Electronic Arts
Electronic Arts
Electronio Arts is an American developer, marketer, publisher, and distributor of computer and video games. Established in 1982 by Trip Hawkins, the company was a pioneer of the early home computer games industry and was notable for promoting the designers and programmers responsible for its games. Originally, EA was a home computing game publisher. In the late 1980s, the company began developing games in-house and supported consoles by the early 1990s. EA later grew via acquisition of several successful developers. By the early 2000s, EA had become one of the world’s largest third-party publishers. In 2007 EA ranked 8th on the list of largest software companies in the world. In May 2008, the company reported net annual revenue of US$4.02 billion in fiscal year 2008. Currently, EA’s most successful products are sports games published under its EA Sports label, games based on popular movie licenses and games from long-running franchises like Road Rash, Need for Speed, Medal of Honor, The Sims, Command & Conquer, Battlefield and the later games in the Burnout series.
History
1982-1991
In February 1982, Trip Hawkins arranged a meeting with Don Valentine of Sequoia Capital to discuss financing his new venture, Amazin’ Software. Valentine encouraged Hawkins to leave Apple Inc., in which Hawkins served as Director of Product Marketing, and allowed Hawkins use of Sequoia Capital’s spare office space to start the company. On May 28, 1982, Trip Hawkins incorporated and established the company with a personal investment of an estimated US$200,000. Seven months later in December 1982, Hawkins secured US$2 million of venture capital from Sequoia Capital, Kleiner Perkins Caufield & Byers, and Sevin Rosen Funds.
For more than seven months, Hawkins had refined his Electronic Arts business plan. With aid from his first employee (whom he worked in marketing with at Apple), Rich Melmon, the original plan was written, mostly by Hawkins, on an Apple II in Sequoia Capital’s office in August 1982. During that time, Hawkins also employed two of his former staff from Apple, Dave Evans and Pat Marriott, as producers. The business plan was again refined in September and reissued on October 8, 1982.
Between September and November, employee headcount rose to 11, including Tim Mott, Bing Gordon, David Maynard, and Steve Hayes. Having outgrown the office space provided by Sequoia Capital, the company relocated to a San Mateo office that overlooked the San Francisco Airport landing path. Headcount rose rapidly in 1983, including Don Daglow, Richard Hilleman, Stewart Bonn, David Gardner, and Nancy Fong.
Early sales strategy
Hawkins was determined to sell directly to buyers. Combined with the fact that Hawkins was pioneering new game brands, this made sales growth more challenging. Retailers wanted to buy known brands from existing distribution partners. Despite this, revenue was $5 million in the first year and $11 million the next. Former CEO Larry Probst arrived as VP of Sales in late 1984 and helped the company sustain growth into $18 million in its third full year. Teaming with the existing sales staff that included Nancy Smith, David Klein, and David Gardner, Probst built the largest sales force of any American game publisher. This policy of dealing directly with retailers gave EA higher margins and better market awareness, key advantages the company would leverage to leapfrog its early competitors.
In December 1986 David Gardner and Mark Lewis moved to the UK to open a European headquarters. Up until that point publishing of Electronic Arts Games, and the conversion of many of their games to compact cassette versions in Europe was handled by Ariolasoft. A small company in Wales was already called Electronic Arts, and until 1997 Electronic Arts in the UK was known legally as EOA, a name derived from its square/circle/triangle logo. The Welsh company ceased trading in 1997 and Electronic Arts acquired the rights to the name.
Name change
Some of the early employees of the company disliked the Amazin’ Software name that Hawkins had originally chosen when he incorporated the company. While at Apple, Hawkins had enjoyed company offsite meetings at Pajaro Dunes and organized such a planning offsite for EA in October 1982. Following a long business day at the offsite, the dozen employees and advisers who were present agreed that they would stay up that night and see if they could agree unanimously on a new name for the company.
Hawkins had developed the ideas of treating software as an art form and calling the developers, “software artists.” Hence, the latest version of the business plan had suggested the name “SoftArt”. However, Hawkins and Melmon knew the founders of Software Arts, the creators of VisiCalc, and thought their permission should be obtained. But Dan Bricklin did not want the name used because it sounded too similar (perhaps “confusingly similar”) to Software Arts. However, the name concept was liked by all the attendees. Hawkins had also recently read a best-selling book about the film studio, United Artists, and liked the reputation that company had created. Early advisers Andy Berlin, Jeff Goodby, and Rich Silverstein (who would soon form their own ad agency Goodby, Silverstein & Partners) were also fans of that approach, and the discussion was led by Hawkins and Berlin. Hawkins said everyone had a vote but they would lose it if they went to sleep.
Hawkins liked the word “electronic”, and various employees had considered the phrases “Electronic Artists” and “Electronic Arts”. Other candidates included Gordon’s suggestion of “Blue Light”, a reference from the movie “Tron”.
When Gordon and others pushed for “Electronic Artists”, in tribute to the film company United Artists, Steve Hayes opposed, saying, “We’re not the artists, they are…” meaning that the developers whose games EA would publish were the artists. This statement from Hayes immediately tilted sentiment towards Electronic Arts and the name was unanimously endorsed.
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