Electronic Arts

Engineers at a New Hampshire based defense contractor, Sanders Associates, developed the first video game. It was created by Ralph Baer who was the manager of equipment design at Sanders Associates. In August 1966 when he came up with the idea of making a game for a television set. In 1967 employee Bill Rusch, assigned to the project, proposed a new game in which the hardwired logic circuit projected a spot flying across the screen. Originally the object of the game was for players to catch the spot with manually controlled dots. Over time, the players' dots evolved into paddles and the game became ping pong. Baer tried to find a buyer for his invention but had trouble finding interested parties. Finally in 1971 he struck a deal with Magnavox to produce the Magnavox Odyssey which was sold in 1972. Unfortunately the product was poorly advertised and extremely overpriced and eventually was forgotten by most people. This event marked the beginning of the video game industry which took another 10 years or so to evolve.

On May 28, 1982 Trip Hawkins new venture Amazin' Software was established with an estimated $200,000 personal investment. Several months later, in December, Hawkins stabilized the company further with 2 million dollars of venture capital from Sequoia Capital guaranteed. Shortly thereafter the company changed its name to Electronic Arts (EA). They took a novel approach at giving credit to its developers which is one of their early trademarks. EA was the first video game publisher to treat its developers like artists in an industry where developers were more likely to be treated like factory workers. EA also shared lavish profits with their developers, which added to their industry appeal.

"Electronic Arts, Inc. engages in the development, publishing, and distribution of interactive software games that are playable by consumers on in-home video game players, personal computers, mobile video game players, the Internet, and worldwide" (www.finance.yahoo.com). They manufacture many different types of games which include adventure, action, role playing, simulations, strategy, and sports. The company has development and production studios situated around San Francisco, Los Angeles, Orlando, Chicago, Vancouver, Montreal, London, and Tokyo. EA develops their games from within the company but they also collaborate with other game developers to produce the software which EA eventually publishes, markets, and distributes. They also offer a free web site which carries four brands of games which include: Pogo, EA Games, EA Sports, and EA Sports Big.

Electronic Arts operates with, or uses four different suppliers in the production of their video games. Sony and Nintendo supply the CDs, DVDs, and optical disks on which Electronic Arts furnishes to make video games. There are companies that press the disks and convert them into video games. There is a company that makes and prints the instruction booklets. And finally there is a company that packages and boxes the video games for shipment.

There are around 250 to 300 million video gamers worldwide that play video games frequently and about 100 million infrequent users. The average age of video gamers ranges from 20 to 40 year old range including preteens, teenagers, and young adults. The average age of video gamers is rising due to the amount of teenagers continuing to play throughout their adult years. As a result of this game developers are releasing games with more mature content. The video game industry has grown because of several factors including broader game content, the evolution of the video game consoles, better graphics, and the ability to play games online.

The software segment of the video game industry was highly competitive, characterized by the continuous introduction of new games and updated game titles and the development of new technologies for creating and playing games. The developers of software games ranged from small companies with limited resources to large corporations with significantly greater resources for developing, publishing, and marketing video game software" (Thompson & Gamble, 2006, pg.308). While these companies are in competition with each other they are also in competition with Sony, Microsoft, and Nintendo to get licensed to make games for specific consoles.

EA manufactures its games for use with three major consoles in the video game industry. EA revenues in 2003 for each platform included 37% from Sony's Playstation 2, 7% attributed to Nintendo's GameCube, and 9% generated from Microsoft's Xbox. In 1994, "Electronic Arts was authorized to develop and distribute Cd-based software for Playstation, with all Playstation CD's being sourced from Sony" (Thompson & Gamble, 2006, pg.317). They released 19 new video game titles in 2003 as compared to 18 in 2002. Their relationship with Sony is considered good. In 2001 EA signed a licensing agreement stating that Nintendo would supply all the optical disks for making the games directly to EA. They released 17 games worldwide as opposed to 5 in 2002. EA believes that they have a strong relationship with Nintendo. In their licensing agreement with Microsoft "Electronic Arts was authorized to develop and distribute DVD-based video games to play on the Xbox; unlike its agreement with Sony and Nintendo, it was not compelled to source its DVDs from Microsoft" (Thompson & Gamble, 2006, pg.318). Their relationship was further strained when Microsoft denied the collecting of revenues from online play of Xbox games. It is not clear though whether this would affect their relationship with Microsoft in the future.

There is widespread competition within the development and production of video games. Sega withdrew from making consoles in 2001 and began focusing on the development of video games. They set out to create the world's best games for all gamers by publishing content on multiple platforms. They were also trying to establish themselves in sports games so they signed on with ESPN. Unfortunately, Segas dreams of making future NFL games was shattered when EA revealed a new 15-year licensing agreement with ESPN, starting when Segas contract runs out next year.

Acclaim Entertainment is a worldwide developer and publisher of software for Playstation 2, Gamecube, Xbox, and personal computers. Acclaim relies on regional distributors to deliver their games directly to retailers and other outlets. They have subsidiaries in North America, the United Kingdom, Germany, France, Spain, and Australia. They target males ages 15-35 and try to develop games for a wide variety of audiences.

Activision, Inc. is the leading international publisher of interactive entertainment software products. The company maintains a diverse portfolio of products that