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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.

 

 

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The Gamification of America, Part 1

The Gamification of America

One of the moms in my son’s Boy Scout Troop happens to be an adjunct professor at the USC Institute of Multimedia Literacy, and last week she invited me to speak to her Mobile Applications Design class about anything I wanted. I pulled together some topics from pervious talks I had given and chose what I thought was a dramatic title: The Gamification of America. Here are some excerpts from my talk.

What makes this image of an elderly couple playing a video game so funny? Partly, it’s because we’re watching them from the perspective of the video game. But mostly, it’s because it defies our expectations. We tend to think of videogamers as teenagers, especially teenage boys. However, our expectations are not the reality.

ESRB Gamer Stats 2010

According to a survey conducted by the ESRB in 2010, gamers aren’t necessarily teenage boys (40% of all gamers are female), they aren’t even necessarily teenagers. In fact, only 25% of gamers are under the age of 18, while slightly more (26%) are over the age of 50. So, the image of the two elderly gamers above is as close the truth than would be the image of two teenage boys playing games.

Now, when I first started making games in the 1980’s, games were made by computer hobbyists, games were sold in computer hobbyist stores, and games were played by computer hobbyists. However, as the game industry grew, large publishers such as Activision and Electronic Arts formed, and games were marketed to the teenage boys who previously played pinball and arcade games in America’s arcade parlors. Game development became more sophisticated, with larger teams and higher production values, and so did game distribution, which penetrated big-name retail chains like Toys R Us and Walmart.

I would sum up the trends I saw during my first 25 years in the game industry as follows:

  • Big market (AAA) titles increasingly dominate game sales and settle into a small number of well-defined game genres
  • Team size, budgets and retail price grow larger and larger
  • Games sold in “brick and mortar” stores — originally just in “mom and pop” computer hobbyist stores and then increasingly in big retailers like Walmart
  • PC game market gets eclipsed by console game market
  • Games played either in family room or in console game market
  • Games mostly played by “hardcore gamers” (teenage boys)
  • However, about a decade ago, several technological changes took place and began to reverse these trends. The acceptance of the Internet for online purchasing gave game developers a route around the big publishers and retailers who decided which game concepts were appropriate for store shelves. Digital distribution through such outlets as Valve’s Steam allowed developers to offer their games directly to potential customers. Social and casual games playable on the internet, usually with a free-to-play option, found an audience much broader than the traditional hardcore gamer, spanning both sexes and all ages. Finally, the development of mobile phones capable of purchasing, downloading and playing games created a market for games of a smaller scope and made with a much smaller budget than those offered in retail stores.

    Thus the trends over the past ten years have been as follows:

    • Blending of big market (AAA) titles alongside smaller market (AA) titles
    • Indie and small development teams continue to rise
    • Mobile market continues to grow
    • Digital distribution has been a viable source for purchasing games for years and shows no sign of slowing
    • You now must be logged in to play games, although the games may be free-to-play
    • Games being played by everyone, everywhere, all the time

    In many ways, the game industry has come full-circled to where it was in 1980, where a broader variety of games are available to play thanks to removal of the structure and restrictions that developed as the industry first matured.

    In Part 2, I will define just what is a “game”.