Electronic Arts: Encyclopedia II - Electronic Arts - History

Electronic Arts - History

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 Computer, 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 established the company with a personal investment of an estimated $200,000 USD. Seven months later in December 1982, Hawkins secured $2 million USD of venture capital from Sequoia Capital, Kleiner, Perkins, Caufield & Byers, and Sevin Rosen Funds.

For more than seven years, Hawkins had refined his Electronic Arts business plan. With aid from his first employee (who he worked in marketing with at Apple), Rich Melmon, the original plan was written 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, eight more people were employed, including Bing Gordon. 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. An additional eleven people were employed in 1983, including Don Daglow and Richard Hilleman.

The Sales Department struggled early in the company's history, until the arrival of future CEO Larry Probst as VP of Sales in 1984. Teaming with Nancy Smith, Probst built the largest sales force of any American game publisher, and eliminated virtually all independent distributors from EA's retail network. 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.

The other early founders of the company universally disliked the Amazin' Software name. In October 1982 they held an off-site meeting to come up with a better name for the company.

The business plan had suggested the name, "SoftArt," meant to imply that the company's software was a new kind of art. However, Hawkins and Melmon knew the founders of Software Arts, the creators of VisiCalc, and thought their permission should be obtained. But they did not want the name used because it sounded too similar to their own. However, the name concept was liked by all the attendees.

Then Gordon proposed "Electronic Artists," in tribute to the film company United Artists. However, Steve Hayes opposed, saying, "We're not the artists, they are..." meaning that the developers whose games EA would publish were the artists. Finally Tim Mott proposed Electronic Arts, and the name was liked and approved by all.

According to the 1982 business plan, EA's original business goals were to grow to a billion dollar company in about 6 years. Another goal was to "make software that makes a personal computer worth owning." At the time, Electronic Arts was the 136th game publisher in the US, but the first to reach the billion-dollar goal (although it actually took 12 years).

A novel approach to giving credit to its developers was one of EA's trademarks in its early days. EA was the first video game publisher to treat its developers like rock stars in an industry where developers were more prone to be treated like nameless factory workers. This characterization was even further reinforced with EA's packaging of most of their games in the "album cover" format of the late 1980s-'90s. This format was pioneered by EA because Hawkins thought that a record album style would both save costs and convey an artistic feeling. EA routinely referred to their developers as "artists" and gave them photo credits in their games and numerous full-page magazine ads. EA also shared lavish profits with their developers, which added to their industry appeal. Because of this novel treatment, EA was able to easily attract the best developers.

In May of 1983 EA shipped:

• Hard Hat Mack for the Atari 800 and Apple II
• Archon for the Atari 800
• Pinball Construction Set for the Atari 800 and Apple II
• Worms? for the Atari 800
• M.U.L.E. for the Atari 800

Three of these five, Archon, Pinball Construction Set, and M.U.L.E., are still considered cornerstone products in the history of video games. Worms? is unrelated to the Worms series of turn-based artillery games; it is a computer toy in which the user trains worms—represented as lines—to move in patterns on a network of nodes.

After a very successful run on home computers, Electronic Arts later branched out and produced console games as well. Eventually Trip Hawkins moved on to found the now defunct 3DO company. In 2003 he founded a new mobile phone software company, Digital Chocolate, that also began life in the Sequoia offices and had Sequoia Capital and Kleiner Perkins as its lead investors.

In 2004, EA made a multimillion dollar donation to fund the development of game production curriculum at the University of Southern California's Interactive Media Division. In addition to the funds, EA staff members have been active teaching and lecturing at the school.

EA is now headquartered in Redwood City, California. Its current CEO is Larry Probst.

Probst considers himself a man of principle and has refused to follow the M-rated example set by Take Two Interactive, whose violent Grand Theft Auto franchise became the dominant brand in many key demographics from 2000 through 2003. As a result, Probst has been heavily criticized by Wall Street analysts, who believe that because of this policy, EA's stock price is lower than it should be (though it has maintained a general upward trend in recent years). In late March 2005, Electronic Arts issued its first ever mid-quarter profit warning blaming hardware shortages and lower than expected fourth quarter sales [2].

Recently, EA's CEO has changed his stance on M rated games, and now EA has several titles that compete in the M rated, adult game market.

Adapted from the Wikipedia article "History", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki