EXCLUSIVE INTERVIEW
EA's Schappert Has Eye on Gaming's Future

With a new generation of video game consoles, increasing online game play and distribution, cross-platform development and play, in-game advertising and more, there are earth-shaking changes going on in the video game industry.

Competition among game publishers is more heated than ever, which means a smart strategy, future-focused perspective and staying ahead of rivals is critical for success .

TechNewsWorld sat down recently to talk about the new gaming landscape with Senior Vice President and General Manager of Electronic Arts (Nasdaq: ERTS) Canada John Schappert, who oversees the largest interactive game studio in the world. Schappert also manages EA Chicago and EA Tiburon, and has oversight of programming, artwork, audio, research and development, quality assurance and strategy for EA's popular sports and other titles.

TechNewsWorld: What is the biggest difference in the video game business today compared to five years ago?

John Schappert: It's a much more complicated time in the video game industry today. You have connected consumers, mobile games are taking off, and handhelds have a huge install base and are both in-depth or casual game experiences. The next generation of consoles can deliver so much more, but that makes it more complicated to develop for them and challenges game development teams to innovate both on game content and design -- and on the technology that powers the games as well. New markets are opening up as you see greater penetration in European emerging markets, as well as all the growth potential for games in Asia.

TNW: How do you see the opportunity and challenge of the next-generation consoles from Microsoft (Nasdaq: MSFT), Nintendo and Sony?

Schappert: Microsoft's Xbox 360 has such a comprehensive Marketplace and online connected feature that really brings gamers content and competition like never before. Whether it's downloading a demo for a highly-anticipated title or connecting with other players through the EA Sports Nation via Xbox Live, the high-definition game play and powerful machine offer a lot for consumers.

Nintendo has both the DS and the upcoming Wii as two pieces of disruptive technology. We're really excited about what we have in development on the Wii, taking advantage of the innovative controller. Whether you're throwing a pass on ['Madden NFL'] for the Wii or you're going to punt the ball, you've never played 'Madden' like this before.

The power of the PlayStation 3 and the growing lineup of the PSP demonstrate how robust Sony's (NYSE: SNE) hardware offering is. We're just at the tip of the iceberg for harnessing the power of the PS3 and you'll see games evolve over the lifetime of this platform.

The biggest challenge is having enough resources both in talent and dollars to develop the best possible games for each of these hardware systems, as well as for PC, mobile and legacy hardware ... like PS2, Xbox and GameCube.

TNW: Has cross-platform development -- for consoles, PCs, portable and other devices -- gotten more difficult in the last year or two?

Schappert: While cross-platform development has gotten more complicated as the machines have all gotten more complicated, you are actually starting to see some cross-platform game play. Some portable devices allow gamers to play smaller games that then upload to the console and improve a player's stats or images. The best is yet to come in cross-platform development.

TNW: Has online distribution of games impacted EA's business and strategy?

Schappert: EA continues to make content available to consumers via digital distribution through our EA Downloader. This is still in its nascent stages, but is an additional way to complement the retail experience for consumers wanting supplemental game content or expansion packs. We will continue to build on this strategy .

TNW: What about online play, and cross-platform compatibility for this area?

Schappert: Online play continues to be of growing significance. We're seeing close to 50 percent online connected consumers with the Xbox 360. Sony's PS3 should also have high online numbers and PC connectivity continues to thrive. There is some cross-platform compatibility in online, but what you see more of is robust online offerings. For 'Madden' there are so many different online offerings for players, whether it's real-time customized ESPN sports stats, match-making, tournaments, and the community overall within the EA Sports Nation.

There's continual awareness that [massively multiplayer online (MMO) games] like 'Worlds of Warcraft' continue to have a lot of potential. And in the casual space, Pogo.com and the subscription site Club Pogo are seeing huge success. Club Pogo has more than 1.26 million paid subscribers playing word, puzzle and original casual games on the site, while they actively participate in the Club Pogo community.

TNW: How significant are new forms of advertising that may be appearing in the latest video games?

Schappert: In-game ad integration is a growing business where we see both advertisers and consumers looking for more. It's an additional revenue stream that is still small, but growing. There's the potential for scalability in this area with dynamically-served ads. It's still in the early stages [in terms of] how in-game ads will grow in significance. That said, the gamer comes first. It's about organic ad placement, adding authenticity and not interrupting the entertainment experience.

TNW: What is EA's biggest area of innovation?

Schappert: EA has a huge focus on game innovation, whether it's new intellectual property and game experiences like 'Spore,' or 'Army of Two' coming out of our EA Montreal studio, or feature innovation within beloved franchises like 'Madden' and 'Need For Speed.' There are so many different ways for innovation to come to fruition. Innovation is how we're making our Wii titles, and integrating new technologies like Universal Capture (U Cap) for graphic fidelity to the game like never before. There are so many directions for innovation in the video game industry right now, it's a very exciting time.

TNW: How do new game concepts come about, and what happens to them before they become a real game?

Schappert: At EA we don't lack ideas, but it's very difficult to take an idea we have and grow that idea into a full game and possible franchise. Ideas come from all areas of the company. Ideas that stick are then worked on by a team as small as two people. As they continue to flesh out the idea the team may grow to a handful of people. As the original game designers pass milestones and the title continues to gain support and funding, the team grows. And from there deliverable dates and milestones are set, and throughout the lifetime of the game development process there are numerous, numerous review stages along the way.