EA has gone through some big changes recently with the reorganization into the four labels. How long was that in the works and why was it needed?
Frank Gibeau: John Riccitiello came back as CEO back in April, and let me just talk a little about the context on that. He left EA at a point in time where he was president of publishing and he had seen how the business was working in that last cycle and then he went out into the private equity world and he got to look at us from afar and he got to look at the industry from a completely different perspective and it gave him a lot of key learnings about how things are moving, shifting and changing. And in early April he came back and he engaged the management team with a couple things. He said, "Look, here's what I've learned since I've been gone and now that I've come back." What we used to be really good at was nailing a world where we had three major platforms and a couple major markets and you'd hit it, and bang you were number one and you rolled through the whole transition, and the customers were more same than they were different.
Now you're dealing with incredible complexity and incredible fragmentation in the market. You have eleven platforms and you start to roll things in like PCs in Asia and phones and two different handhelds, maybe three if you include the GBA, multiple console platforms and then you have an incredible proliferation of categories. You've got things like 3D social networking like Second Life, as well light PSWs like Club Penguin at the same time that you have WoW and at the same time you have these mass console things happening. So as I said, you have 11 platforms, you have more customers, they're more fragmented and [John] comes back and says, "You know what? This is a really cool place to be in. There's a lot of opportunities out there but it's going to require EA to think differently and to start to configure itself differently in order to go after these opportunities." It was one of those things where, at its core, by bringing together the marketing function and the studio function together under one person, that's enhancing the ownership of how you bring products to market. Regardless of the platform or customer type, there's somebody who's now holistically looking at the whole thing. In our old structure, we had a studio organization and publishing organization that then met at the top and it operated off of a lot of teamwork in between. Problem is, as the market got fragmented, those two pieces moving together across eleven platforms and multiple regions... it became too unwieldy. It wasn't that the talent and the quality of the thinking was wrong, it was just prioritizations and the amount of complexity inside that was required to get something done was just a little bit too much.
So, when you look at it, refreshing and sharpening the focus, ownership and accountability by moving to a label structure really starts to equip the organization to go after these new things. At the same time, though, you continue to keep what you do great, which is that competitive advantage that we had in publishing, which is the global reach of our organization. You keep that as a horizontal foundation block; HR, finance, sales, publishing, those kinds of things. All of those labels operate off of those kinds of things that make the company great. In terms of core competitive advantage it gives you scale, but at the same time, we're getting more focused. In my old job, I looked at everything from the Jamdat acquisition with corporate development teams and studio to sports to casual to Sims to our various EA franchises. Now I'm much more narrowly scoped. My job is to go in and look after products that are in the EA Games label, like Need for Speed, Spore, Medal of Honor, Battlefield, the EAP businesses with Hellgate and Rock Band. So my focus is a lot more narrow and I also get to work with the development teams directly and the publishing teams and look at that holistically from the standpoint of date, quality and profitability.