Electronic Arts Company is the world's leading interactive entertainment software company.

According to it's video game designer Will Wright entertainment industry and videogame software development industry are moving rapidly into an era of revolutionary change.

There is a need in creating new forms of entertainment like video games movies and even toys, investing money into research and development of strictly online games, downloads.

Only in this way according to John Talor, an analyst at Arcadia Investment Corporation, the company may gain significant competitive advantage, otherwise there is a threat of loosing it's competitiveness in the industry market.

 

The history of Electronic Arts, videogame software development industry

      Electronic Arts is a company established in Redwood City, California, is the world's leading interactive entertainment software company. The company was founded in 1982, and nowadays it develops greatly. Electronic Arts Company publishes, and distributes interactive software worldwide for video game systems, personal computers, cellular handsets and the Internet. EA, EA SPORTS, EA SPORTS FREESTYLE, and POGO are registered trademarks of Electronic Arts Incorporated in the United States of America and other countries. Electronic Arts' company offers it’s homepage and online game site - www.ea.com. 

      Will Wright the video game designer who created such hit-games as The Sims glorified as the best-selling PC game of all time, with more than 100 million units sold around the world, is leaving game publisher Electronic Arts Inc. after 12 years to lead a company called Stupid Fun Club which he started in 2001 to develop new forms of entertainment like video games, movies and even toys. Will Wright states that the entertainment industry and videogame software development industry is moving rapidly into an era of revolutionary and radical changes. Will Wright also claims that Stupid Fun Club Company will explore new possibilities that are coming up from this majestic chaos and create new forms of entertainment on a variety of platforms which are the underlying drivers of change in the videogame industry (Jensen, 2009, p.110).

      Will Wright as well as the Electronic Arts Company is making an equal investment in the Stupid Fun Club Company and apart from this both, Electronic Arts and Will Wright own equal percentages which makes them the main shareholders, however the exact amount of money invested in the company has not yet been brought to light.

The very strategy change follows Electronic Art’s mixed results for highly touted licensed games such as "The Godfather” and also the James Bond game "From Russia With Love.” If Electronic Arts Company is right, it could deliver and expect on its plans to grow even bigger as a multi-billion-dollar publisher of video games, become more competitive and remain independent in a world of entertainment conglomerates. If it’s wrong, rival game companies and even the Hollywood movie studios themselves could knock Electronic Arts off its perch at the top of the $25 billion game industry.  It isn’t clear how well the very strategy will work. Electronic Arts has disappointed investors several times in the past couple of years, partly because it has had to spend so much money making games for the next-generation game consoles in 2007. Much of that expenses and costs went toward creating brand new titles (Pham, 2008, p.17).

      John Talor an analyst at Arcadia Investment Corporation affirms that shareholders are going to reward the company much more on what it creates on its own than what it rents. He also added that Electronic Arts Company is one of the few companies in a position to take a risk on something unique. What is more a lot of licensors are exercising more control over the creative process than what licensees appreciate. Electronic Arts Company will still have a balance of important franchises and licenses such as its deal with the National Football League in football games and the rights and permitions to create games based on the Harry Potter novels. But it has given up rights to the James Bond franchise and will forego and give up deals for one-time movies such as Catwoman, the Haley Berry film that bombed the society both as movie and as a game. Electronic Arts Company built its entertainment business on licenses with figures such as celebrity coach John Madden, whose pudgy face has been used in millions of Electronic Art’s games. The strategy worked in the days when it was hard to get noticed on store shelves (Sinclair, 2007, p. 10).

       Executives at other companies such as THQ and Activision say that pushing too far toward original games is risky. Robin Kominsky, executive vice president at Santa Monica-based Activision, notes that most of original titles fail. His company can afford to try a couple of new games each year, but it relies on franchises like "Spider-Man” for guaranteed hits. He also added that everything that is succeeding in the entertaining market is not original intellectual property. And while developing new International protocol the top management has to be very thoughtful of it. But Electronic Art’s change has parallels in the change from high-paid actors for TV shows to low-wage reality TV stars. Shaving saving costs is important now that it takes $10 million to $25 million to create a game for the new consoles. With growing technical complexity, it isn’t easy to finish games on time. Electronic Arts Company had to delay the release of "Superman Returns” game from the summer to the fall. That meant the game couldn’t come out at the prime moment when Warner Bros. Company launched the blockbuster film.

Another risk is that Electronic Arts Company could move further away from Hollywood at a time when the business demands convergence. Star Wars film creator George Lucas’s game company, Lucas Arts, is collectively developing technology for animating characters with Lucas’s special effects house, Industrial Light & Magic, to create digital characters for movies and games at the same time which for sure is a significant step forward.

Swot analysis results

Overall the situation in Electronic Arts Swot analysis ,which is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture and involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective, revealed  the decreasing gamers attractiveness in Electronic Arts  in the year 2007 and showed that the companies prospects were not as terrific as the top management seemed to believe (Plunkett, 2007, p. 136).

The opportunities of the company are represented by putting more money into research and developments of strictly online games, video games, downloads, and add ones as an opposition to cartridge games. Taking everything mentioned above into consideration it is important to stress the necessity of the company to present itself as a reliable online developer and only this way the company may have a significant competitive advantage in the entertaining industry market.

References

1. Alex Pham. (2008, April 17). Electronic Arts Incorporation. Los Angeles Times, p.17.

2. Brenda Sinclair. (2007, June 10). Electronic Arts Company. Camloops Daily News, p.10

3. Brian Crecente. (2008, May 22). Electronic Arts. Business Wire, 290, p.125-126.

4. Jeff Jensen. (2009, March 24). Computers and video games. Entertainment Weekly, p.110.

5. Luke Plunkett. (2007, July 23). Electronic Arts Software Industry. Computer Weekly News, p.136.