Discussing The History Of Electronic Arts Foundation Information Technology Essay

Electronic arts was found in 1982 .It has gone on to become the front runner in developing and publishing video game software. Towards the end of the 80’s, the company started out by building in house games. Then in the 90’s, it shifted to a console supported mode. By the beginning of 2000, the company headed on to become the leader in third party publishing. It is headquartered in Redwood City, California. In the late 1980s, the company began developing games in-house and supported consoles by the early 1990s. EA later grew via acquisition of several successful developers. By the early 2000s, EA had become one of the world’s largest third-party publishers. Since the birth of the company, it has gone on to receive more than 700 awards in the software industry across Europe and US.

Company Profile

The company products are transported via the physical media which are in turn distributed. They also provide online services and contents of games straight to customers should they choose to pay and download them. They operate various development studios throughout the world – the prime locations being the United Kingdom, United States and Canada. The Company is sub divided into three categories:

EA Label (Games, Sports and Play)

EA Interactive

Global Publishing

EA Label

The EA Label is sub divided into three segments – EA Sports, EA Games and EA Play. The EA Games domain is made up of fully owned properties and involves franchising with games such as Battlefield, Need for Speed etc. Dragon Age and Dante’s Inferno are titles which are there and there abouts . This is the day and age of multi player gaming and the company recognizes this by massively increasing multiplayer games over the internet. This has attracted more than thousands of web savvy gamers. EA Partners Groups is also a sub section of EA Games which liaises with third parties to provide publishing, assistance and distribution of games. The EA SPORTS Label comprises of sports related video games .The graphics are its forte along with the legal rights to use players and team names as they are. This recreates an entire arcade gaming environment. Some of the more popular games are NBA Live, FIFA Soccer and Madden NFL Football. The EA Play label primal area is on targeting hard core gamers as well as the newbies. It is meant to be for people of all generations – to give them a whiff of the action .This can keep them interactive and their grey cell running for periods of time .The popular products in this segment are Harry Potter , The Sims etc,

EA Interactive

The EA Interactive segment is closely linked to the Global Publishing division. Its area of work is confined to creating interactive games enabled for mobile phones and the internet. Its is constituent of Pogo, Play fish and the mobile section. Through the mobile world , consumers can download games by paying a certain amount through the service providers application which in turn gives them the access to begin their gaming experience .The Company makes its games for this particular segment largely in EA Mobile develops games for mobile devices internally at studios located in Australia, India and Canada. They also have a faction in other countries to further develop and enhance their games. Through the Playfish Service, the company offers more games on the social lines like Pet Society, Country Story and Restaurant City .The advantage of such a service is that it is integrated with media applications and social networking sites like Facebook , Android ,Google and MySpace. The consumer base for this particular set of application drew up to almost 46 million. Through the Pogo Service, the company offers puzzles, crosswords and other word games. The number of people playing Pogo was as astounding 1.6 million till about a couple of months back

EA Global Publishing

Through their Global Publishing Organization, EA is accountable for the other aspects of its products like sales and distribution. It channelizes its efforts in assuring that quality checks, certifications, outsourcing activities etc are all kept in check. The efforts are to ensure that the games are published and distributed all over the world. The Global Publishing Company is primarily based in Redwood for North America. They also have various distribution areas, the famous one being situated at Kentucky . The operations are also spread out to offices in Switzerland as well as Europe, Australia and Asia . Warehousing becomes an important component and for this very reason , EA has offices set up across Europe mainly in Switzerland and Germany . One of the clinchers of this section was the capture of Play fish in the November of 2009 . Apart from gaming , Playfish engages in syncing up with social networking sites to indirectly help in selling online content and do a bit of advertising on the web as well. They have also building a strong semblance with Sony . Sony Computer Entertainment has been given the rights to sell their products along with their various consoles like PSP, Play station 2 and Play station 3 .It has a strong endeavour in supply chain activities. They have also tied up with Microsoft to allow them to distribute games which are compatible with the Nintendo and the Xbox 360. The terms of agreement allows them to distribute games on disks and or cartridges. They made a significant breakthrough in the summer of 2010 where they signed up with Warner brothers to launch their two games on the Harry Potter series and the Deathly Series just as the films were going to be released. This was a masterstroke in capturing the moment. In terms of packaged goods, all of the above mentioned tie up companies becomes competitors. The focal point is on developing and publishing the software for the respective consoles. The other competitors for EA come in the form of the companies that develop portable games. Some of the more prominent ones are Sega, THQ, Disney and Fox . Another outlet of competition to them comes by the way of mobile applications provided by other companies such as Namco and Capcom Mobile. The multi player gaming segment has companies like Sony, NC Soft and Atari. Other providers and nowadays even messengers like Yahoo and MSN have come up with their own versions of online gaming .

