Microsoft and game software developer Electronic Arts (EA) announced changes in the upper echelons of their executive suites Tuesday. Peter Moore, the chief architect behind Microsoft’s Xbox 360 gaming platform and the Xbox Live online gaming site, will take the helm at EA’s sports division. Meanwhile, Microsoft tapped Don Mattrick, former president of EA’s Worldwide Studios, to lead Microsoft’s Interactive Entertainment Business (IEB).
No stranger to the gaming industry, Mattrick, who has been acting as an advisor to Microsoft since February, brings some 23 years of experience in the gaming industry to his new position there.
“Peter has contributed enormously to the games business since joining Microsoft in 2003, and we are sad to see him go,” said Robbie Bach, president of the entertainment and devices division at Microsoft. “Since that time, he presided over the global launch of the Xbox 360, spearheaded a revitalized and rebranded Games for Windows business, and helped steer the console’s ascent.
“While Peter will certainly be missed, we are delighted to have one of the industry’s most talented and passionate veterans on board to lead the business,” Bach continued. “Don is well known and respected throughout the industry for his deep knowledge, technical expertise and management savvy. Under Don’s leadership, the games team is looking forward to embarking on our biggest holiday ever, with a wide-ranging roster of some of the most highly anticipated titles.”
Snaring Moore did not come cheap for EA. Moore will receive a base salary of US$550,000 annually, with as much as $412,500 in yearly bonuses, according to an 8-K form on file with the Securities and Exchange Commission (SEC). The compensation package also includes a one-time signing bonus of $1.5 million “in recognition of the future compensation value he would be foregoing by leaving his position at Microsoft,” $330,00 to cover his moving expenses and a stock option to buy 350,000 shares of EA stock in addition to 50,000 restricted stock shares.
“Peter Moore’s proven record of leadership in games and sports makes him a terrific fit for heading up EA Sports,” said John Riccitiello, EA’s chief executive officer. “As a partner at Microsoft and earlier, as a competitor, we’ve learned to respect his vision and leadership.”
Moore, Microsoft said, will stick around the Microsoft complex through August to assist in the transition and will leave Redmond for the San Francisco Bay Area in September to assume his duties at EA. Mattrick, whose name was on the short list to become EA’s president but left the company in February, moves into the top gaming spot at Microsoft July 31.
Both EA and Microsoft are in relatively good positions in the video game industry at the moment, Joe Laszlo, a JupiterResearch analyst, told TechNewsWorld.
“Despite some technical issues with its console, Microsoft has been executing extremely well with the Xbox 360, and really the main strategy for Microsoft now — as it has been for a while — is going to be about continuing to ensure a flow of great games for the console, both offline and online.”
No Big Waves This Year
The industry will not see any affect from the executive changes until the start of 2008, Mike Goodman, an analyst at Yankee Group, told TechNewsWorld. For Microsoft, the holiday strategy for the Xbox is set in stone until the end of the year.
“2007 is locked in,” Goodman explained. “That’s part of the reason for the timing here is that all those decisions are locked. It is a good time for a transition because at this point in the year, 2007 is set, which gives the incoming Xbox exec a window of opportunity to get his feet wet before he has to start making major decisions.”
“The only real important decision that has to be announced is when they are going to enact their price cut,” Goodman said. While the official word has not come down from Microsoft, Goodman said the company will likely lop about $100 off the Xbox 360 price tags, and that could happen as early as August.
“It makes perfect sense. They’ve been at the same price point for about two years now, and everybody knows there is a price cut coming. The question is when they are going to do it,” he said.
“They missed their unit sales number [of 12 million consoles sold] for this quarter. It clearly indicates the need for a price cut because they have tapped out the market at the existing price point. Every price point has a certain number of sales in it, and it is clear the current price point is tapped out. But there is ample opportunity to continue to expand the marketplace for Microsoft,” Goodman continued.
Better Shape Than He Found It
Moore, Goodman stated, leaves Microsoft and its gaming division in better shape than when he arrived. “The installed base of the 360 is higher than the Xbox was at a similar time in its life cycle. Live is going gangbusters. The expansion into digital distribution has been incredibly successful for Microsoft. There are a lot of good things happening there,” he noted.
As Mattrick assumes the position, his marching orders will be to continue to expand the Xbox 360’s installed base and continue innovation in the Xbox Live site, according to Goodman. Price drops alone are not the answer for continued strong sales of the Xbox 360 — compelling games such as “Halo 3,” scheduled for release this fall, are the second component.
“They have sort of the same problem they had last year,” Goodman explained. “They have software coming out, but really the late spring software there hasn’t been anything to move the market. They haven’t announced it, but they have some new things coming out in the fall and over the holidays for Live. So we’ll have to wait to see what that is. But they continue to innovate and make Live better — that’s a given. They need a price cut and they need software that will drive the market.”
The executive shakeup should re-energize EA’s sports division, which has in recent years relied heavily on its “Madden NFL,” “NBA Live,” “FIFA Soccer” and “Tiger Woods PGA Tour” franchises.
The challenge for EA, Laszlo explained, is that at some point even ardent fans have to realize that buying the new installment of a longstanding line like “Madden NFL,” does not really make a lot of sense, regardless of the game’s quality.
“While team rosters change, the gameplay and graphics capabilities just can’t improve all that much. If or when sports gamers do cool on that idea, it’s up to EA to come up with either new sports titles, broadening their library — maybe offering more simple games for time-challenged consumers or delivering games designed for Nintendo’s Wii — or else EA needs to innovate around the premise behind the big franchises, creating novel reasons why gamers really will want to go out and buy a new ‘Madden Football’ or ‘NBA Live’ every year,” Laszlo opined.
EA “needs a little new blood, some outside-the-box thinking to reinvigorate sports,” Goodman added. The sports division is still a huge driver for EA and is by no means in any sort of trouble, Goodman stressed. However, it has grown “complacent,” he said.
“‘Madden’ is clearly the cornerstone of EA Sports, but even ‘Madden’ doesn’t push the envelope the way it did in the past,” he pointed out. “It’s possible they have pushed the envelope as far as they can, but at the same time, bringing in somebody new has the potential to reinvigorate it.”
Moore, a former Sega executive, knows his games and has a bigger challenge at EA than he did at Microsoft, Goodman added. In an industry where exclusive deals have reduced competition and led to a lack of innovation, this could be just what EA needs.
“Sometimes you have to break in some new blood to get people thinking differently,” he continued, especially as the company undertakes the challenge of designing games for the industry’s current “it” console, the Wii.