EA: Development Cost Leading to "Creative Failure"

In a surprisingly frank keynote at the DICE (Design, Innovate, Communicate, Entertain) Summit, EA CEO John Riccitiello said that high development costs are driving consolidation and leading to “creative failure”.

"The first thing I want to talk about is the rising cost of development", said Riccitiello. "It's putting pressure on everyone... It's also leading to industry consolidation. It's leading to developers being bought by publishers and publishers disappearing. It's leading to creative failure. The organizations are not coming together in a good way, and we're getting less creative, less innovative products."

He went on to say that the industry needs, "a new model for how publishers in the future can deal with these problems."

He believes that the games market has become a tricky place for small, independent developers, saying, "If you're a small studio doing a title every year... you probably find yourself in a pretty dangerous situation, and it's got to be tough, and the cost of failure has got to be very high... all but the rarest of developers are on the edge. It's create a hit or else. This gives rise to consolidation.”

For the companies that have already seen consolidation, however, it's less of a problem. "Companies like Activision, EA, Sony, Microsoft, companies like this have the opportunity to invest, we can create the space," he explained. "We can create Spore because we've got that backdrop from the franchises we put out, like Need for Speed and Madden."

The upshot, Riccitiello believes, is that smaller companies will be absorbed or squeezed out. "I think that there are going to be fewer major publishers in 2010 than today", he stated, "and the second tier players are going to thin out pretty significantly. Market share controlled by those few publishers will increase in 2010 compared to today."

Referring to EA's acquisitions of Bullfrog, Origin and Westwood, Riccitiello said, "Something broke, it didn't happen as we or they dreamed it. I would state simply that we at EA blew it, and I was involved so I can say I blew it." The reason, Riccitiello said, was that, "We had a top down approach to creative development."

The solution, at least for maintaining creatively successful studios, is a label model which treats different arms of the company as "city states", according to Riccitiello. "These city states are more about who they are individually than they are part of EA... The heart and soul of what our company is with the developers who create the products because without that we are absolutely nothing."

The impact of budgets and consolidation has been high on the DICE agenda this year. Last week, SPOnG told you how Mitch Lasky, former head of EA Mobile, branded Sony and Microsoft "innovation killers" for the high cost of development for their platforms.

^{Source: Gamasutra}