Electronic Arts vs

Activision Blizzard

Presented By :Kaitlin Camporese

Zachary BergoineSakib Hussain

Introduction

Electronic Arts-Founded 1982-PC,Console, Mobile-Market(North America 40%)-Sports, Action RPG, Racing

Activision Blizzard-Founded 1979- Animation Studio “Dreamworks”- Activision and Blizzard which focus on games, covers 56% and 36% of revenue

Game Industry has a potential to grow $43 billion in next 5 years.

GAMING INDUSTRY

Report by ESA(Entertainment Software Association)

Industry Analysis - Bargaining Power of the Suppliers/ Complementary Goods

Software Developers are at the bottom of the supply chain

Work with Hardware Developers

Both are interconnected to each other’s success

Hardware dictates what the software developers can create and do

Hardware developers need software in order to compete and appeal to customers

Software developers sometimes contract to specific hardware

Competition

7692 Companies in gaming IndustryOnly 4 generate revenues over 50 millions

Large differences in products sold

EX. Mobile vs Console Games: Angry Birds vs Grand Theft AutoCost and Price differences

Graphic and technological differences

Distribution differences

Different Genres

Demographics

Industry Analysis - Threats of Entry

Economies of Scale

Product Differentiation

Capital Requirements

Access to Distribution Channels

Learning/Experience Curve

Industry Analysis - Threats of Substitutions

Low Cost of Switching

Substitute products are cheaper

Indoor vs Outdoor

Online and Cloud based Mobile games

Industry Analysis - Bargaining Power of the Buyers

Two buyers in the industry: Retailers and Final Customers

Limited Shelf space - Allows more power for retailers

Large amount of potential substitutes

Brand Loyalty

Easy Access to Relevant Information (IGN, E3)

Bargaining Power of Buyers: Strong

Key Success Factors

Ability to adapt to new technology

Strong presence across multiple platforms

Through retailers and digital

Distinct advertising campaign

Strong brand image

Offer a wide range of products

Different genres/consoles

General EnvironmentSomewhat risky industry

Personal Income

Very Hit and Miss

Sequels and pre determined genres hold the most profit

Goat Simulator, Dumb ways to Die

5% Growth

https://www.youtube.com/watch?v=d7lQdTgEQJ0

http://coffeestainstudios.com/sites/default/files/games/logo/goat_simulator_logo_0.jpg & https://i.ytimg.com/vi/IJNR2EpS0jw/maxresdefault.jpg

General Environment - Trends

Increase in development costs as technology advancesThus, the price or quantity sold must increase in order to make up deficit

Leads to acquisition of studios who develop games, rather than develop themselves

Rise of Women GamersMake up 50% of customer base

Rise of Massively Multiplayer Online Games (MMOG)Allows people to play with others all across the world

Constantly trying to create a more realistic and immersive experience

vibration of controllers or possible virtual reality game in the future

Internal Analysis - Business Strategy

Electronic Arts:

Differentiation Strategy

Able to obtain competitive advantage through licensing agreements and distribution strategy

Activision Blizzard:

● Focus market● Online and Subscription

Based- World of

Warcraft, - Diablo

● Better communication with customers

● Digital delivery of content

Value Chain Analysis - Inbound Logistics

Electronic Arts:

Small portion of firm’s activities

Primarily Electronic Arts itself that acts as a supplier to other video game manufacturers

EA does work and negotiate with independent contractors to obtain ideas for new video games

Activision Blizzard:

● supplier to other game console manufacturers

● Console gaming generates 82.76% of total revenue for Activision

● Game Servers

Value Chain Analysis - Operations

Electronic Arts:Designing, developing, and

distributing software on both a domestic and global scale is essentially the main goal of EA

Model on Entertainment industry instead of Video game industry

License Agreements

Activision Blizzard:

● Two main Segments○ Activision (56%)○ Blizzard (36%)

● 25+ game studios around the world. ● Dreamworks Animation Studio● Demo Version and direct user

feedback.

Value Chain Analysis - Outbound Logistics

Electronic Arts:Another core capability – many firms sell

goods via a third party to retailer, while EA sells to customers and retailers directly

The organization also invests heavily in a digital strategy which allows them to sell products to final consumers directly.

In 2011, EA launched Origin, which is a digital interface that allows consumers to buy and download video games from their computer.

Also utilizes mobile applications

Activision Blizzard: ● Sales houses around the world● Third party seller (Humble Bundle), Total

Interactive and many others for their distribution channel.

● Digital game stores Steam, PSN and Battle.net(Online Sales)

Value Chain Analysis - Marketing and Sales

Electronic Arts:

Moving toward digital platform

Events - E3

Television programming and social media

In-game advertising

Activision Blizzard:

● Retail Sales● wholly-owned European

distribution subsidiaries: - Centresoft in the UK - NBG in Germany

● Mobile Game (Feedback)● Online Game forums

(Gamespot)

Value Chain Analysis - Services

Electronic Arts:

Not surprisingly, as digital revenues continue to rise, so too, does service revenue. For EA, service revenue represents 40% of overall sales

Activision Blizzard

● The company provides technical supports via email or telephone.

