Mythic deliver a quality title they will get more out of their customers than the initial purchase price.

By sathias on Jul 22, 2008
This goes right along with my whole distaste for our current corporate culture. The real money, the profit comes from the customers, from selling a good product.

But it’s the shareholders that make all of the demands and these days they’re just interested in a flip for their personal gain, they don’t really have much interest in the longterm goals or health of the company. Just look at the whole Microsoft vs Yahoo vs Icahn fiasco.

One would hope some of these CEOs, COOs and shareholders would see the examples in the industry where patience and quality has paid off (Blizzard) and come to their senses.

I seriously think the best contenders in the long run for this industry could be privately owned businesses, but the problem with that theory is the lack of investment lately in private enterprise.

We’re living in an era where the entire economy is about speculation. =/

By Rog on Jul 22, 2008
Is it bad that this morning I read this as him not giving a ‘t-shirt’ and for a moment felt a little sad that there would be no t-shirts

By arbitrary on Jul 23, 2008
If you are investing in game development, and you look at something like WOW, which is a giant money maker (they have 50% margins… meaning 50% of all the revenue they receive go to the bottom line).. and you also have the example of a string of other titles that didn’t do nearly as well. No one would, if given a choice, take a little more profit now… as opposed to waiting a little while and having a major hit.

However in real life it isn’t so cut and dry. You have money invested and the software guys are making promises and they keep missing their projections.. they say 2007 then spring 2008 then fall 2008… when does it end! At some point you start to believe that unless you draw a line in the sand the software guys will never deliver anything… As an investor you knew this was a high risk situation… are the developers trying to get a perfect product that will never be finished… Will the project be delayed so long that the buzz will die out and the market dry up…

Unfortunately you only really figure this out in retrospect.

By Frank on Jul 23, 2008
This is a bit of a tangent, but I think the financial reality is that Mythic has to release WAR some time in the early-mid Fall. Putting it off by a few months and going head to head with WotLK would be suicidal. The closer to the launch of WotLK WAR launches, the more their hype is going to be drowned out by Blizzard’s. The only other option would be to wait until 3 or 4 months after the launch of WotLK, when many players will start to become bored with it.

I think this also explains why the cities and classes were cut to focus on the rest of the game. Mythic has to balance a trade-off between 1. having enough content in game that players will be entertained for at least a few months, and 2. having the content that is there be polished enough that players won’t get pissed. They also need to launch the moment they hit the sweet spot between those two considerations, not only due to WotLK, but also because EA is bleeding money for every quarter the game is not generating revenue.

I think that regardless of what they are saying, Mythic figures the best way to hit that sweet spot while the bulk of former or current WoW players are bored and looking for a new MMO was to cut the cities that weren’t up to snuff (and classes they were having trouble balancing) and focus on polishing the rest.

By Yeebo on Jul 23, 2008
I agree with Yeebo, the longer that Mythic waits, the more players they will lose to WotLK. Too many WoW players are in a state of limbo waiting for new content or a new game.

By Fester on Jul 24, 2008
The return a gamer gets on his $14.99/month investment is entertainment. If we play a game for 10 months and then quit, we have received 10 months of entertainment. On the other hand, if an investor provides resources, and the game flops, what was his return, other than debt? :p

By Earnest Dodge on Jul 25, 2008