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Business & Management
EA Games and the Benefit of a Change
To what extent will changing EA Games’s profit focus to customer focus
benefit them?

Word Count: 3900

1

Abstract
To what extent will changing EA Games’s profit focus to customer focus benefit them? That is
the question this essay will attempt to answer
...
The essay then discusses how EA Games introduces their
products into the market, by creating awareness among consumers before the product is released,
to maximize sales and then releases an incomplete product to be able to utilize their pricing
strategies
...

The next part of the essay shows a product life cycle graph of EA Games’s products and how their
pricing strategies can be used as extension strategies, by releasing additional content in the
decline phase of their product life cycle, making their products attractive again
...
Then the essay compares EA Games’s financial results from 2011 to 2015,
showing that EA Games increased their net income by a huge amount in those four years,
specifically due to their increased profit-focused strategies
...
Then the essay moves onto the critical success factors of EA Games, and
how EA Games does not follow its objectives in practice
...


Word Count: 298

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Table of Content

Abstract
...
4
“The Worst Company in America”
...
5
Pricing Strategies
...
7
SWOT Analysis
...
10
2015 Financial Results
...
13
Critical Success Factors
...
16
Bibliography
...
EA Games is a public, American
video game developer, publisher and distributor, with headquarters in Redwood City, California,
United States
...

However, EA Games is not as perfect as it seems
...
This raises a question: To what extent will changing EA Games’s profit focus
to customer focus benefit them? This question is very relevant today, as the change in the video
game industry is at its biggest, as many new independent developers and larger video game
companies begin to realize that customer-orientated strategies and objectives are ultimately more
beneficial
...
Firstly
looking further into the vote discussed above, then EA Games’s marketing mix and their 4Ps of
marketing as well as their unique pricing strategies to get a closer look at why they were voted as
the worst company in America
...
Afterwards, the financial results of EA Games from 2011 will be
compared to their financial results from 2015, and these results will be used in the discussion of the
importance of customer satisfaction for EA Games
...

The conclusion will focus on wrapping up every detail discussed about EA Games and their profitfocused strategies into one detailed and understandable paragraph, which will contain enough
information and perspectives to be able answer the research question and show how EA Games can
indeed benefit from focusing more on their customers
...
gl/4mAbHI
Business Insider: The Worst Company in America: http://goo
...
Business Insider’s article explains how EA Games has focused more on securing
its own profits than satisfying their customers and that “It's part of a larger trend where the
company has focused on profit over the user experience”3
...
This essay will revolve around
this exact problem
...
This will also reveal why their customers voted them as the worst
company in America twice in a row
...

EA Games uses a very efficient strategy to prepare their upcoming video games for the video game
industry
...
S
...
, which is a trade fair for the video game industry
...

The features they announce also begin a so-called “hype-train”, where the consumers glorify the
video game, before the video game is even on the market
...
However, when
EA Games finally releases the video game, many of the promised features are not present, leaving
EA Games’s customers with an incomplete game
...

To set a proper base and understanding for the rest of the essay, the 4Ps of marketing of EA Games
will be looked at
...
gl/lnHvTY
EA Global Code of Conduct: http://goo
...
EA Games promises that the quality of the products will be
excellent, however the products are usually incomplete, and EA Games
attempts to complete the product utilizing extension strategies, discussed later
in the essay, that further increases the price of the product
...


Price

The general price for all EA Games products is $60
...
Along with this price tag, EA
Games also utilizes extension strategies to increase their profits from their
products
...
Now moving onto the actual pricing strategies of EA Games, to
connect the above claims to some actual pricing strategies that EA Games uses to increase their
profits
...
Many people are passionate for video games
and will therefore purchase good-looking video games at launch for $60, without knowing the video
game’s actual quality
...
Therefore, they can allow
themselves to sell their video game at a high price, and gradually lower it to extend the reach of the
video game to those who cannot afford the general price tag
...
This is when
EA Games decreases the price of their video game to attract new customers to their video game and
breathe new life into the multi-player modes of their video games
...
This is where the customer
purchases a full price video game ($60), and is then able to purchase additional content in the game
...
EA Games is
known for having micro-transactions in all of their video games5, and it is possible to purchase every
single item in their video games with money
...

Now moving onto the product life cycle of EA Games’s products to see how these discussed
strategies and pricing strategies actually have an impact on the launch of EA Games’s products and
specifically looking at how EA Games extends its product’s lifetime in the decline phase of their
product life cycle
...


5

VG247: EA’s future games will all feature microtransactions: http://goo
...
They announce the video games long before they are released
and then gradually release teasers from the video game and then a few
weeks before the product hits the market, they announce several new and
unique features
...


Growth

As the video game ages, EA Games uses price skimming to attract more
consumers who could not afford the $60 price tag at launch
...


Decline

This is where EA Games’s profit strategies come into play
...
While EA Games has micro-transactions in their video games as
well as downloadable content the day they launch their products, they keep
the best additional content for the decline phase, as the best additional
content is able to drag many customers back to the game
...
After half a year, the
video game began to die and players stopped playing the multi-player
mode, which made the video game lose its appeal very fast, as multi-player
mode was a vital feature of this video game
...


Looking at their product life cycle, it can seen that EA Games is experienced with their product
launches, and it shows that when EA Games launches a product, it is to create profit, as they market
it to the extent so that everyone is aware of the product and many consumers buy the video game
...

Now that the strategies of EA Games has been discussed, including their launch strategies, their
pricing strategies and their extension strategies, there is enough information to establish a SWOT
analysis
...


