Interesting article about xbox live and EA. (1 Viewer)

[Peter Manojlovich]

I don't have a link, so I'll have to post the article in its entirety.

NO END IN SIGHT FOR EA-MICROSOFT ONLINE GAMING SQUABBLE:

Although Electronic Arts (EA)continues to make videogames for Microsoft’s console and companies say their relationship remains strong in offline gaming, their dispute over online gaming rages on. Comments each company made at E3 Expo in L.A. offered little indication that resolution was in sight. EA CEO Larry Probst told analysts in briefing that “the relationship is good with Microsoft — on the packaged goods side of the equation it’s excellent and it continues to get better all the time.”

He said “we’re very happy with that part of the relationship.” But he was quick to admit that “in the online space, we’re not on the same page and it has to do with multiple things.” Indeed, company said last year that it wasn’t happy with Microsoft’s online strategy for reasons including lack of revenue stream from Xbox Live business model for 3rd-party publishers and fear of Microsoft’s taking control of relationship with EA’s customers — especially in light of companies’ continuing competition in game software.

EA Senior Vp-N. American Mktg. Frank Gibeau told us at E3 that both of those issues continued to be “deal killers.” Probst told analysts that most important issue in online disagreement with Microsoft was desire to be “compensated for the use of our intellectual property.” He said: “They’re building a secondary revenue stream [with Xbox Live service] — and eventually a secondary profit stream — and they’re using intellectual property and not providing the content provider with any kind of revenue or profit stream. And it’s akin to a cable operator starting a new channel and saying to HBO [for example] ‘we’re going to use all of your best programming and we’re not going to pay you for it,’ and that’s ridiculous... We’re not going to agree to that in this space and any other publisher that thinks that’s a good [business] model for them — I just don’t understand it. It’s as simple as that.”

EA Pres.-COO John Riccitiello later told analysts “the reason we’re not supporting Xbox Live in our judgment is in the short term, it doesn’t look good, and in the long term it could theoretically have very bad strategic consequences for our profitability on that platform, where we own the consumer [experience] directly [without] an intermediary and frankly that there’s” way EA can charge customer some kind of fee. He said: “It’s hard to believe the consumer will give us a fee after having already paid Microsoft a fee. So, we need to shift that [business] model and we’re working with Microsoft to see that that happens.”

Although he admitted that Microsoft would be reluctant to change its strategy, he said EA had perhaps more “leverage” than other companies in sector. EA is, after all, #1 third-party publisher. Riccitiello said EA was “going to use that leverage aggressively to get where we want to go.”

But Microsoft Xbox Live Gen. Mgr. Cameron Ferroni said his company was convinced it could “succeed without them” in online console gaming. He said revenue wasn’t real issue, asking rhetorically what kind of revenue EA and other 3rd-party publishers were getting via PS2 online strategy. As for EA’s fear of having Microsoft steal away its customers, Ferroni said: “They’ve got full access to the customer, so that [issue] never made any sense [and is] not an issue as far as I’m concerned.” He also predicted: “Ultimately, they’ll come around and do the right thing for gamers.”

Ferroni also said that “every one of [the 3rd-party publisher] partners” already taking part in Xbox Live “were excited” about service. Ultimate purpose of service, he said, is to sell more games. Indeed, executives of some of those 3rd-party publishers interviewed at E3 had few complaints. For example, Ubi Soft Entertainment Publishing Vp Jason Cohen said: “Xbox has been very supportive of what Ubi Soft has been trying to accomplish online... We feel that online console gaming is the future and they’ve been very supportive of our attempt to enter that market.” But Cohen said Ubi Soft had found initial “success” with PS2 online gaming as well.

Atari CEO Bruno Bonnell said he was “very happy with the support Microsoft is giving” in online space and said he didn’t buy into fears of those who believed Microsoft was using its online strategy to gain control of online gaming arena. Although Bonnell said EA’s “attitude is understandable” considering its online gaming experience, he said online console gaming now was “still in the experimental stage” and it wasn’t yet clear whether Microsoft or Sony had better online business model: “So far, nobody has really proven” to have truly successful model. More needs to be done in online arena, he said, but he didn’t really expect truly significant online console gaming business for about 3 years.

