How Game Publisher Electronic Arts Got Started
A user of the question-and-answer site Quora recently asked me how the game publisher Electronic Arts its start. Although I’ve never worked directly for Electronic Arts, I was co-owner of a company, Electric Transit, that was Electronic Arts’ first affiliated label publisher, and I did work for EA founder Trip Hawkins later as one of his employees at The 3DO Company. So, I figured that gave me enough expertise to answer the question, and here is the answer I gave.
Electronic Arts founder Trip Hawkins got the idea to start a company publishing computer games while he was a student at Stanford University in 1977. He told his idea to like-minded fellow Stanford student Bing Gordon but estimated that the home computer market wouldn’t be large enough to make such a company viable for another five years.
Sure enough, in February 1982, Trip Hawkins arranged a meeting with Don Valentine of Sequoia Capital to discuss financing his new venture, which he called Amazing Software. Valentine encouraged Hawkins to leave his position as Director of Marketing & Strategy at Apple Computer and allowed Hawkins use of Sequoia Capital’s spare office space to start the company.
On May 28, Trip Hawkins incorporated and established the company with a personal investment of an estimated $200,000. Seven months later in December, Hawkins secured $2 million of venture capital from Sequoia Capital, Kleiner Perkins Caufield & Byers, and Sevin Rosen Funds.
For more than seven months, Hawkins refined his business plan. With aid from his first employee (with whom he worked in marketing 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, and a Stanford MBA classmate, Jeff Burton from Atari for international business development. 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, David Maynard, Steve Hayes, and his friend from Stanford, Bing Gordon, whom he brought on as Chief Creative Officer
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 employees from Apple, Atari, Xerox PARC, and VisiCorp, and Hawkins got Apple’s Steve Wozniak to agree to sit on the board of directors.
After deciding that “Amazing Software” was too pretentious a name for the company, the employees held a meeting that lasted late into the night to come up with a new name, and they selected “Electronic Arts.”
Hawkins wanted to treat software as an art form and called his developers, “software artists.” He decided to model his publishing company after the music publishing industry, and so contracted music producers to instruct his game producers — including Don Daglow, Richard Hilleman, Stewart Bonn, David Gardner, and Nancy Fong — in how to recruit, work with, and promote talent. Electronic Arts game its game developers in its marketing and packaging materials, and modeled its packaging after album covers because Hawkins thought that a record album style would both save costs and convey an artistic feeling.
Years later, as I was driving him to the airport when we were both at The 3DO Company, Hawkins told me about how he was the inventor of the term “producer” for the liaison between a game publisher and a game studio, as well as the term “director” for the person who directly manages the development team. And as much as he promoted the concept of game developers as artists, he told me that every game ever made originated from one of his ideas. I don’t know if he was kidding me or not, but true story!
Electronic Arts, or “EA” as the company was also known, quickly became the biggest game publisher, and has maintained it dominance in the industry for 35 years, even after the departure of Hawkins in 1991 to head up The 3DO Company, as well as Bing Gordon and many of its original executive and producers. As many success stories as there have been in Silicon Valley, Trip Hawkins’ original success with Electronic Arts has to rank as among the greatest.
Working In The Game Industry Before (And During) The Crash Of 1983
I’ve worked in the videogame industry a long, long time. It often surprises people when they hear how long I’ve been developing games: thirty-six years. I made my first game professionally in 1979, when personal computers like the Apple II and TRS-80 were first entering the homes, although several years after the Magnavox Odyssey and Pong had already found their way into the living room.
Someone recently asked me what it was like working in the game industry before The Crash. Ah, The Crash. It still causes a shudder down the spines of those of us who lived through it. The Videogame Crash of 1983 was a massive recession of the game industry that actually lasted from 1983 to 1985. Revenues that had peaked at $3.2 billion in 1983 fell to $100 million by 1985, almost destroying the industry while it was still in its infancy.
I worked in the video game industry for six years before The Crash. However, I didn’t work on console games, which were the primary casualties of this crisis. I worked on home computer games, which was one of the causes of The Crash.
There were actually three things that contributed to the Crash. First, there was a glut of poor-quality videogames on the market, including high-profile failures like the ET-The Extraterrestrial videogame, for which there was such high expectations but poor implementation that the poorly received title was over-produced and much of the inventory was buried in the New Mexico desert. Second, was an over-flooded console market in which just about every electronics manufacturer introduced their own videogame console, only to bail out after the fierce competition caused prices to be reduced to nothing. Third, the introduction home computer provided additional competition for families’ home entertainment spending.
As I said, I first worked on games for home computers for much of my early career in the game industry. I remember it as being an exciting time, where there was a whole new world of interactive entertainment emerging, and as pioneers in a new medium, we were free to explore all sorts of crazy ideas before genres and game mechanics were being solidified — things that you couldn’t do once the big publishers controlled the industry (until indie development came into being thanks to Steam, the App store, Kongregate, and other indie portals).
I worked for a very small publisher and designed/programmed games in a team consisting of only three people: me, myself, and I. I developed games about such bizarre things as colonizing planets while preaching religion and using mind-expanding drugs, running an oil company during the oil crises, programming a television network, and being a spy trying to escape his mind-controlling captors in an adventure game based upon The Prisoner television series.
Those of us who designed computer games saw our work as being much more sophisticated than the type of games being developed for arcade and console systems. I remember attending one of the first Computer Game Developer Conferences, and the big point of debate of whether videogames could be rightly considered “games” and should be given the same consideration at the conference. This snobby bias lasted for several years until the Conference dropped the word “Computer” from the title.
While working on computer games was very fulfilling creatively, I didn’t make a lot of money. I made the meager sum of $800 a month when I got my first job after graduating college. The company, Edu-Ware Services, was run out of the founder’s apartment. He and I worked on folding tables in the living room, while our sales rep worked out of the bedroom. Our fourth member would only show up occasionally while he was finishing up his bachelor’s degree at UCLA.
We would churn out a new game or educational software in anywhere from three days to three months, depending on the scope and how badly it was needed to bring in revenue. When one of us made a product, the others would test it. When it was ready to ship, I would usually be the one to make copies, inserting 5-1/4 inch floppy disks on at a time into the disk drive. We would print out disk labels on standard mailing labels using a daisy-wheel printer, photocopy documentation at the nearest copy place, and then put everything in Zip-lock bags to ship off.
We did make a profit, and within a year we made enough money to move into a real office, and then a couple of years later, into an even bigger one. Our staff grew to sixty employees when Edu-Ware reached its height, and I was earning enough money ($35,000 a year) to trade in my Honda Civic for a Toyota Supra. Our growth was successful enough to attract the attention of a mainframe entertainment software company, Management Sciences America, to purchase us so that they could gain a foothold in the home computer industry.
And then there was The Crash. Our sales when to nothing, and MSA dissolved our company. Four of us got together to form a new company, Electric Transit, which specialized in 3-D simulations like Wilderness: A Survival Adventure and Lunar Explorer: A Space Flight Simulator. Our games were well reviewed, but alas The Crash was still in effect, and we never made enough in sales to keep the company going. We worked for two years without a salary, with only a collection of good reviews from the game magazines to show for it.
After The Crash ended, I joined The Walt Disney Company as its very first video game producer, but that’s another story for another day.