Electronic Arts: Making Up for Missteps

Electronic Arts isn't necessarily known for its groundbreaking games.

Sure, the company has had some innovative titles, such as The Sims. But its basic business is updated iterations of key franchises, such as Madden NFL and its Need for Speed racing titles.

That model has served EA well, and the company is now the largest independent video-game publisher.

But there are signs that that model won't work as well now, in an industry making a difficult move to a new generation of game technology. Although the transition has been tough on all the publishers, EA has been hit especially hard. Indeed, over the last two years, the company has endured stagnant sales and slowed earnings.

EA has blamed most of its problems on deteriorating market conditions and investments in a wide range of new game technologies. But the company also has been hurt by some of its own missteps.

In recent months, EA has delayed a number of high-profile titles, while other games, such as the latest iteration of Madden NFL, have received tepid reviews. And despite the company's massive investment in next-generation games, the top-selling title on Microsoft's (MSFT Quote - Cramer on MSFT - Stock Picks) Xbox 360 console to date is made by chief rival Activision .

At the E3 video game conference last week, I talked with Paul Lee, the new president of EA's worldwide studios, about problems the company has been facing and some of the steps being taken to turn things around.

TheStreet.com: Timeliness has been an issue for EA of late. You've delayed Godfather. You delayed Superman. Medal Of Honor: Airborne is also delayed. What's going on? Why are you having so much trouble meeting deadlines?

Paul Lee: One of the things that we're betting on is ... more and more of the [next-generation] games are going to need some form of open-world game-play. And the reality is that open-world game play is just a much more significant undertaking than we would have imagined. But to rush it out and not get that right doesn't get you the learning you need. And I think we made the right decision to do that with Godfather, and I think the reviews and the product sales show that. We are pushing the envelope.

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