Electronic Arts, Inc

• Date Founded: 1982
• Industry:Video games
• Corporate Headquarters: Redwood City, California
• Type: Public

Trip Hawkins, a former employee of the technology company Apple, founded Electronic Arts (EA) with Apple coworkers William Gordon and Tom Mott. EA is an American publisher, developer, and distributor of some of the most popular video game franchises such as Battlefield, Mass Effect, Need for Speed, Dragon Age, The Sims, and other games based on licensed sports and sci-fi intellectual properties like FIFA, Madden NFL, and Star Wars.

Hawkins started the company with the objective of providing a platform for "software artists," game developers, and others involved in video game design and programming. The idea was to publish and promote the games and the game developers equally. But with time, the business philosophy changed considerably, and by 1991, EA started producing games within the company. Hawkins left the company in 1991 to start 3DO, a company that made video game consoles. After Hawkins’s exit, the company grew through the strategic acquisition of competing developers.

The company, which grew to become one of the largest video game makers in the world, was also awarded the "Worst American Company" for two consecutive years (2012 and 2013) by the Consumerist Magazine for manipulative practices like introducing microtransactions and requiring players to remain online throughout the duration of a game.

History

In the early years, the company was nothing but a conduit for professional game developers, so it had to find a way to make money off the conduit. EA employed a strategy of selling the games directly to retailers, a move that no other gaming company had attempted before. EA would widely promote its developers, almost like gaming rock stars, and give them visibility on the covers of the games. EA would then keep a good portion of the profits received from the game sales. But in order to scale up the business, the company had to soon abandon the noble strategy of running the conduit, and by the early 1990s, it started operating in-house studios.

EA operates through several divisions, including EA Studios, Maxis, and EA Mobile. While EA Studios manages franchises like FIFA, Madden NFL, and Battlefield, Maxis is responsible for creating content that requires creative involvement from the players, like the Sims series, and EA Mobile makes interactive content for mobile phones and tablets.

After Hawkins left the company in 1991, EA grew by acquiring companies that made popular game titles. The idea was to have the newly acquired companies produce sequels of popular games year after year to build multi-year franchises. EA was the first company to start the practice of releasing sequels and updates each year. But the relationship between EA and the acquired companies remained frosty. In 1991, EA acquired Distinctive Software, the maker of the popular game Stunts, and a year later, Origin Systems, developer of Ultima and Wing Commander, ceded ownership to EA. Don Mattrick, founder of Distinctive, was asked to look after the newly acquired company. Mattrick was criticized for too much interference and for being unreasonable about release schedules. Peter Molyneaux, the founder of hit gaming company Bullfrog, which was bought by EA in 1995, leveled a similar complaint.

Other companies bought by EA over the years included Manley & Associates, developer of Lost in L.A; Maxis, developer of SimCity and RoboSport; Westwood, maker of games such as the Command and Conquer series; and DreamWorks Interactive, the creator of Medal of Honor. EA also bought other studios like JAMDAT Mobile, Mythic, and Dice in 2006. To consolidate its presence in sports titles, EA acquired Sega Sports Studio, Black Box, and Studio 33, the maker of racing games. All these acquisitions gave EA the ability to make games across digital platforms, be it consoles, computers, or mobile devices.

By 2012, EA had sensed the inevitable decline in the popularity of physical games in the form of discs and cartridges. EA quickly transitioned to digital formats while continuing to lead the console games market. In June 2015, EA’s digital revenues stood at $482 million, growing by 10 percent from the previous year to constitute 76 percent of total revenues. This rise was led by the success of online franchises like Battlefield and The Sims. In the same year, EA made about $255 million in revenues from charging players for extra content, especially on the freemium model, which uses a free-to-play tactic to rope in customers, who are later charged for upgrades or access.

EA also aggressively tapped into the continuously evolving eSports market. The company hired Peter Moore from Microsoft’s Xbox to lead EA’s competitive gaming or eSports (electronic sports) division. In order to make a strong presence in the eSports broadcasting business, EA brought in Steve Bornstein, former CEO of sports channel ESPN, and Mike Sepso, co-founder of Major League Gaming, in 2015. Additionally, the company explored the potential of the growing field of virtual reality (VR) games and systems. It created the Frostbite Labs subsidiary in 2016 to work exclusively on future technology, including VR and deep learning. Through marketing strategy, strategic partnerships with companies such as Disney, and consistently adapting to changes in technology, EA increased its annual revenue to $7 billion by 2022.

In the early and mid-2020s, EA made major changes to its business structure. The company canceled the development of Apex Legends Mobile and Battlefield Mobile, leading to the shutdown of Industrial Toys, the studio behind these projects. Some layoffs also resulted from this change. Then, EA reorganized into two divisions: EA Sports and EA Entertainment. Laura Miele was appointed president of EA Entertainment, and Cam Weber became president of EA Sports. Additionally, CFO Chris Suh and Chief Experience Officer Chris Bruzzo departed, with Stuart Canfield and David Tinson stepping into their roles, respectively. While only a small percentage of employees were impacted by the earlier layoffs, further layoffs occurred in 2022 and 2023, with EA subsidiary BioWare laying off about 20 percent of its workforce. Racing game maker Codemasters laid off employees in late 2023 and again in early 2024.