Current Strategy

EA Sports started off in time when technology was almost nonexistent. The inventions and innovations with technology has help EA grow phenomenally as an organization. Initially technology was only limited to functions such as ERP models catering to payroll, word and maybe some other dashboard creations. It was only in the early 1990’s that technology started to become a major force. It was then that it became important to integrate the companies with the latest in information technology to have a sound business. To reach the heights of success, many a companies started formulating strategies out of technology itself.

The changes with respect to technology have been huge. The traditional methods have now been changed and delivered to the closely knit technological world. Strategy is the core competency of all organizations and the change was made gradually with the emergence of the IT industry. Enhancements have become the order of the day with the changing needs and wants of the customers. Thus, companies had to adopt to change to main their competitive advantage. Supply

chain was significantly bettered which results in improvements of the quality of products.

All these were welcome changes for EA Sports modus operandi. The workforce at EA sports was already knowledgeable about technology and it use . They also had a good sense of business . This deadly combinations helped them break the barriers of technology without much difficulty . Hence their customers were satisfied and trusted the company and its products. Hence efforts were increase to further tap up the technological innovations that were coming up in the gaming industry and merge it with the business to work out the best possible model. This would ensure sustainability in competitive markets at least for some time to come.

EA realized quick enough that to be a market leader, they would have to go one step further . The goal was not only to satisfy the customer but to offer them the little extra . Thus the onus was changed to attain customer satisfaction. The company started out by reach to customers and asking them for feedback about games, understanding their requirements and studying the various change methodologies to be implemented accordingly. They tried to maintain a perfect balance between between business and technology which proved to be crucial in the long run . To make sure that this was happening effectively, a strategy team was built up to investigate the various models that would take the company ahead in the future in lieu of the changes .

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Change Manifestation

Integration and Innovation

Integration and innovation are the key components in today’s world to stay put in a particular market. EA needed to be ahead of the surge to gain one over their rivals in an increasingly penetrative market and this could be achieved through the combination of both innovation and integration. The second half of the 1900’s saw a change in the market with respect to the computer industry and the demand grew for people working in software’s, applications and databases(Hiatt 2003). Hence there was confusion everywhere with companies trying to integrate technology to their innovations. Technology spread its wings to all areas right though all levels of employments and became the focal point of an organization. Hence as the software industry grew , EA benefited from it hiring skilled resources who preferred working in technology rather than others walks of life like medicine and architecture.

Business for Service

The use of information technology has been on the upward trend in the industry in terms of usage(Hiatt 2003). The onus on management was less giving the anomalies and the requirement for high skill base employees. It became paramount for the organization to maintain the perfect balance between customer requirements and the technologies available. The new model was built around the company offering interested parties the chance to franchise their brand and build on from there. In this case , the company was not only selling its video games and providing other gaming experiences but also putting itself up for the grabs as a brand franchisee.

No other competitor had a strong hold of the IT industry apart .EA could use this in their favour to a large extent. The models previously used were built around only one aspect of the business which was the service point for the company. The revenue streams were more or less confined to this model. There was the opportunity to tap into the operational side of things in order to increase profits. This has gone on to aid EA to become the large player in the video games industry with its constant integration efforts as well as it strategic operations efficiency.

