Wednesday, July 16, 2014
EA Reveals All Its Next-Gen Plans

EA Reveals All Its Next-Gen Plans

During Goldman Sachs’ Technology and Internet Conference in San Francisco, EA’s chief financial officer Blake Jorgensen revealed the publisher’s plan for PS4 and Xbox 720, notably leaving Wii U out of the equation. Everything from Battlefield 4 to the used games market and next-gen formats, which he refers to as “gen-four” consoles not being backward compatible were discussed.

An interesting read, courtesy Gamasutra:

The cost of a new console transition

“Historical transitions have been bumpy for a few reasons. One reason has been that a lot of the companies had too many titles. We had way too many titles in the last transition, and the more titles you have, the more expensive it is to convert them from one generation to the next.

“We’re much more focused now. We’ve got a core group of ten-to-fifteen titles. We’ll stage those in terms of the transition and manage those costs through that. Our goal is to keep the cost increase for R&D under $100 million. And some of that will be in this year, some of that in ’14, and some in our fiscal year ’15.

“I think the other issue in the past has been what happens to pricing with the existing consoles. And what we’re trying to do is be receptive to where pricing ends up. We don’t think it will be as dramatic. I think the benefit we have now is that we’ve got some very large franchises that are more tied to sports calendars, and won’t be impacted by some of the pricing issues.”

Why many of EA’s customers won’t upgrade right away

“The reality is, is that fiscal year 2014 will still be a fairly large gen-three if there’s a console business that comes in at the tail end of the year, mainly because a lot of our titles are built around sports calendars. And so a FIFA, a Madden, an NCAA, an NHL title, all come out aligned with the sports calendar. And if a next-gen console doesn’t come out until next Christmas, most people won’t wait. They’ll want to be involved in getting those titles early, because their friends are all playing those titles, and because they’re being played on a current generation’s consoles.

“An important thing to remember is that next-gen consoles will most likely not be backwards compatible… And if you [play] multiplayer on a game, you’ll most likely not be able to play with someone on a different generation. And so if you’re a FIFA player and, and the soccer season’s starting in August, and all your friends are playing FIFA, you’re going to want to be on the same box that they’re on. So if they all go out and buy a gen-four box if it comes out at Christmas, then you’ll most likely do it. If they all hold on and continue to play on third-generation, you’ll probably not see that box purchase until after the soccer season’s over.

“And I think that works for us positively in both ways. It helps us continue to sell gen-three products, and it will help us sell gen-four product as that cycle finally gets into place.”

The next-gen version of Frostbite

“We’ve always been moving Battlefield well out on the specs because of the huge PC embedded base of that business. And so moving from gen-three to a gen-four is not a huge uptick in cost.

“The other key advantage for us is we’ve been building those types of titles on Frostbite, which is our proprietary engine. Moving Frostbite up to gen-four was a big task, but once you’ve done that, you now can do that across multiple titles as long as they’re using the Frostbite engine.

“That’s been going on over the last year. The early look on some of those products is spectacular. It will be interesting to see how it plays out as it ultimately gets finished.”

Do people even want a new console?

“No one’s really seen yet… I mean, we have internally, but no one externally has really seen what the look and feel will be like on the new consoles. So I’ll reserve judgement other than to say that I think people are going to be pretty excited.

“I do think once again without describing the new consoles, you’ve got to assume they’re going to be highly integrated into the living room and the house, and there will be a lot of capability for interaction. I think the console makers have seen what the typical gameplay is today. It’s very different than five years ago, or ten years ago. It was typically single gameplay, not dual gameplay or multi game players. So there’s going to be some connectivity potential around that to make the game much more exciting.

“I think as well you’re going to see a lot more integration between tablets, phones, and the consoles over time. You’re going to see people playing on glass at the same time they’re playing on the console. And there’s going to be some exciting innovations around that. And I think it’s going to be an extension of moving from what’s in the living room to what’s outside the house. Even though it might not be playing on the console, it’s connected to the console in some way.