Microsoft’s decision to handle online gaming infrastructure for Xbox Live is seen as good thing by at least some publishers who don’t have nearly same amount of experience as EA has had with online gaming via EA.com and don’t want burden of having to deal with complexities involved. Meanwhile, publishers including Eidos have yet to fully throw their hat into online console gaming arena. Eidos Interactive Pres. Rob Dyer said “we’re analyzing both” Sony and Microsoft online game strategies but his company was “probably a year away” from online console gaming support.

Although EA and Microsoft executives said they would continue to discuss online issue, EA made it clear that it saw enough significant opportunities via Sony’s more 3rd-party-friendly PS2 online gaming initiative that it wasn’t concerned at this point what it might be losing with absence from Xbox Live. Clear example of EA’s attitude was provided in E3 announcement that EA’s Madden NFL and other hit sports game franchises would be available exclusively for PS2 on online console front for 2003-2004 season. Therefore, even if EA and Microsoft managed to make deal in next year, Microsoft still would have to make do without EA’s sports titles on Xbox Live. Although Microsoft has its own sports game franchises, EA’s clearly have achieved far more sales success to date. Online sports gaming demonstration provided by Sony at E3 with help from EA was far more show-stopping than one by Microsoft. Referring to their presentations, Riccitiello quipped: “This year at E3, EA and Microsoft demonstrated online sports games on their preferred formats: EA’s were played live on the PS2. Microsoft games were shown on PowerPoint.”
WEDNESDAY, MAY 28, 2003 CONSUMER ELECTRONICS DAILY

I have a few comments. First off, from everything I've read EA is currently losing their shirt with their own online plans, so this whole "We want to see a business model where we can make money." routine seems pretty funny to me. Add to the comment from MS, "He said revenue wasn’t the real issue, asking rhetorically what kind of revenue EA and other 3rd-party publishers were getting via PS2 online strategy." I don't get EA, they currently make nothing from madden online for the ps2, in fact its costing them having to maintain servers. I don't believe its p2p. Could be wrong here.

Second, I don't like the sound of this. "It’s hard to believe the consumer will give us a fee after having already paid Microsoft a fee. So, we need to shift that [business] model and we’re working with Microsoft to see that that happens." Sounds to me like EA is looking to charge a fee for their online games. I'll be very interested what happens this august when madden 2004 rolls out.

Third, I've been a big purchaser of madden in the last three years, four copies on two systems in 3 years. But, I'm finished. Moving on. EA's refusal to support xbox live has cost them a loyal madden supporter. Enabling a title with online features improves its appeal which in turn generates greater sales. Seriously, would RTCW be selling so well, if it wasn't live enabled. What's wrong with EA supporting xbox live for now, and the gamers that have bought madden in the past, and working out the nitty-gritty details later with MS. I'm sorry, but Madden's not that great a football game, and it's not stuffing the competiton on a merit basis.

If MS gives EA a cut of revenues from the xbox live subscriptions, then they have to give every third party publisher a cut. I don't think this is feasible, not at this point, at least. EA is still free to charge a fee if they wish, just as sega does with PSO. People who've already paid a fee for a service I think are more likely to consider a separate fee for a game than people who want everything to be free. I mean people get a basic cable subscription and then pay extra for the premium channels.

Lastly, I find EA's arrogance tedious. “This year at E3, EA and Microsoft demonstrated online sports games on their preferred formats: EA’s were played live on the PS2. Microsoft games were shown on PowerPoint.” Its comments like these that have me packing my bags and moving over to NFL2k4.

I know that this is a topic that has been done before, but I'd be interested in other people's opinions.

 

[JamesHl]

EA thinks that games you have to subscribe to rock. You not only pay them the full retail price of a game generally, you also give them $5-10 a month. So they have the initial sale of the game, and then a constant revenue stream. The actualy development overhead is greatly reduced, you almost never have to come out with a new engine, and you can charge people like $30 or whatever for expansion packs which don't require a lot of work. What it boils down to is that they're greedy jerks, and I hate them. They killed Origin.

 

[Keith Frederick]

There has to be some way of banding together and sending EA a message.

 

[Dave F]

When Madden is released, buy NFL2k3 or NFL Fever (or any other XBL game). The only message they can see is $$$.

-Dave

 

[Brandon_H]

Well, I'm not buying NFL Fever or NFL2k3 if they aren't up to par with Madden. I buy football games first and foremost for football, not for online features or play.

Yes, EA is planning to implement a fee for its online services -- that's been known for a while. And don't think EA is the only third-party publisher looking at online gaming as a future revenue stream. I'd bet that almost all of them are -- or will, and sooner rather than later.