Infrastructure

The markets began to witness winds of change in the mid 90’s as the focus shifted to personal computers. Several computing models were installed which were interdependent on personal computers(Hiatt 2003) . Slowly the networking and distribution services improved and EA caught on to it. They made use of exclusive database services to extract out data on customer requirements and proceeded with enterprise planning activities. Systems which were used for other purposed were upgraded and used as databases to manage the levels of transactions. The introduction of the advancement of technologies in mobile phones, gaming consoles, PDA’s and other appliances benefited EA in their diversification plans. This then led to the emergence of a new set of appliances into a new software advancement which was long time coming and known as Middleware. Middleware is a software putting together processes and in built applications. The growth of Middleware has been rapid and helped EA to integrate its services more efficiently. This has helped EA enhance its products and thereby achieve a good amount of success in the market.

Competition

Most companies suffer today from lack of standards on meeting expectations. Customer need and wants set these standards and companies need to understand how to fit these requirements into the various architectural models(Hiatt 2003). EA Sports used to initially dwell around a strategy in limiting itself to building video games and providing patches in upcoming versions. Recently they have moved towards expand their new products in partnerships with fellow companies to hold one over competition. They are sticking to their core competency but also concentrating on other areas which will help them sustain in times of adversity. This is paramount in times of global recession.

The combination of the above mentioned models will help in creating something that will contribute to an effective functioning system. The cultural roots of the organization improve considerably with time. The company is always performing environmental scanning through this process and keeping a close eye on competition. The best part is that changes can be incorporated without much of a drastic change in the system. Thus, the concentration could be on conjuring up new ideas and best practises. Up and coming talents could be recognised by regular rewards programmes.

SWOT Analysis

Strengths

Electronic Arts Games is a pioneer in gaming technology. They are engaged in developing, marketing, publishing and distributing software for video games. Some of their key console associations include Sony Play station, Microsoft X-Box and Nintendo Wii. They also cater to the portable gaming segment with Sony PSP, Nintendo DS and the Apple I-pod. The computer and the mobile gaming fraternity also benefit from EA’s products.

EA Games has diversified into segments within gaming like EA Sports, The Sims and EA Casual Entertainment.

EA Games focuses on research and development and in good stead. They have come out with high definition games like adventure, racing and football games being one of their marquee products. Their innovation with the role play games have been an instant hit worldwide.

They have successfully catered to the simulation gaming segment through their Sim label. Users get a taste of something as good as the live action. The popularity has help them to reach an astronomical 4 million homes.

The EA Sports brand has made sport related games ranging from soccer (FIFA) to football (NFL) to Golf (PGA Tour). This is the main source of income for the company amount to a 43% share of the pie.

The EA Casual Entertainment division has made education fun through the online gaming service they provide. Pogo has subscribers to the tune of nearly 1.6 million.

EA Games has been well associated with corporate social responsibility driving several donation programs, volunteering activities and charity work.

EA Games worked in sync with Hasbro in 2007 to provide the ultimate board gaming experience with Scrabble, GI Joe and Monopoly online. These games have been created for portable games, mobile phones and even computers.

Weaknesses

During the peak of recession, EA had to muscle down its workforce around the world by around 10% . They shut down nice publishing places and their very own studios. They had to let go of several key employees because of the inability to meet their budgeting expectations.

They cannot release their new games any time of the year. They are restricted to the holiday seasons and the time before and during major sports events. Misplanning on this front can potentially lead to adverse effects on the sale of their products. In 2008, EA, in a licensing deal with Hasbro, created a digital Scrabble game, which was a failure due in part to software problems.

Even if they use the best of technology and produce immaculate designs, the capabilities are always determined on the consoles on which they operate. Hence the limitations of these consoles lead to their work not being appreciated to the fullest extent.

The success of their products was not very well documented with only the NFL game (Madden NFL) make it to the top ten list of games in the year 2007.

Opportunities

In 2008 EA spread its wings to other markets by acquiring ThreeSF and J2MSoft to delve into Korean markets.

Providing infotainment specially to kids on sports and how to play them .

The United States army has come up with high end requirements for their simulation and training. EA have these instruments readymade and can contribute which will help them make some revenue while they are at it.

Making the games more interactive and developing on voice commands.

The can move more into the franchising and licensing industry and make more profits there rather than by just selling games .

Using their popularity in the gaming industry to come up with electronic products that can can be merchandized and sold and be a brand out of in coming years .

Threats

Despite strong sales in the last couple of years, the profit margins have been on the wane with negative figures overall . Their sales volumes earned them revenues in the region of $3.8 billion in sales but the profit margins were $454 million down.

