John Riccitiello has resigned his positions as CEO and board member at EA as of the end of their fiscal year (March 30). Riccitiello, who has been with EA since 2007, has lead their transition from what was mainly a boxed product company to what is now largely a digital business. However, the transition has come at a cost and while competitor Activision Blizzard have posted record profits, EA have been struggling with profitability. Some would point to costly endeavours such as the attempted revival of the Medal of Honor franchise or the extremely costly Star Wars: The Old Republic, but there are no simple truths here. Riccitiello also made some major investments purchasing Bioware and Pandemic early in his reign and later with Playfish and PopCap Games. This quarter the problems with the launch of Sim City and what is likely some underperformance by Dead Space 3 and Crysis 3 may be what prompted Riccitiello to hand in his resignation (letter in full below).
"Dear Larry,
I hereby offer my resignation as CEO of Electronic Arts effective with the end of our Fiscal Year 13 on March 30, 2013.
This is a tough decision, but it all comes down to accountability. The progress EA has made on transitioning to digital games and services is something I'm extremely proud of. However, it currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued in January, and we have fallen short of the internal operating plan we set one year ago. EA's shareholders and employees expect better and I am accountable for the miss.
I have been at the helm as EA's CEO for six years and served as COO for nearly seven years starting in 1997. I know this company well, and I care deeply about its future success. I leave knowing EA is a great company, with an enormously talented group of leaders and the strongest slate of games in the industry. I could not be more proud of our company's games, from Battlefield and FIFA, to The Simpsons: Tapped Out and Real Racing 3. We have built many great franchises that will serve the company well in FY14 and beyond. In particular, I am confident that the investments we have made in games for next-generation consoles will put EA in a strong leadership position for many years ahead.
In offering my resignation, my goal is to allow the talented leaders at EA a clean start on FY14. I look forward to working with you in the coming weeks on an effective leadership transition. I'm extremely honored to have led this company and proud to have worked with all the great people at Electronic Arts.
Sincerely,
John Riccitiello"
EA are now starting to look for a replacement and the following letter was sent out to EA employees to explain the situation.
"To Everyone at EA -
I am writing with some tough news. I have resigned my position as EA's CEO. I will be around for a couple of weeks, and I hope to have the chance to say goodbye to many of you. Larry Probst will be stepping in as Executive Chairman to help smooth the transition. Larry first hired me at EA in 1997 and he was an incredible leader for the company during the 16 years he served as CEO. While he will continue to be the Chairman of the US Olympic Committee, he will also provide leadership for EA until a permanent CEO is appointed.
My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year. It currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago. And for that, I am 100 percent accountable.
Personally, I think we've never been in a better position as a company. You have made enormous progress in improving product quality. You are now generating more revenue on fewer titles by making EA's games better and bigger. You've navigated a rapidly transforming industry to create a digital business that is now approximately $1.5 billion and growing fast. The big investments you've made in creating EA's own platform are now showing solid returns. I believe EA is alone in mastering the challenges of building a platform for our games and services - a platform that will provide a more direct relationship with our consumers. You are number one in the fastest growing segment, mobile, with incredible games like The Simpsons: Tapped Out, Real Racing 3, Bejeweled, SCRABBLE and Plants v. Zombies. You have worked to put EA in a position to capture industry leadership on the next generation of consoles; and I believe two of our titles - Battlefield and FIFA - will be among the top few franchises in the entire industry. And the industry's most talented management team - Frank, Rajat, Peter, Gaby, Andrew, Patrick, Blake, Joel and Jeff - are certain to lead the company to a successful future.
I remain an incredible fan of EA and everyone who works in our world - from Stockholm to Seoul, Orlando to Edmonton, Guildford, Geneva, Cologne, Lyon, Bucharest, Montreal, Austin, Salt Lake, LA and, of course, EARS. My hope is that my travels and yours allow us the opportunity to talk more in the months and years to come.
In a few weeks, I will be leaving EA physically. But I will never leave emotionally. I am so incredibly proud of all the great things you have done, and it has been my honor to lead this team these past six years. After March, I will be cheering wildly for EA from the sidelines."
It's hard to say whether he actually left on his own volition or whether he was encouraged to step down. The later would seem more likely as EA are obviously underperforming at the moment. So, who's next for the hot seat?