Based in Redwood City, California, Electronic Arts, Inc. (“EA” or the “Company” for brevity) is a self-proclaimed “leading global interactive entertainment software company (ea. com n. d. ). ” “EA develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, wireless devices and the Internet (ea. com n. d. ). ” As of March 2008, the Company has 9,000 employees worldwide (ea. com n. d. ). History In 1982, the company was founded as Amazin Software by Trip Hawkins; the name was changed to Electronic Arts in 1983 (MobyGames 2010).
Throughout the 1980’s the Company built its distribution network and distributed externally produced games. Towards the end of the decade, the company opened an office in London and has been distributing in Australia (MobyGames 2010). By 1990, the Company went public at $8 per share and the market value per share has risen to $35 by 1991 (MobyGames 2010). In 1991 Trip Hawkins resigned as CEO though he remained Chairman of the Board until 1994 (MobyGames 2010).
Throughout the 1990’s, the Company began a series of acquisitions: Distinctive Software, Inc. in 1991, Origin Systems, Inc. in 1992, Bullfrog Productions, Ltd. In 1995, Vision Software, Ltd. in 1996, Maxis in 1997, ABC Software in 1998, Playnation in 1999 (MobyGames 2010). Aside from these various acquisitions, EA also etablished different offices all over the world as follows: Japan in 1992, Gutersloh, Germany and St Didier au Mont d’Or, France in 1993, Spain in 1994, a subsidiary in Korea in 1998 (MobyGames 2010).
Towards the end of the 1990’s, The Company has entered into some relevant agreements: with Kodak interactive who will develop WWF wrestling titles, 8-year exclusive soccer licenses, multi-year Formula One license, Supercross sponsorship, contract with Wizards of the Coast to develop new online-based games (MobyGames 2010). Additionally, in 1999, EA received its first “Online Privacy Seal under ESRB Privacy Online certification program (MobyGames 2010).
” Lastly, in 1999, the Company created Internet Business Division to “develop content for America Online and the Internet (MobyGames 2010). ” By the year 2000, the company acquired more subsidiaries: Black Box Games in 2002, Studio 33 in 2003, NuFX, Inc. , Criterion and19. 9% of Ubisoft in 2004, Jamdat in 2005, Phenomic Game Development, Digital Illusions CE and Headgate Solutions, Inc. in 2006, 15% share of The9 Limited, Super Computer International (SCI), VG Holdings Corp. (Bioware and Pandemic) in 2007, J2MSoft Inc.
in 2008 and Playfish in 2009 (MobyGames 2010). During the last decade, some of the acquisitions from the 1990’s proved to be unprofitable and EA opted to close them down. Amongst the companies that had to be closed down are EA Japan in 2007 and Pandemic in 2009 (MobyGames 2010). Currently, John Riccitiello is the CEO of the Company and he is being paid $1. 19M a year for his services (Yahoo! Finance 2009). 95% of the Company’s shares are held by Institutional and Mutual Fund Owners, the biggest of these companies is Dodge and Cox, Inc.
, holding 5. 91% (19,311,657 shares) (Yahoo! Finance 2009). As for individual shareholders, Lawrence F. Probst III is recorded to be the biggest shareholder owning 532,201 shares (Yahoo! Finance 2009). Industry EA belongs to the Technology Sector under the Multimedia ; Graphics Software Industry (Yahoo! Finance 2010). The industry has a market capitalization of $34B and in this terms, EA with $6. 3B is second to Activision Blizzard, Inc. which has $13. 8B market cap (Yahoo!
Finance 2010). This was not always so. According to Sterman (2010), for many years, there were only two companies in the world of video gaming: EA and the rest. Before, EA’s sales were large enough to cover the three major competitors’ revenues combined. Something, however, went wrong that the Company has been reduced to becoming no. 2 in recent years. EA, however, is not the only one problematic with its revenues or market share; in fact, the decline is industry-wide (Terdiman 2010).
In March 2010, however, the industry as a whole saw a 6% year-over-year increase which is a great improvement from the 14% and 13% decline in January and February, respectively (Terdiman 2010). Management and Culture Looking at the Company’s history, it appears that EA is no stranger to acquisitions. In fact, it has been acquiring software companies since the 1980’s. According Christian Nutt (2009), EA leaves its acquisitions alone to manage their own business, not because EA is lazy but because this is the way to go about the business.
EA, however, just realised this recently. According to the Company’s CEO, EA’s previous strategy (“one-management-fits-all”)of acquiring talented developers did not work because it stiffled the devlopers’ creativity (Kohler 2008). The gaming industry is all about talent and technology, particularly how to use that talent in visual arts that will be appealing to the gamers. To develop a good gaming software, the top management would rely a lot on the talent its people. Market Value Currently the Company is valued at $19. 37 per share (Yahoo! Finance 2010).
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