Piracy has been a disastrous problem for the gaming industry and has been eating into EA’s profits . Some of the Asian countries do not have laws against piracy and this has led to emergence of fake CD’s market which has even spread globally albeit illegally.

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EA has strong interdependency on the gaming console industry. If the consoles are becoming less popular and on the decline, so do the games. Hence, profits and sales are heavily reliant on the success or failure of the consoles.

EA was faced with legal implications when it found out that they used the names and features of basketball and football players at the college level without proper authentication in May 2009.

EA have made themselves prone to the whispers of takeover. Their excessive firing during recession has led people to believe that the company many not be sustainable in upcoming years. They are not that big an organization to wade away potential offers and are likely to make a choice if a good deal comes along(Marketing Teacher 2010)

Porters Generic Model

Competitive Advantage

Competitive scope

LOW COST LEADERSHIP

DIFFERENTIATION

FOCUSED LOW COST LEADERSHIP

FOCUSED DIFFERENTIATION

BROAD TARGET

NARROW TARGET

Porters generic model helps the business understand the best strategies it can employ to deliver optimum results .This model specifically helps the organization gain a competitive advantage in the market place. It is a good factor in determining positioning of the organization. The model is redistributed into three main categories (Griffin 2008).

Cost Leadership

Differentiation

Focus

There has always been ongoing hard work to change EA’s competitive scope from a narrow target to a broad target. This places the company in the differentiation segment. EA has since been working hard to work its way through tough competition. This accompanied with its broader target objective raises its onus on focussing on a total differentiation strategy.

Leadership

Peter Moore (President)

Peter Moore took over the reigns as the President of EA Sports in September 2007. He was welcomed into the family of one of the biggest brand in sports as a strategy leader. His role includes overall product development, management of the overall product as well as the full proof planning of the web version of EA Sports. He brings to the table a good 25 years of leadership experience in the consumer product industry as well as entertainment. He was in charge of Xbox running the show for the games development section .He was also overlooking the business of SEGA in Northern America. He majorly and perhaps correctly influenced the decision to move the strategy to a more publishing area. He was responsible for marketing initiative campaigns and tied up with Dream Cast. He also has wide experience of marketing at Reebok managing a large number of employees in good times for the company (EA.com).

John Riccitiello (Chief Executive Officer)

John Riccitiello is the Chief Executive Officer of Electronics Arts. He was the initially joined the organization in 1997 as a Chief Operating Officer. He was the President of the company during the times of significant growth. During his tenure, the company increased its market share, build up its product portfolio and strengthened ties across the world. He was a founding officer at Elevation Partners which he joined after quitting EA in 2004. He handled the task of heading the entertainment and media sector. He rejoined EA as the Chief Executive Officer in 2007 (EA.com 2010).

Marketing

EA marketing strategy currently is to maintain its market share. They have to retain their position in the market whilst continuing to develop quality games. Part of doing this is via their marketing strategies and EA has captivated users and thereby made a good amount of profits in the past .They have worked in conjunction with AOL and this has helped then attain good results but its all about the matter of keeping up to those high standards already set . Continuing to anticipate the market can and maybe be a good idea going forward but maybe only good in the shorter scheme of things. Some companies have often failed due to this short sight in their marketing segment .Channel marketing is good but makes one’s business exposed to the outside world . This is where an organization may utilize its marketing strategies in order to be cost effective. The presence of EA Sports in the market place for quite some times has helped it to develop its own strategies with respect to marketing. They spend more than 50 million in 2004 for their advertising and marketing. They worked with different media channels, the most recent one being collaboration with a media house during the airing of a reality show. Electronic games are a constantly evolving domain with respect to technology and EA has well realized this. Hence, they have changed their marketing models in correlation with the constant changes in demand. To further improve their games, they have to research and understand consumer behaviour. This will help them to achieve a focussed marketing channel and thereby reduce costs. A typical example would be to monitor the traffic on the television as well as the internet. If the traffic is decreasing in the television side of things, then more money should be put in the Internet advertising aspects to best promote products. The best part of Internet advertising is that it facilitates to focus on customer segmentation. If they are targeting a niche group, then they can do so by advertising on sites related to that content but whereas if they want to mass publicize they can always use the Face books and the Orkuts. Another key aspect EA have got to work up on is retaining their old customers and also attracting new customers into the markets. The issue of innovation becomes a slightly tacky issues for EA . If they produce something ground breaking, they will be able to muster all the profits available in the marketplace. However, failure could spell doom and put a financial question mark on the status of the company. Hence the best way to confront the issue of risk is by partnering with a fellow company in launching a products and sharing both its success and failure. In the case of Electronic Arts , the viable thing to do would be to is to merge with one of the consoles like Nintendo in launching their products . One of their major successes thus far has been licensing games and providing customers with the ultimately experience. They should continue in the same vein since it is something that attracts more clients and helps them to gain profits .Hence the key focus areas of their marketing strategy should start off by obtaining licenses, analysing customers and using this as an input to create innovative games integrates with the best in technology(Neilsen and Ramly 2003)

