EA: Console 'Arms Race' Turns Cold

According to Electronic Arts' CEO, John Riccitiello, the console "arms race" is subsiding. He said in a conference call following EA's earnings report that the publisher sees no need for platform holders to make a full leap to a new generation of hardware in either the immediate or medium term.

Riccitiello noted that HD gaming, which can require a massive cash outlay for a monitor, has already been provided for.

"I think that arms race, while I can never say that it’s done, the relevance of doing that faster and faster as it had been traditionally done in the late 80s and 90s, seems to have subsided, and so we are projecting relative to the core tech we developed for, for that to be a very extended cycle", Riccitiello said.

Is it just us, or is there something a little lukewarm in Riccitiello's comments about the console business?

The publisher also noted that PC gaming, which provides more gradual hardware change, is a growing part of its business, putting emphasis on the opportunities afforded by digital distribution. John Pleasants, COO and president of global publishing, noted that, "Our online part of our business is growing as much as 60% year over year.

"...the way we look at a lot of what’s happening in the future is we’ve got probably about a billion PCs that are out there in the world... Very rapidly, the PC is becoming the largest gaming platform in the world -- just not in a packaged good format."

Pleasants said that the growth of digital distribution is going to open up new demographics, new territories and "new types of game play".

It should, of course, be noted that PC gaming includes everything from Crysis down to online Sudoku, so growth on the platform is not necessarily in core gaming. It should also be noted that EA's main third-party competitor is Activision Blizzard, a company that arguably has its biggest success in online gaming with World of Warcraft and the rest of Blizzard's portfolio. EA needs to make a push in that area.

On that front, Riccitiello also noted that, "We also plan to introduce two additional online subscription services later in the fiscal year." Further details were not forthcoming.

The subtext in all that seems to be that EA doesn't want new hardware to develop for (and all the R&D costs that go with it) any time soon.

With all this talk of a lengthening console cycle and growth in PC gaming, the elephant in the room that EA neglected to mention was OnLive and cloud-based gaming. The company was even asked about it as part of an analyst's question, but somehow forgot to answer it. That's despite having said that it will support the platform.

That service, if it works, will remove the need for new hardware as all processing will be done by remote server farms. Interesting times...

^{Source: Seeking Alpha}