SWOT Analysis
EA Games has many strengths, weaknesses and so forth and as discussed before, a simple SWOT
analysis will assist in shaping the idea of EA Games’s strengths that has kept them alive, and the
threats they face due to poor customer satisfaction
...




Widely known in the video game industry



Large customer base who are willing to buy new yearly installments in existing
franchises, such as FIFA or Madden, even though the product does not
drastically change over the years

Weaknesses




Bad reputation of being profit-focused
Completely reliant on their customers

Opportunities




Operate in the growing market of online video gaming
Have the means to focus more on their customers



Reputation of caring more for profits than customers can cause customers to
stop purchasing their video games



Releasing incomplete video games has left many customer angry and ready to
take action against EA Games, for example switch loyalty to a competitor

Strengths

Threats

Owns famous franchises, such as FIFA, which is integrated into millions of
consumers lives

9

As can be seen on the SWOT analysis, EA Games has a very important strength, which is what has
allowed them to use their profit-focused strategies without a real damage to their company, other
than their reputation
...

Now moving onto the financial results comparison that will ultimately show if EA Games’s profit has
increased or decreased as they have increased their focus on their profits
...
The following financial results from EA Games’s 2011 fiscal year have been
taken and simplified from EA Games’s official website and are the financial results of EA Games and
Subsidiaries6:

6

EA Games Full Year FY11 Financial Results: http://goo
...
To figure
out if their profit-focused strategies has paid off, EA Games’s financial results from 2015 will be
taken a look at
...

As can be seen on the financial results, the operating expenses did not drastically change between
2011 and 2015, however, the net revenue increased by $926 million from 2011 to 2015
...
The amount of consumers in the video game
industry has without a doubt increased, however not by a determining amount
...
gl/4mAbHI

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The one thing that has drastically changed is the amount of consumers in the video game industry
utilizing the internet to purchase and download video games, as well as connect with other
consumers and play together
...
Through their most famous franchises, such as FIFA and Battlefield, they
began selling DLC’s through micro-transactions, which are updates or extra content, for a high price
that their customers were ready to pay, as there was no other way of obtaining the extra content
...

Customer Satisfaction Matters
EA Games has vastly underestimated the value of customers of a company
...
According to Leading
on the Edge of Chaos8, which is a book written by Emmet Murphy & Mark Murphy, “a 2% increase
in customer retention has the same effect as decreasing costs by 10%”
...

Vice versa, this means that if they continue decrease their focus on their customers, their costs will
increase, which could be due to extra marketing and so forth
...
Two specific results that are relevant to this essay were discovered in
the survey:
1
...
S
...
”
2
...
S
...
”
When looking over these results, one begins to wonder why EA Games has not increased their focus
on their customers, as that would be far more beneficial than just increasing the price of their
products as a short-term solution
...

To go into more depth regarding how EA Games treats their customers according to their objectives
and how they should treat them according to their objectives, the critical success factors of EA
Games will be looked at
...
Leading on the edge of chaos: The 10 critical elements for success in volatile times
Business Wire: RightNow's Annual Research: http://goo
...


Think players first | Build lifetime players

Release a new video game in known franchises
every year, with little changed, and thereby
attract customers who loved the previous
installments in the franchise
...


As can be seen on EA Games’s objectives and realistic critical success factors above, they have a lot
of objectives that they claim to follow, however the realistic critical success factors above is how
they in practice try to live up to those objectives
...
gl/2inePO

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Objective11

Theoretical Critical Success Factor

Be bold | Go big | Take the right risks

Design and create new video games that are
unique in many aspects and demonstrate how
the video game works and the purpose of the
video game
...


Be accountable | Always do what we say

Promise the creation of amazing and unique
video games, which our customer’s will be able
to follow and view small teasers of the video
game, and then at launch, deliver the full
promised experience
...

Comparing the realistic critical success factor table to the theoretical critical success factor table, it
can be inferred that their realistic critical success factors assist them in reaching a higher profit than
if they were to focus more on their customers, such as in the theoretical critical success factor table
...


11

EA Global Code of Conduct: http://goo
...
Going through their marketing mix, 4PS and pricing strategies, it is clear why EA Games’s
customers despise them, as every strategy they utilize has the purpose of increasing their profits,
such as micro-transactions, while exploiting their customers
...
This can also
be seen on the financial result comparison
...
As discussed, this is due to their increased
for-profit strategies
...

Their critical success factors confirms this, as well as show how they apply their objectives in
practice
...
RightNow’s survey shows that EA Games would
massively benefit from focusing more on their customers, than focusing on their profits as a shortterm solution for their financial issues
...

If EA Games does begin to focus more on their customers, their options would expand beyond
recognition, as with loyal customers, anything is possible
...
Furthermore, if EA Games begins to focus more on their customers, they
would serve as an example of a company that suffered financial losses and applied for-profit
strategies, exploiting their customers, to fix the issue, but ultimately realized that customers are
important and then used their resources to focus more on the customers
...
All there is left is for EA Games to realize that customer focus is more beneficial than profit
focus
...
(2013, February 27)
...

Retrieved June 22, 2015, from VG247: http://goo
...
(2011, May 4)
...
gl/SCj3b5



EA Games Full Year FY15 Financial Results
...

Retrieved August 19, 2015, from EA Investor: http://goo
...

Retrieved June 22, 2015, from EA Investor: http://goo
...
C
...
A
...
Leading on the edge of chaos: The 10 critical
elements for success in volatile times
...




Nisen, M
...
EA's Been Voted 'The Worst Company In America' Once Again
...
gl/lnHvTY



RightNow's Annual Research
...

Retrieved September 28, 2015, from Business Wire: http://goo

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