Why?

Strategic thinking. I believe that this is the overriding reason why Electronic Arts is, and will continue to be, the premium player in the game industry. To be honest, strategic thinking is a the American shorthand for long-term planning. While most American companies in the technology sector shy away from long-term planning, most of the good ones are willing to cover up their short-termism with strategic planning. For Electronic Arts to do this in the unpredictable world of computer games is in itself an achievement of note.

The results of strategic thinking at Electronic Arts can be seen in a few key areas:

Senior Management - In so far as senior management is concerned, Electronic Arts retains a core group of executives that have had a relatively long, and prosperous tenure at the San Mateo, California company. It's a little easier to make plans, and execute on them, if you have the time and patience to get it right. Franchise titles and studios - Command and Conquer, Wing Commander, Sim City, Madden Football, the list of franchise titles and studios at Electronic Arts puts to shame most other publishers. Whether you are addicted the game-play, or not, Electronic Arts titles consistently perform at the highest levels in their genre categories. It sounds easy in theory, but Electronic Arts acquisition portfolio has been shrewd, and the next key area is one reason why it succeeds for them. Distribution - Electronic Arts has direct distribution in almost all of the major World game markets. The company sells its products almost exclusively through retail in the US. That's quite a network. Feed it right, and you can't but help achieve volume sales. Product Mix - In the last quarter Electronic Arts revenues from PlayStation slipped by 5 per cent, compared the same quarter last fiscal year, while the company's revenues for N64 jumped from $6.1 million to $30.6 million, in the same period, on the strength of only two new SKU releases for N64 in the quarter. Of course, out of the company's almost $278 million in revenues, $103.7 million still came from PlayStation CDs. Also, in the same period, PC CD sales rose from $43.7 million to $87.6 million. Electronic Arts is well versed in juggling its mix of platform SKUs to take advantage of opportunities in the channels. The company is taking advantage of the growth in low cost PC sales because, it sells its titles in the same retail markets as the PC manufacturers sell their boxes. N64 is lucrative, and in need of sports genre titles to match up with PlayStation. Electronic Arts obliged with Triple Play 2000 and Beetle Adventure Racing. The PlayStation market is saturated, and will probably have some uncertainty as Sony makes the painful transition to its next generation console so, Electronic Arts is less sanguine about this market. Yet, PlayStation revenues are healthy and profitability in Electronic Arts franchises are assured. Again, Triple Play 2000 reared its head on the PlayStation as it did on N64 and the PC.

You have got to love Electronic Arts for its business acumen. The company isn't on the bleeding edge of technology, and it's unlikely to restrict its market by exclusively targeting any one piece of hardware at the expense of another, at least, not for long. The statistics also speak volumes about how steady the company has been in recent years. A model citizen, if you will.

I came to have a better appreciation of Electronic Arts working on the 1999 Game Publisher Profiles Report (for more details on this, and other Miller Freeman Game Group Research visit www.mfgame.com ). I hope to continue using some of that insight gained there to pepper Second Hand Smoke in the coming months with similar bits on the other game publishers.

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