In November John Riccitiello’s global publishing empire began searching for 900 developer jobs to cut in a bid to save an annual $100 million. However, at the same time, EA was handing over a cool $300 million to buy social game studio Playfish. Such gloomy circumstances made that takeover price look even more extravagant – perhaps even wasteful – but Riccitiello is adamant that social gaming is central to the future of the industry. It is this emergent faction of gaming, he says, that has helped the entire market to expand to one billion potential customers.
If his comments sound familiar, it’s because Playfish itself has been making such claims for years. Now with the firm’s rhetoric endorsed by EA’s cash, Develop talks to Playfish CEO Kristian Segerstrale to discuss new directions for the studio.
Playfish has always been very vocal about the potential of social games. How does it feel to see a company like EA back those claims with $300 million upfront?
Well, it’s an incredible time for us, we’re very excited about our prospects from here on. From our perspective, what’s really exciting about the deal is that it ultimately allows us to build on everything we’ve done so far, but also speeds-up our quest to change the way the world plays games.
The deal allows us to build on some of the most-loved IPs in the industry and perhaps explore other platforms quicker.
How did the deal come about?
The discussions we had with EA, what struck us – I think all of us at Playfish – was just how similar we both viewed the future of the industry. And we also got a big picture of how similar Playfish is to EA’s other divisions like Pogo and EA Interactive. So when deep in discussion with EA, we got the feeling that we could overlay our vision with theirs.
Playfish has millions of registered users.
Yeah I think we’ve said in the past that we’ve got 50 million users.
Was this something that EA appeared attracted to?
Obviously I don’t want to put words in their mouth, but we both felt that each of us had a huge opportunity to grow by partnering with each other.
As part of the acquisition, EA will pay an additional $100 million if Playfish meets ‘certain milestones’. What’s EA looking for here? Sales? User-base growth?
I can tell you that the milestones need to be met before calendar 2011, but we haven’t publicly broken down what EA wants. I’m sorry if I can’t be much help in answering that question.
Will EA be entrusting its own IP to Playfish?
Well, as I said, I think EA will benefit from a lot of growth in the digital space. In general, I think that any new platform will see new types of game; new genres and new IP. That certainly happened to the home consoles and, more recently, the iPhone.
But after a little while, when the format begins to mature, franchises tend to become more important. Marketing needs to become more important.
I’d say the iPhone has seen that transition recently; it’s beginning to move from a place where everything is completely democratic to a place where groups like EA are beginning to take over.
EA is involved in many of the 25 top-grossing apps on the App Store. And we’re certain that digital distribution will be important going forward. Not just on the iPhone, but on social networks like Facebook too.
It’s that combination of being able to create fantastic consumer experiences and innovating, but it’s also bringing some of those IPs that people love to new platforms.
People are already discussing how The Sims would perform on Facebook.
Yeah that’s understandable.
Is that a prospect that excites Playfish?
Obviously part of the excitement is creating new IP and new titles but at the same time part of the excitement is the opportunity to work with some of the most loved franchises in the videogame industry and perhaps bringing those onto social networks.
We haven’t made any specific project announcements though. But that said, yes, it’s exciting.
Is there a concern that, when EA does ask you to work with its own IP, that your own properties will no longer be priority? Do you think you’ll still be working on Playfish’s original games?
Well I think there’s a huge opportunity for us to grow with our own IP and EA’s. I think it’s going to be a mix, and will continue to be a mix. What we’ve seen on mobiles is how a market can flourish with both new IP and established franchises. There are many opportunities for both.
EA often gives its studios vast sums of money to develop games. And though Playfish has in the past delivered big profits on comparatively small budgets, what exactly would you want to do with, say, a $30 million cheque?
It’d be a lot of fun, certainly! But I think the great thing about social games is that you don’t have to make bets the size of $30 million up front. You can make small bets and work with your communities to try and make a better and better game out of it. And at the early stages of a social game’s release you can get a clear picture of whether the game is going to properly fund itself over time, or not.
I’m sure there will be social games with $30 million budgets, but that won’t be up front, it’ll be over time. Those sort of funds will add up incrementally.
Was that an attraction for EA? That Playfish can develop on more affordable budgets to test the market before investing in what’s proven profitable?
Typically we try to release games very early in our development cycles, and we continue to support the project if it shows itself to be successful. Back when we released Pet Society about 14 months ago, that game had been in development for six months before we launched, but it’s also been in development every day since.
So we try to evolve our products over time. The format allows us to do that. Our process reflects the broader shift from upfront investment to ongoing investment that starts low and offers feedback quick. However, I wouldn’t want to speak on EA’s behalf on whether that attracted us to them.
Generally speaking, how will EA’s acquisition change Playfish’s operations?
Well we will continue to grow as much as we would have done without EA, quite frankly. One of the things that we are excited about is that EA’s acquisition allows us to grow much faster, and also gives us the chance to work on franchises that we wouldn’t have before. And also, this will speed up our ambition to take our games to other platforms as well.
Ultimately, Playfish will remain an independent part of the company. EA has a heritage of having its own independent studios, if you like.
We still believe that we’ve hardly scratched the surface with what’s possible with social games. The next couple of years ahead the genre will see some wonderful new genres and new IP, as well as be able to evolve existing IP to be served in a social network space. We really cannot convey our sense of excitement about being part of that.
What are you most excited about with this new direction?
I’m really excited about working on the franchises, obviously, and I’m really excited about the fact that Playfish and many social game groups are learning new things every day. Unlike the console space which is fairly predictable, there’s so many opportunities for innovation in social games right now.
MMO veteran Jeff Strain recently told us something that we’d like to put to you. He said that developers who make free-to-play games fixate on creating alternative revenue streams during the development process, otherwise the games won’t make any money. But, he argued, this means that the development process will not be centred on what’s most important, which is making games fun, but instead on how to recoup investment. Would you agree?
Well I think the key objective for a game – any game – is to make it fun, otherwise no one’s going to play it! I don’t think microtransactions are going to work unless the game using them is fun to play.
Also, a very large part of traditional physical games is in the packaging, if you like. Publishers have to convince people to pay a large amount up front for these experiences, so they need to support titles with large marketing campaigns, or using familiar franchises. But players still don’t really know what the game they are just about to buy will be like. Free-to-play games, however, need to be fun because players can sample them for free.