EA isn't the only company leaving Xbox Live in the cold. Tony Hawk Underground -- PS2 online only. Midway's sports lineup -- also PS2 online only. The EA squabble gets the most press simply because it's good copy -- two industry heavyweights battling it out. But this is a problem that Microsoft is going to face again, with other publishers, and one that it must address soon -- I suspect by Xbox2's launch, if not earlier.

 

[Peter D]

If it's about the money, I don't understand why EA just doesn't *try* charging a monthly fee on XBL (since that's what their aim seems to be). If they aren't happy with the revenues relative to those on the PS2, then stop supporting XBL.

 

[Peter Manojlovich]

If it's about the money, I don't understand why EA just doesn't *try* charging a monthly fee on XBL (since that's what their aim seems to be). If they aren't happy with the revenues relative to those on the PS2, then stop supporting XBL.

Well, that's what's so curious about EA's position. There are NO revenues from ps2 madden online. It's like we want to make money off XBL, but we don't mind not making money off the ps2, in fact we're even going to subsidize the cost of maintaining madden online for the ps2. At least with xbl, they're not losing money.

My take is the following. EA wants control of their online and doesn't like the idea of immediate accessible competition. Currently there are rumors of a sega EA alliance or colloboration or whatever. As long as Sega doesn't charge for their online sports games, EA has major problems in this area. Why would I pay EA to play sports online, when I can play Sega sports for free? If EA can convince Sega to charge as well for online, EA is a step closer to implementing their own online ambitions of a monthly or annual fee.

With XBL being largely p2p, I don't think there is much that Sega can do about people continuing to play their current 2k3 sports titles, even if they go this route. I think this is another thing that EA doesn't like, that hosting is largely done by the gamers. That takes control away from them, and places the power in the gamers hands. As broadband capacity increases, p2p becomes more and more attractive.

About the ony thing I know for myself, I have no intention of paying a lot of different monthly fees for online gaming. It's not that big a deal. The increased sales of a title due to implementing online features should be enought to compensate a publisher. I'm paying for the bandwidth, and gamers are essentially paying for their own hosting. Why should I pay the publisher a monthly fee just for the privilege of online play? What are they actually doing that deserves compensation.

I don't mind paying for XBL at the current rates. They're providing a standardized environment for the games and are updating and improving the software. But, if they push the price much past the current rates, I would have to rethink a renewal.

 

[Chris Duran]

I think I read somewhere that EA has spent alot of money building and maintaing their own servers, and basically they want to try to get money their money back and make even more money in the process. I think this year EA is going to start charging for online play, but we shall see. EA is basically in Sony's pocket anyway, and has been for years. They refused to support the Dreamcast, and are now refusing to support online with anyone else except for Sony. I always thought it odd how Sega was the system for their sports games and that's how they got started to the uber empire they are now, and they refused to support the Dreamcast. I guess they were afraid that their sports games wouldn't match up with Sega's. Anyway, that's a whole other topic. Basically I could care less as I'm not going to be buying any EA Sports games, because of their faliure to give 100% support to anyone but Sony.

 

[Jeff Kleist]

With XBL being largely p2p, I don't think there is much that Sega can do about people continuing to play their current 2k3 sports titles,

Sure can. Just reprogram the matching servers to chuck out NFL2K3 requests. As far as EA being in bed with Sony. That's about accurate as the previous DC observation proves

 

[Chris Duran]

True about the Sega part, plus don't forgot Sega has alot of servers set up around the US, anyone remember Sega.net? So P2P is not the only option Sega has.

 

[Scott L]

EA is the pits. They're lack of support for PC games is already horrible. The only reason they want control of the online realm is for the cash, not for any reasons beneficial to the gamer. I can't see them fixing minor bugs here & there or adding extra downloadable features in a console game (nothing worth any extra amount they want to charge anyway).

*Speaking as a disgruntled MOH player.

 

[Michael St. Clair]

Ultimately, the question comes down to this.

Will the market bear a model where, the more games you play, the more you pay?

Personally, I believe the long-term success of online console gaming will only happen with a single flat-rate model that covers most games across multiple publishers. Gamers will pay extra for large, massively multiplayer games, especially those that have persistent environments. They will not pay extra for football games, shooters, puzzle games, and the like. Some will, sure, but not enough to support a pay-for-play model.

That's my opinion, anyway.