In 2024, the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) initiated a strike against several video game publishers, including EA, over concerns about artificial intelligence and fair compensation. After this controversy and the poor performance of EA Sports FC 25 and Dragon Age: The Veilguard in 2025, EA lowered its revenue predictions for 2025.

Impact

Electronic Arts grew to become one of the largest video game producers in the world, achieving a considerable economic and social impact. Its products have been widely popular, with various titles becoming best sellers and critical successes that have influenced scores of gamers around the world. Additionally, many of its games have been technologically groundbreaking or introduced players to new types of gaming experiences. For example, The Sims has been examined as a notable cultural phenomenon and an important development in artificial intelligence. Sports analysts have researched the impact of EA's immensely popular sports games on the actual sports they model.

EA has also had its share of controversies, and for some of these reasons, Consumerist Magazine named EA "Worst Company of the Year" in 2012 and 2013. Some of the pricing tactics of the company were unpopular with gaming fans, who felt cheated by these tactics. In the 2010s, EA drew severe criticism for its freemium model. In-game micropayments were charged even on titles, such as Dead Space 3, that cost as much as $60. In another example, with the release of the mobile version of the popular PC game Dungeon Keeper, players were made to wait as much as 24 hours to gain access to certain geographies within the game. Onscreen characters would prompt players to pay up with remarks like, "This is no time to be stingy. Spend a few more gems to instantly rush the building of this trap."

Another controversy had to do with the internet requirements of certain games. Consumers, who have been used to playing games that were either downloadable or available offline, were angry about the launch of games in online-only mode like SimCity. To make matters worse, EA was also sued for using the identities of popular college football and basketball players in its simulations without copyrights. The company was forced to pay over $40 million to settle the dispute.

EA, a company that started with the idea of respecting and promoting game designers, was eventually criticized for overworking its developers to exhaustion. In 2004, Erin Hoffman, a spouse of an EA gaming developer, filed a class-action suit for unpaid overtime and inhumane working hours at EA, which had become a norm rather than an exception at the company. In the 2020s, EA continued to dominate the video game industry, consistently attracting investors and acquiring smaller mobile gaming companies worldwide, including Codemasters, Playdemic, and Metalhead Software. Its largest acquisition was Glu Mobile for $2.4 billion in 2021.

Bibliography

"About EA." Electronic Arts, www.ea.com/about. Accessed 2 Feb. 2025.

"EA to Permanently Shut Down Origin in April 2025." Games Market, www.gamesmarket.global/publishing/digital-distribution-ea-to-permanently-shut-down-origin-in-april-2025-ca4d85fb96a48ae6d9e4ab7a2cebf2e0. Accessed 2 Feb. 2025.

"Environmental Sustainability." Electronic Arts, www.ea.com/commitments/environment. Accessed 2 Feb. 2025.

Kent, Steve L. "Album Covers." The Ultimate History of Video Games: From Pong to Pokémon and beyond—the Story behind the Craze That Touched Our Lives and Changed the World. Prima, 2001.

Farrey, Tom. "Players, Game Makers Settle for $40M." ESPN, 31 May 2014, espn.go.com/espn/otl/story/‗/id/11010455/college-athletes-reach-40-million-settlement-ea-sports-ncaa-licensing-arm. Accessed 2 Feb. 2025.

Hoffman, Erin. "EA: The Human Story." EA-Spouse, 10 Nov. 2004, ea-spouse.livejournal.com/274.html. Accessed 2 Feb. 2025.

Morran, Chris. "The Voters Have Spoken: EA Is Your Worst Company in America for 2012!" Consumerist, 4 Apr. 2012, consumerist.com/2012/04/04/congratulations-ea-you-are-the-worst-company-in-america-for-2012. Accessed 2 Feb. 2025.

"Profile: Electronic Arts Inc (EA.O)." Reuters, www.reuters.com/markets/companies/EA.OQ. Accessed 2 Feb. 2025.

Rossell Waugh, Eric-Jon. "A Short History of Electronic Arts." Bloomberg Business, 24 Aug. 2006, www.bloomberg.com/bw/stories/2006-08-24/a-short-history-of-electronic-arts. Accessed 2 Feb. 2025.

Statt, Nick. "Electronic Arts Puts Peter Moore in Charge of New E-Sports Division." The Verge, 10 Dec. 2015, www.theverge.com/2015/12/10/9889842/electronic-arts-e-sports-division-peter-moore-madden-fifa. Accessed 2 Feb. 2025.

Tassi, Paul. "EA Voted Worst Company in America, Again." Forbes, 9 Apr. 2013, www.forbes.com/sites/insertcoin/2013/04/09/ea-voted-worst-company-in-america-again. Accessed 2 Feb. 2025.