● Activision has service team aligned for the users of Steam or Battle.net who help the customers for installation and registration for the game.

Value Chain Analysis - Procurement

In order to obtain the necessary resources to function successfully, EA and Activision both generally looks toward independent contractors.

Mostly, these contractors provide ideas for new video games.

Value Chain Analysis - Human Resource Management

Electronic Arts:Culture - Hard work and Success

Values Honesty

Appointment of positions based on merit alone

Mediocrity and lack of passion is not tolerated

The worst thing an employee can do is miss a deadline

Activision Blizzard:

● Fortune top 100 Companies to work for

● arrange storytelling events, visual drama and many other activities to make the workplace fun and effective

● They have more than 30% of minorities

● More than 20% female in top management

● College Tuition Reimbursement up to $7,500, paid vacation, up to 90 days of maternity leave and yearly bonuses

Value Chain Analysis - Technological Development

Electronic Arts:Technology is an important aspect of

EA’s overall business, starting with the establishment of 3DO Inc., a joint venture whose primary purpose was to license technological advancements to hardware companies

Groundbreaking breakthrough in 2012 - The organization spent $250 million on a technology that would allow for consumers to play the same game on several different hardware

Activision Blizzard:

● Activision used IW game engine to develop “Call of duty” which is recognized as best graphics for its genre.

● Blizzard Online Network Services run in 10 data centers around the world.

Value Chain Analysis - InfrastructureElectronic Arts:

Three major parts: Corporate, Publishing Function, and Studios/Labels

Studios responsible for production of its video games

Prior to 2014, six studios existed: EA Games, EA Sports, BioWare, Maxis, PopCap, and All Play. As a result of restructuring, the only labels that are currently in operation are EA Studios, Maxis, and EA Mobile.

Decentralized Approach - Studios relatively autonomous

Central Headquarters ensures that studios/labels are following overall vision

Activision Blizzard● Similar to EA on Production of

games● 25+ Studios● New Sports division● Ten top executives are

responsible for acquisitions, expansions and publishing new games to market.

Corporate Strategy

Electronic Arts:

Narrow Scope

Stay within gaming industry

Four Different Studios: Bioware, EA Games, Maxis, and EA Sports

More Focus less sharing

Strategic Acquisitions of Smaller gaming Companies

Activision Blizzard● Narrow Scope of Business● Stay within gaming Industry● Two Studios: Activision and

Blizzard○ Share Resources but less

focus● Strategic Acquisitions of

smaller gaming Companies● Candy Crush

Corporate Strategy(EA)

BioWare

Command & Conquer

Dragon Age

Mass Effect

Star Wars: The Old Republic

EA GamesDICE (Sweden)BattlefieldCriterion (UK)BurnoutNeed for SpeedVisceralDante's InfernoDead SpaceVarious EA studiosMedal of HonorThird-partyCrysis (Crytek)Half-Life (Valve)Rock Band (Harmonix)

MaxisThe SimsSpore

EA SPORTSFIFAMadden NFLNASCARNBA StreetNHLSkate 3SSXTiger Woods PGA Tour

Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc

Corporate Strategy (Activision Blizzard)

ActivisionBakugan

Band Hero

Cabela's Big Game Hunter

Cabela's Survival: Shadows of Katmai

Call of Duty: Black Ops II

DJ Hero

GoldenEye 007: Reloaded

NASCAR Unleashed

Activision( Cont)Prototype

Rapala for Kinect (fishing game)

Spider-Man

Skylanders Giants

Skylanders Spyro's Adventure

Tony Hawk

Transformers

True Crime

X-Men: Destiny

BlizzardDiablo

Star Craft

World of Warcraft

Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc

Financial Comparison

Financial Analysis Comparison

Annual Sales 2014 Net Profit Margin 2014

Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc

Financial Analysis EAAnnual Net Profit Margin

Annual Revenue vs NI

Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc

Financial Analysis Activision BlizzardAnnual Net Profit Margin

Annual Revenue vs NI

Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc

Implementation

Electronic Arts:

Implements strategy through human capital

Employees are rewarded for hard work and determination (stock options)

Open and honest culture in which creativity is valued

Activision Blizzard

● Independent Division implementing different strategies.

● Different teams for different genre of games.

Recommendations Electronic Arts:

Continue licensing system/agreements

Continue to invest in digital platform

Stay ahead of the curve in terms of technology

Prepare for possibility that Virtual Reality games will take over industry

Activision Blizzard

● Continue developing and acquiring mobile games

● Enter into Sports game segment

Recommendations

Recommendations

Electronic Arts:

Continue licensing system/agreements

Continue to invest in digital platform

Stay ahead of the curve in terms of technology

Prepare for possibility that Virtual Reality games will take over industry

Activision Blizzard

● Continue developing and acquiring mobile games

● Enter into Sports game segment

● Augmented Reality

The VOIDLindon , UTAH

https://www.youtube.com/watch?v=cML814JD09g