The video game industry is fragmenting.
That's the familiar refrain. The irresistible rise of smartphones and tablets, together with the arrival of smart TVs and the introduction of Android boxes like Ouya, has broken apart the traditional industry forever. What place can there be for expensive specialist consoles in this fast-paced market of free-to-play casual gaming on multi-functional devices?
And then the PlayStation 4 and Xbox One are announced to a cacophonous reception. There has been hype, excitement, rage and retraction – but what there certainly hasn't been is global apathy. In the midst of the chaos are the giant games publishers – Activision, Ubisoft, Electronic Arts – all trying to make sense of this shifting market place.
Out of those, it is EA that has perhaps moved most gracefully with the tides of change. From 2005, the company has heavily invested in the digital sector with purchases of early mobile superstar Jamdat, and later, casual gaming specialists Playfish and Popcap. Add in the publisher's own PC digital games service, Origin, and 76% of its annual income now comes from digitally distributed games and services.
But according to Frank Gibeau, president of EA Labels, the publisher is reveling in the excitement surrounding the Xbox One and PS4. "Going into E3, a lot of people were writing the story that the tablet killed the console," he says. "The year before that, they were writing that social gaming had killed the console. But the console is back and the pent up demand is being unleashed.
"Sony has announced a million pre-orders for the hardware – they didn't even sell through a million units of the PS3 in its first Christmas. We think that all the indicators and the buzz are there – the living room entertainment experience is still alive and well, and it seems live sports and interactive games are what will drive it. We're excited about these things coming together and creating a new growth kick for the consoles."
EA will certainly have a huge role in the ongoing success of the consoles. Its Fifa, Madden and NBA sports titles will all be launch blockbusters, as will Battlefield 4 – indeed Fifa 14 is being given away to gamers who pre-order the Xbox One machine. The deal led some to wonder whether EA was siding with Microsoft in the coming console war.
"The way to think about it is, we make the bullets for the hardware war, but we want both competitors to be successful," says Gibeau. "Some have suggested that EA tilted toward Xbox One and that's actually not correct. We are agnostic, we're supporting both equally. What you're seeing are tactical marketing programmes that we did throughout all the last cycle – we did them with Sony, with Microsoft, it was a mix and match. That's the nature of first parties and third parties, whether that's EA, Activision or Ubisoft."
As a veteran gamer, Gibeau sees an interesting new dynamic entering the business; the generation that grew up with interactive entertainment is now moving the experience from the bedroom to the front room, and involving the whole family in the process. Which means Sony, Microsoft and Nintendo have no foes to face.
"Guys like you and I who grew up with games are getting older, having families and then playing games with our children," he says. "That natural changeover is happening now – and that's why everyone wants to own the living room; gamers want to spend more time there, and not alone, but with their families.
"Sony and Microsoft are clearly thinking, we want to be the set-top box. Meanwhile, T-Mobile, Comcast, etc, all want the cable box to be it, and the television manufacturers want the smart TV to be it. Apple and Google approaching it, too. I think what's cool is that there's going to be a massive amount of R&D and innovation going in to the living room entertainment experience. We don't see a wall that we can't get past, we just see a lot of new innovation and possibility."
So how competitive are the new consoles in this space? "PS4 and Xbox One are the best living room integration solution," he says. "Smart TVs aren't there yet because they have to rely on streaming, they don't have high-end processors, and they don't have resident memory, you have to go to the cloud.
"The next-gen consoles are the Ferraris in this space – they do the job the best and the price points are competitive: they're cheaper than iPads. I have three kids, and if they could get to their Disney channel downloads through Xbox, the Xbox would be on all the time. It will be interesting to see how the fight takes place between smart TVs, dedicated consoles and then new solutions we haven't even thought of."
As for EA's own plans on the next-gen machines, during the Gamescom event in Cologne last month, Gibeau told several reporters, that the company has six unannounced new IPs in production. "Yeah, but they might not all make it to market," he clarifies. "The trick is to get the right talent together to create a team that can really go after it. That's where you spend most of your time."
For him, the current priority is getting the preparations right. "The first trick is to move to a development environment where there is a lot of leverage and efficiency," he says. "This is why we invested in the Ignite and Frostbite development engines. In the last console transition, we were fighting the technology; ultimately in the mid-point, we had something in the region of 15 to 18 different development environments, which is just inefficient. If you have flexible engines, you can do a lot more with them.
"Last generation, our development costs went up 30%, this time we're running flat and it's because of two things. The first is the engine development, we cut a lot of costs out by focusing on Frostbite and Ignite. The second piece is we've adopted a smaller portfolio. We were shipping 40-60 games a year, now we're in the teens. We want a fewer, bigger strategy, but within that there's still plenty of room for new IP. It's more important to get one great idea out there in a year than launch three that may not work. we're looking at the first three years of this console transition as an opportunity to launch some new titles. We have six we haven't really talked about, we've announced Titanfall, UFC, Mirror's Edge, and we have the Star Wars relationship with Battlefront. That's four business that are new to EA …"
We chat about the games we like – almost inevitably Minecraft comes up. Gibeau has apparently been playing it with his kids, and dealing with the arguments that explode when one destroys another's building project. I also ask, half-jokingly, half-serious, if EA would consider entering the toy-crossover market, going up against Activision's Skylanders or Disney Infinity. There's surely room for interactive Dragon Age, Mass Effect or Plants vs Zombies figurines?
Gibeau laughs. "Disney had a clear opportunity because they had a diverse IP portfolio so they could figure it out, and Activision was brilliant in terms of hitting it first," he says. "I don't want to be third into the action figure and portal market.
"We have other ways to grow our business. We are open to innovative ideas."
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