Global publisher looks to heightened profitability via focused internal projects
Electronic Arts will cut the number of externally developed games it publishes, the company has announced, reducing independent developers’ chances of striking a deal with the global publishing giant.
The move comes as EA looks to recover from dramatic losses in revenue, profit and workforce. The company said during Monday’s financial call that the shift to internally developed titles is part of a wider aim to generate higher margins.
"While we have great relationships with our partners, we are modelling a reduction in our distribution business as we concentrate on higher-margin EA owned titles and digital initiatives," said EA COO John Schappert, as quoted by Gamasutra.
EA’s internally developed console games enjoy profit margins of 60-70 per cent, the company said, while internal PC titles can return 90 per cent. Externally developed games - centralised under the EA Partners label - usually generate lower margins, the firm added.
EA said that, as part of its new plan, a $450 million year-on-year drop in distribution revenues is expected.
However, EA was keen to point out that a handful of externally developed titles remain key to its plans. Crytek’s Crysis 2 and an unannounced product from Epic Games are two of the few independently developed games that will be backed by EA.
It is unknown what affect this will have on internal EA teams. As the publisher looks to be as economical and efficient as possible, internal dev budget cuts would not come as a surprise. EA is focusing its efforts on returning to good health, and recently announced that 800 developers will be cut from the company.
The group recently spent at least $300 million on acquiring Playfish, a social game studio known for returning revenues at comparably low development costs.