EA mobile chief Jeff Karp on live service gaming

EA’s live service gamble pays off

Electronic Arts, the sports game publisher that spent years neglecting the mobile gaming market, couldn’t have picked a better time to jump in the deep end.

Last year, EA spent close to $4 billion acquiring its way to a stronger position in mobile. After a period of furious M&A that saw EA’s biggest competitors shell out many more billions to do the same, the video game market has begun to slow down, wiping billions from the business through share price, consumer spending and revenue declines.

EA mobile chief Jeff Karp isn’t worried. The head of EA’s mobile gaming division, who rejoined the company in 2020, said EA is in a position to not only weather the storm but also thrive in a more cross-platform game industry.

• “Challenging times with IDFA and COVID and all the unprecedented headwinds we’re facing … I think that puts EA very well positioned in the strength of our brand in games,” Karp told Protocol in an interview last week. “That’s something we identified a year back, and it's something we continue to build around and double down on in the future.”
• “We’re excited about where we are. Arguably, today’s times favor companies like EA that have well-established brands and IP,” Karp added.
• One such challenge is App Tracking Transparency, which restricts how advertisers are able to track users throughout the iOS ecosystem using a unique identifier known as IDFA. For game makers, the change has hindered user acquisition, because many games rely on ads to attract new players.
• “No doubt IDFA is a significant change, and we’re all learning and adapting on how to connect with our players. Obviously, it all starts with great quality games,” Karp said.
• “But we believe we will thrive in this environment. We’re well positioned because we have to look at not just [user acquisition], which is important to bring new players in our games, but also how we can leverage our brands and IPs that are obviously very familiar and have decades of communities and markets to build upon.”

Mobile is a key pillar of EA’s live service future. In many ways, EA’s investments in mobile are intertwined with its transition into a live service company, because the mobile market helped pioneer many of the business model and monetization strategies that free-to-play, live service games depend on.

• EA’s biggest acquisitions of the last half-decade have been mobile game companies, including Golf Clash maker Playdemic for $1.4 billion and prolific smartphone publisher and developer Glu Mobile for $2.4 billion.
• Those investments, combined with its live services growth, appear to now be paying off. While many of EA’s competitors have seen double-digit declines in stock price this year, the FIFA developer has remained stable. In the most recent quarter — a period of decline for its competitors — EA’s sales and profit increased.
• The company’s net bookings for the trailing 12 months are up 22% year-over-year to nearly $7.5 billion, and it now has more than 600 million active player accounts.
• Live service products like Apex Legends and FIFA, both of which are now on mobile, account for over 70% of EA’s business, the company’s chief financial officer, Chris Suh, told investors last week. Suh added that live services games will be the “predominant driver” of its profits in the long term.

Live service also means cross-platform. The approach of taking its existing brands and finding new ways to grow them beyond the console market has become the cornerstone of EA’s live service approach.

• “We’re excited that there are 3.5 billion players in our addressable market. It brings accessibility to our brand,” Karp said. “It’s really an opportunity to expand our overall ecosystem for the brand, and it creates practicable recurring revenues. It also brings the opportunity to bring our games across platforms.”
• Apex Legends Mobile launched in May, and the company is testing a smartphone version of its Battlefield shooter. Also in the works is a new game based on “The Lord of the Rings” called Heroes of Middle-earth.
• “We’re taking more time in soft launch than we ever have,” Karp said of the mobile division’s development process, which often now includes extensive beta periods spent collecting data from players in the Philippines, Australia and other regions. “Knowing these games now last five to 10 years, we want to be really thoughtful and methodical about when we launch it globally.”

EA has cracked the code. Two central components of EA’s live service, cross-platform push are accessibility and monetization.

• It’s a balancing act in which EA has to weigh two conflicting goals: “How do we make sure we respect our brands in a meaningful way,” Karp said, while also ensuring EA “can meet the players where they’re at” with regard to how sophisticated their phone might be.
• EA is taking a similarly measured and careful approach to monetization. The company doesn’t want to repeat the mistakes it made in the past, like with Star Wars Battlefront II, or risk a situation similar to Blizzard’s Diablo Immortal, which has been marred by the game’s rampant microtransaction model.
• Karp said EA approaches this dilemma by trying to set realistic expectations for players that align with why they play mobile and what they hope to gain. “I think it’s just understanding the needs that they would expect on the different consumer value propositions,” he said.

EA’s approach appears to be working, especially for FIFA. The company said last week that in fiscal Q1, FIFA Mobile had its best-ever quarter in the six years the company has been releasing mobile ports of the franchise.

“I think we’ve done a great job with FIFA,” Karp said, noting that the mobile division at EA is growing and many of its new releases are proving to be quick hits. “Those are things we’re quite proud of. Also understand there’s a ton of opportunity and a great road ahead for us.”

— Nick Statt

Read the full interview here.

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Overheard

“We have seen historically that bad actors will often be tolerated because the people with the skills and power to remove them do not focus their efforts there … To put it simply, we disagree. In our view, removing harassment and abuse from our community is not only the right thing to do, it is also good business." — Don McGowan, a lawyer well known for his work with The Pokémon Company, detailed his new employer Bungie’s aggressive legal offensive against cheaters and harassers in an interview with Axios last week.

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Google sues Sonos. In its new lawsuit, Google alleges that Sonos is violating a number of voice assistant patents. It’s just the latest in a long series of legal disputes.

Ubisoft is being eyed by Tencent. The French publisher has had a bad year, with canceled projects and poor sales. Now Chinese gaming giant Tencent is eager to become the largest shareholder in Ubisoft, Reuters reported. Tencent currently owns about 5% of the company.

Activision continues union-busting tactics. Activision Blizzard has deployed the same anti-union law firm it used to try and squash organizing at Raven Software to undermine a new unionization effort among QA workers at Blizzard Albany, Kotaku reported.

Netflix insiders talk of a culture shift. Things have changed at Netflix in recent months, with the company now more focused on hit shows than prestige projects, according to employees who spoke with Insider.

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The pandemic-era hybrid event is fading

COVID-19 forever changed industry events throughout the world of tech and gaming, giving rise to hybrid showcases and stringent safety measures that broke down barriers to entry for many speakers. But as event organizers itch to get back to the way things used to be, both health precautions and hybrid events are falling by the wayside.

The company behind the Game Developers Conference told game writer Heidi McDonald last week it’s no longer accepting remote presentation proposals for its San Francisco event next spring, after returning earlier this year with a mix of in-person and remote presentations via video conference. Many in the game development community expressed frustration over the decision, especially after a coronavirus outbreak during GDC 2022.

TwitchCon, an annual gathering for the game-streaming platform’s sprawling community, is returning to San Diego this October after a three-year hiatus, but organizers said last week they will not require masks, proof of vaccination or testing. The company cites “current local guidelines,” but similar events like San Diego Comic-Con, also held at the city’s convention center, required masks and proof of vaccination just last month.

“Welp,” McDonald wrote. “It was great while it lasted.”

— Nick Statt

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