EA Puts Faith in 'Next Gen Consoles'

John Riccitiello
Michal Czerwonka | Getty Images
John Riccitiello

New video game consoles coming out this year could breathe new life into game maker Electronic Arts.

Although, the next generation of video game systems technically started last November with the launch of the Wii U, a lot of people aren't going to start their clocks until later this year, when new consoles from Sony and (presumably) Microsoft hit the market.

Among those, it appears, is Frank Gibeau, president of EA's Games Labels division. While the company has put out a handful of titles on Nintendo's new system, he's especially excited about the two systems yet to come.

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"Next gen consoles are an investment for us," he said. "We've never been more ready… [And] HD consoles are where it's at."

EA (EA) has released a few games for the Wii U, and Gibeau said the company continues to consider Nintendo's (NTDOY) console for new releases, but at present has no announced titles for it.

That will likely change in June when the company's slate of annual franchises—like "Madden," "FIFA" and "Need for Speed" are rolled out again—but it's noteworthy that the Wii U isn't on the list for top tier franchises, particularly this fall's "Battlefield 4."

EA took the wraps off of "Battlefield 4"—which will be one of the company's flagship titles this year—Tuesday night. The game is powered by a new proprietary graphics engine that showcases incredibly lifelike images, something EA is hoping will woo players away from Activision's (ATVI) "Call of Duty" juggernaut. And EA plans to double down on that engine, aligning studios to utilize it in several upcoming games.

"I think what you saw on 'Battlefield 4' represents what the next generation can be and will be," Gibeau said. "This will be the biggest 'Battlefield' we've ever made. In fact, it's going to be one of the biggest games EA has made in 25 years."

The unveiling was something of a high point for the company, which has been besieged by low points for the past month.

Earnings have been soft for a while now and on March 18, CEO John Riccitiello announced plans to resign after a rocky tenure. At the same time, EA acknowledged that revenues and earnings per share for the current quarter will be at the low end—or slightly below—previously issued guidance.

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(Gibeau, who oversees global product development and marketing and has played a part in hundreds of game franchise launches since 1991, is considered one of two internal candidates for the CEO job, but declined to talk about the whispers.)

Beyond the internal shuffle, the company suffered a significant PR black eye with the launch of "SimCity," where it was unable to handle network traffic for the game, which requires players to be connected online.

"We had a rough 72 hours out of the chute," says Gibeau. "We did not do a good job of anticipating demand."

If there was one bright side to "SimCity," though, it was that the problems did not chase away customers. And the game's digital sales surpassed those at traditional retail outlets. That's noteworthy, as EA is betting big on the digital future. About 40 percent of its revenues in the past 12 months have come from digital income—and it's looking to grow that number.

One of the ways it's planning to do that is by increasing the number of micro-transactions in its premium games. While not mandatory, players who wish to advance more quickly in games will be able to pay to unlock certain weapons and features early.

It's a page taken from the free-to-play business model. Small purchases can add up to big money—quickly.

"In the 'freemium' business model, microtransactions are how you monetize the experience," Gibeau said. "You design the game so people who have more time than money can grind away, but for folks who want to jump ahead, they can go ahead and pay to do so. … We think it fits as well to epic experiences and for people who are passionate about those games."