Company’s Future Vision

Electronic Arts is sweeping the video gaming industry. Their competitors have struggled to keep pace and faced licensing battles in their quest to gain market share. This has given Electronic arts a bargaining power as a supplier since the consoles like Xbox 360, Nintendo and Play station are highly dependent on their games. They will look to gain more competencies in other genres of games. This has started off well with the Godfather collection on its way to becoming big. From Russia with Love is another game looking to make it big in the industry. EA is looking to build on its success in terms of graphics. This is a big way to differentiate their product from the market place. However, the most important thing is the strong emotional impact delivered to the end customer. They have to be involved in the way that the customer feels and thinks as well as reacts to things .For the not so hard core gamers, they are delving into the core feature of providing encore entertainment. They are also moving into the next generation motion and dynamic technologies. High definition is the talk of the town nowadays and EA have taken advantage of the fact. Resolution, colour fidelity and contrast are going to give gamers an experience like never before. There is a look on the online markets and advertising mainly on them. This is also done with a view of targeting a different segment of people through a proper social network. Every team in EA Sports in every part of the world has a person familiar with the film industry to assist them. This has been humongous in terms of quality and the actual graphics produced. The focus is also centred to be around 3 – D games and how those entities can be poached into . Next generation games are something that Electronic Arts will look to implement in upcoming releases. There are also going to be significant changes architecturally. This involves the condensation of the disk place in their forthcoming editions. This is instead going to move to processors in the wake of technology developments. From the employee’s perspective, the aim is to build a more creative community from an already existing one. The designers, graphics people and the artists are the best in the industry and keeping them knit as a unit to deliver the best will be amongst the priorities of the company (Gamespy 2005).

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Changes in Culture

EA employs developers in huge numbers in its main studios in Los Angeles, Redwood and Vancouver(Docstoc 2010) . The developers are split up into a number of projects and rotated around. This helps them meet tight deadlines for every patch or release. Thus the company can improve its ratio releasing more number of game titles every year .Teh organizational culture has made it a good model for reliability. But the problem with this approach is the apparent lack of creativity .So , one of the General Managers , Neil Young took it upon himself to to dwell on innovation whilst focussing on the areas of morale as well as the spirit of competition. For one of the new games – Medal of Honor built on the lines of the World War , he divided the staff into groups between 6 and 8 . He then gave each of the groups their cells which were their very own mission for the game .They had to involve themselves in direct programming of weapons used by enemies and then making characters in the game that look very much real. The basic idea of the exercise was to put in technological advantages in games such that people know exactly what they are building at every step and what the best modus operandi is. The teams which come out with the best breakthroughs are features on TV screens that are displayed all over the studio. The arguments is that at every small step, people think they are inventing something . They small minute tasks like colouring et all are given for outsourcing. This system is employed all across the studios after its huge measure of success. The other change that has been implemented is the more easier deadlines given to home-grown projects . Since the projects do not have tight release dates , the goal is more spread out to try developing the games as much as possible and incorporate new ideas as they cycle goes on . In the past Electronic Arts had come in for criticism regarding their strategy which involved promised shipping dates before the games were even designed. Now , this is done only after the product is full y ready to hit the markets .This has helped the company improve its quality in terms of games supplied . The down side of such an event is that it could pose a problem for the product pipeline as the revenue generated becomes less of a certainty. This is certainly a way to achieve greater creativity among the employees(Docstoc 2010) .

