John Riccitiello

Electronic Arts chief executive John Riccitiello, a keen gamer, must have that stuck-on-the-same-level feeling after the video game publisher’s latest results.

He returned to EA in April 2007 with the task of improving an underperforming giant of the industry.

Instead, the company has continued to lose its lustre as a hit factory and has also lost its position as number one, due to the merger of Activision and Vivendi’s games division.

The CEO has succeeded in improving the quality of existing franchises and has introduced innovative new titles.

But EA lacked blockbuster hits in the holiday season and some of its games were shunned by retailers – consumers were confining their spending to top-ten hits and games for the Wii, where EA has been under-represented by its standards.

This all added up to flat sales in the December quarter , reported on Tuesday, when the industry as a whole saw North American game sales rise 15 per cent. EA reported a $641m loss, which included a $368m writedown of its investment in its wireless business.

EA has always had a reputation as a big spender that has pursued every platform for its games, but that is about to change.
Mr Riccitiello said he was cutting half a billion dollars from previous expectations for operating expenditure in the next financial year beginning in April, with the aim of reducing it to $2.1bn.

That would be achieved with the help of a 14 per cent cut in versions of its games, the closure of 12 facilities and a cut of 11 per cent – or 1,100 people – in its workforce.

The Sims 3, a much anticipated game due later this month has been pushed out to June and other significant titles, Godfather 2 and Dragon Age are also being delayed until the next fiscal year.

EA will concentrate on core titles and redouble its efforts on the Wii platform, where games such as its Playground and Boogie were poorly received.

The giant appears humbled – Mr Riccitiello said its marketing department would spend more time wooing consumers – but getting its costs under control is an important first step in any recovery, and moving on to that next level.

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