 

[BrianB]

With XBL being largely p2p, I don't think there is much that Sega can do about people continuing to play their current 2k3 sports titles, even if they go this route. That takes control away from them, and places the power in the gamers hands.

Peter, I think you're fundamentally misunderstanding the XboxLive service... Yes, some games are hosted by player's consoles as opposed to central servers but before the players can play, you need to hook upto the central server... And the player has no control over the service, the player has no power. All games/connections on Xbox Live have to continually maintain a "heartbeat" to the central Xbox Live server - without that heartbeat, no game (regardless of the hosting type). It would be incredibly easy for Microsoft to chose to deny a game access to that heartbeat. Just refuse connections from any machine running a "disallowed" game.

I'm not saying that's going to happen, just making it clear that technically, it's incredibly easy. And yes, in theory a company could patch their game to use their own service or avoid the Microsoft "heartbeat"... However, there's zero way to get that patch out to consumers without pissing off Microsoft

Don't get hung up on the whole "peer to peer" aspect...

 

[Michael St. Clair]

Most sports games are going to be played by 2-4 people. I wouldn't pay extra to have that server hosted over broadband, it would not improve the quality of play.

 

[Graeme Clark]

Nor is it really feasible. Most online games are P2P and hosted by one of the player's connections. What you'd be paying for is the matchmaking and possible stat tracking provided by EA (much like you already do with XBL).

EA already charges for many of their PC sports games, and I'd be surprised if they don't start to charge for their PS2 games this year (and possibly pull the plug on 2003).

 

[BrianB]

I'd be surprised if they don't start to charge for their PS2 games this year

I believe at E3 they pledged not to this year? Not that means anything with publishers

 

[Michael St. Clair]

Hell, the year is almost half over. They'll come out with more games before Christmas and be charging for online play before the needles have fallen off the tree.

 

[Conroy Tesa]

I though one of the reasons EA want to control their own online strategy is to make sports games unplayable online when the new version comes out. Forcing you to buy the newest Madden/Etc.

Personally I don't really care about EA as I though NHL2K3 blew the doors of the steaming dung heap Nhl 2003.
What a piece of crap!!

 

[Peter Manojlovich]

Peter, I think you're fundamentally misunderstanding the XboxLive service... Yes, some games are hosted by player's consoles as opposed to central servers but before the players can play, you need to hook upto the central server... And the player has no control over the service, the player has no power. All games/connections on Xbox Live have to continually maintain a "heartbeat" to the central Xbox Live server - without that heartbeat, no game (regardless of the hosting type). It would be incredibly easy for Microsoft to chose to deny a game access to that heartbeat. Just refuse connections from any machine running a "disallowed" game.

I'm not saying that's going to happen, just making it clear that technically, it's incredibly easy. And yes, in theory a company could patch their game to use their own service or avoid the Microsoft "heartbeat"... However, there's zero way to get that patch out to consumers without pissing off Microsoft

Don't get hung up on the whole "peer to peer" aspect...

Thanks Brian, I wasn't quite sure how this all worked. In the case of let's say, the sega sports games, if the plug did get pulled on the 2k3 games, (which I hope doesn't happen) it would be MS pulling the plug and not sega, I take it. So, it's still MS running the show, and from what I've read, that's another part of what EA doesn't like about XBL.

I guess, my feelings are that there is very little incentive for MS to deny access to a game since it's not really costing them very much to maintain it, since players are largely handling chores such as hosting. If a company is dedicating servers to the hosting, then that's a different situation, I would assume. Again, I have no idea how much or how little the expense is in maintaining dedicated servers for titles as popular as a madden or a socom on the ps2. I'd be interested in finding out if anybody has any info on this topic.

Personally, I can't think of a better way to piss off players than to shut down a previous generation sports title and require them to buy the latest version just to maintain online play. I know if MS were to do this with the 2k3 games, I'm not sure I would bother renewing my XBL subscription. I just hope all these companies realize that the customer needs to come first if they're going to succeed in the online space.

 

[Keith Frederick]

I think it is ridiculous for EA to implement, or for us to worry about, gamers playing last year's sports games online beyond next year's publishing cycle. It is a natural process. Anyone who is a Madden fanatic to the point that they are still playing the game an entire year later, is definitely going to get the next version anyway. Anyone who is content with the version they have, will be in the minority, and will have a difficult time finding people to play with. I don't think people need to be forced off of last year's games... it will happen naturally.