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.