“So today, for example, our FIFA Ultimate Team business is a great example of where the business can go. People are playing FIFA at night with their friends, connected in a multiplayer mode. They then, the next morning, are downloading scores onto their handheld device, as they may be on the bus to work or the subway or in the car. And then they’re interacting with their friends and trading players during the day, and then at the end of the day they may be scheduling another game that they’re going to play that night with their friends. And all along the way, we’re either doing microtransactions or just simply staying connected to the customer, and that’s a huge opportunity for extension beyond what was traditionally a [single-player] gameplay.

“So I think you’re going to see more of that, and the new boxes will be much more tied to that capability. I remind people to look at whatever device they’re using in the room right now, and I guarantee virtually none of those existed two years ago, let alone seven years ago. So you’ve got to imagine, seven years is a long time in technology. We’re probably going to see a lot of exciting things when it comes to the new consoles.”

The used games market (and whether it will exist in gen-four)

“It’s one of these classic double-edged swords. In one way the used game business has been critical for the health of the retail channel, and having a healthy retail channel is an important thing for us. The business will probably never be 100 percent digital. Bandwidths are a constraint, and will continue to be a constraint for many years to come, which hold back the ability to do full digital downloads of some games.

“So at the end of the day, it’s storage capacity. Unless you’ve got a giant storage server in your house, keeping hundreds of games can tax your storage capacity. And so having a healthy retail channel out there like GameStop or Best Buy or others is important, and to the extent that used games is important to them, I think that’s a positive.

“Would we like to sell everything at full price and not have a used game market? Sure. But I think the used game market’s a little like any other kind of market where it creates liquidity. The fact is, that liquidity benefits us in some fashion. So if someone goes in and trades in a game, there’s a good chance they’re going to buy another one of our games. And so if there’s a liquid market, I think that that’s not a bad thing at all.

“I can’t really comment on where the next generation boxes are going to be relative to used games. I will say that the trend in the business is to have that always-on connectivity and connect with a customer, and to the extent that the software identifies a certain customer is going to create some issues going down the road in the used game market. But I do believe that the consumer likes it, and it’s been good for the retail channel.”

About Ernice Gilbert

Ernice Gilbert here. Founder and Editor-In-Chief of Gamesthirst. Thanks for stopping by, make yourself at home!
  • Ghost250

    i think retailers and the game industry should have talks that allow the retailers to sell used games but at the same time the devs and publishers get a cut of whats made off used games sells. this is what the business model should be that way companies like gamestop can stay in business and the devs & publishers can stay in business as well. instead of harping at each other, work together.

  • Ernice Gilbert

    @Ghost: Couldn’t agree more. That way, everybody wins.

  • Wolf1888

    Yea. I wouldn’t mind the price of used game go up by maybe 10 bucks (depending on the price of that used game, of course) if it can help both businesses.
    Because I see on both sides excellent reasons to act the way they do, but I think we’re at a point where they should do a compromise before destroying this whole used game business.

  • nick

    everyone wants a new system, there starting to get bored of turning on the same system every day and seeing the same old startup menu.
    one thing i really hope M$ and $ony do with their next consoles, why not let customers create and install their own themes and backgrounds?
    ATM you can only download ones off PSN so if a official developer does not create the one you want than tough.
    why cant we just create one ourselves?
    another thing is software, theres so many peripherals out there that come with drivers to enhance the product.
    the logitech G75 racing wheel for example comes with software to customize your wheel and pedals the way you like them.
    but you cant install that software on the ps3.
    you can use the device with the ps3, but you cant install the software?
    manufactures need to become allot more open with both their consumers and developers as well.
    let customers create software themselves, and help developers port software onto their system.
    i REALLY want to get the beyerdynamic MMX300s, there suppose to be THE king of gaming headsets!
    but whats holding me back is this exact problem, the sound card they use needs the software install and it wont work on the ps3, thus rendering them useless.
    unless i spend 600 more bucks and buy a headphone amp, but then the microphone wont work.
    wish manufactures would open up their consoles and turn them into more PC like, that way whenever you buy a product you can install its software to improve the product.