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Risk Management Analysis

Risk management is pivotal to a company’s working culture . The potential unpleasant issues that can crop up will need to have been evaluated as well as the potential threats that are likely to come in . The analysis will then highlight the solution that can be implemented in order to sort out the risk . Risk management has become quite commonplace nowadays with emphasis being laid on this department. It has helped organizations reduce several cost factors and come out with better outputs keeping risk at the back of their minds. It is therefore important to constantly evaluate risk and come up with solutions that can that deals with the changing nature of the environments.

The employees who work for EA Sports are accomplished and are good at adapting the best practices in the risk management process. They understand the changing needs of the organization. They evaluate the probability and consequences of the various types of risks and gauge the whole risk process as such (Kotaku 2010)

The assessment of risk can be done on the below mentioned factors:

Assessing Quantitative Risks: It can be figured out from the name that the assessment perceives and weighs up the threat and the value of its impact on assets. The figure is calculated on a monetary front with a value attached to the capital in terms of losses.

Assessing Qualitative Risk: The impact of the risk in terms of it being high or low can be evaluated with this approach.

Assessing Initial Vulnerability: The impact of risk on a particular function within the organization and how the questions can be formulated and the problems be answered.

Review by Peers: In organizations which are large, a small thing can be paramount and employees are a good source for providing effective feedback.

Assessing the Workplace: The structure of the place as whole is reviewed – both the mechanical and electrical structure. A complete assessment is done by an in charge employee who analyses the whole set up and examines issues pertaining to safety. All aspects such as data centres, lighting and other facilities come within this scope and are effectively evaluated.

The benefits of risk management as a whole are mentioned below:

The tactics as a whole can be evaluated.

The overall cost impacts can be gauged.

Focus while performing tasks can be improved.

Threshold limits can be set up for business processes.

Future failure can be prevented to a certain degree

Auditing can help industry be effectively ready to face risks.

Strategic decisions can be made to a certain degree of expectations.

Recommendations

Some of the key recommendations for EA Sports would come by the way of :

Lowering their expenditure online

Being proactive rather than reactive to opportunities

Fight it out to make FIFA the leader in the football gaming industry once again

Build on the leadership activities at EA Sports

Work on increasing subscription in the coming years

Increase its sports marketing leadership worldwide

Strengthening its value chain industry.

Maintaining and strengthening ties with its customers

Lowering expenditures online:

The success rate of the online gaming industry in the recent past has not been really good . Online development in gaming has positioned itself in the dog quadrant of the BCG Matrix. Hence EA Sports could divest some of their income and put it into other value added services.

Being proactive rather than reactive to opportunities:

EA’s creativity and ability has helped it diverse into new areas and into different domains. As the video gaming industry grows, keeping abreast with technology and the opportunities that come with it are crucial.

Maintaining and strengthening ties with customers:

The gaming industry depends heavily on console manufacturers. Hence EA would have to strengthen ties with both the console owners and the end customers

Strengthening its value chain industry

EA could see itself falling behind if it does not work its way towards the value chain industry. New entrants could create a niche for themselves by entering this segment and it is upto EA to make it not such an attractive industry to enter with their capture of the value chain.

Conclusion:

The choices made by EA in terms of weight age over opportunity costs have indeed been different from most competitors and this has helped them in the long run. The prime example is that of licensing. They are put through by three aspects which has enhanced growth in most of their business segments. There are constant developments in its business model, generation of new customers and globalization. EA has thrived because of its superior innovation . This has help it become a pioneer in the video gaming industry . To enhance innovation , the organization has shifted its focus from just building video games to actually integrating its games with consoles , personal computers and mobile phones. This has helped them worked their products to a good perceived value.It was also the forerunner in the leadership area with their diversification in terms of services and the latest software technology usages. It has endeavoured to transform the video gaming industry with its high definition games. This plus a whole host of other innovations has helped it get the most out the market in terms of sales. The factors mentioned above have a huge bearing in helping the company in attaining a very strong position in the market which has helped them deliver good services and products to customers which has helped it expand worldwide.

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