Game Not Over Not Yet case study help
Case #3 Game Not Over, Not Yet
Although their expertise lies in creating games, itâ€™s definitely serious business for the video game industry. The computer and video game industry has struggled over the last couple of years as game makers looked for new sources of revenues and worked to hold down costs. And nipping at the industryâ€™s heels were companies like Zynga that saw the opportunities and jumped in on the burgeoning social gaming revolution. One company, Electronics Arts (EA), exemplifies the challenges of this industry, where customers are fickle and demanding and competition is intense. As one of the worldâ€™s top three interactive entertainment software companies, EA lives and dies by its innovations. Its product lineup includes more than 100 titles such as Battlefield, Madden NFL, FIFA Soccer, Rock Band, Need for Speed, and The Simpsons. The company has created more than 50 best-sellers (each with more than 1 million copies sold) since 1998. In 2011, revenues were almost $3.6 billionâ€”a decrease of almost 2 percent from the previous yearâ€”and the company had a net loss of $276 million. The last three years have been quite challenging as the company lowered its sales and profit projections because of changes in the behavior of consumers and retailers. In addition, EA missed the initial social gaming trend, but is now pushing hard to develop digital platforms for many of its popular games. As a result, its Sims Social is the number 2 game on Facebook, behind Zyngaâ€™s CityVille.
EA continues to look for ways to prosper. Paranoia has been a critical part of EAâ€™s strategy for success. A top game title takes anywhere from 12 to 36 months to produce and costs between $5 million and $10 million. Thatâ€™s a significant investment risk riding on the companyâ€™s ability to be innovative. John Riccitello (former president and chief operating officer who left the company in 2004 to start a private equity firm but then returned in 2007 as CEO) has guided much of the companyâ€™s game design accomplishments. He said, â€œThe forgotten aspect of creativity is discipline.â€ The hard part, and the part that EA pursues relentlessly, â€œis identifying the right idea, assembling the best development team, solving the inevitable technical problems, creating a game that people want to play, getting all of the work done on schedule, getting it to market at the right time, and knowing how to generate buzz about it in an increasingly crowded market.â€ How does EA do it?
It starts with the discipline of understanding ideas. Game designers try to identify the creative center of a gameâ€”what they call the â€œcreative xâ€â€”so they understand what the game is about. Then, itâ€™s the discipline of understanding the customers by using focus groups to pinpoint desires and likes and dislikes. And itâ€™s the discipline of sharing best practices and technologies through the companyâ€™s intranet library. As one employee said, â€œIf somebody develops a better blade of grass in one game, that grass will be in somebody elseâ€™s game the next day.â€ Then, thereâ€™s the discipline of developing the next generation of creative leaders. The companyâ€™s â€œemerging leadersâ€ program gives participants firsthand experience in departments outside their own. And thereâ€™s the discipline of studying the competition. Employees are encouraged to know the features of competitorsâ€™ products. Then, itâ€™s disciplined project management. Riccitello, known for his strict discipline, said, â€œIf youâ€™re working on a game and you miss your deadlines, you wonâ€™t be working here very long.â€ Although the discipline of creativity is important at EA, you canâ€™t overlook the passion of the companyâ€™s game designers. Nearly everyone at EA grew up playing games. They love what they do and are inspired to look for new and creative challenges not only for the hard-core gamers, but for the casual gamers as well.
Describe EAâ€™s competitive advantage from each of the three perspectives on competitive advantage.
Does EA exhibit the critical success factors for the new business context? Explain.
Describe the types of resources EA appears to have. Do you think any of these resources might be unique? Explain.
What ethical and social responsibility issues might EA face as it develops new games? What would be the best approach for dealing with those issues?
What stakeholders might EA have to be concerned with, and how might those stakeholders affect EAâ€™s strategic decisions and actions?
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