Electronic Arts' CEO Resigns Amid Missed Revenue Goals

The website Gamespot.com reported Monday that the Redwood City-based gaming company Electronic Arts' CEO John Riccitiello has resigned his executive position as well as his spot on the publisher's board of directors, effective March 30.

The company has appointed Electronic Arts' chairman Larry Probst as his temporary replacement while an extensive search of both internal and external candidates is conducted, with the help of a "leading executive search firm."

The Securities and Exchange Commission published the internal memo Riccitiello sent to Probst recently, announcing his resignation. In it, Riccitiello suggests that missed revenue goals was a factor in his decision to resign.

Mr. Larry Probst
Chairman Electronic Arts

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

An Associated Press reporter said Monday she theorizes that the company's financial shortcomings are a result of the fact that more and more people are turning to games and entertainment on mobile devices instead of purchasing games like EA's Battlefield and Sims, which can often cost around $50-60 each.

The article says EA posted revenue of $1.18 billion for the last three months of 2012, which was a 28 percent drop from the same period a year ago. It fell short of the $1.29 billion that was expected - the "slightly below financial guidance" Riccitiello referenced in his resignation memo.

Regardless, EA executives like his successor Probst praised Riccitiello for his 13 years of service and leadership to the company, though he said "We have mutually agreed that this is the right time for a leadership transition."

"We thank John for his contributions to EA since he was appointed CEO in 2007, especially the passion, dedication and energy he brought to the Company every single day," Probst said in a statement. "John has worked hard to lead the Company through challenging transitions in our industry, and was instrumental in driving our very significant growth in digital revenues. We appreciate John's leadership and the many important strategic initiatives he has driven for the Company."

EA has been involved with a small handful of scandalous press recently.

Seven members of the U.S.'s Seal Team Six were disciplined recently for giving away classified information and Navy secrets to EA while employed as consultants for the company's "Medal of Honor: Warfighter" game, to help make the game more realistic.

Just one month before that Seal Team Six story broke, a Pacifica man who was employed as a night security guard at EA's Redwood City offices was sentenced to nine years in prison for repeatedly raping and sexually assaulting a cleaning woman also employed by the company.  

What do you think of CEO John Riccitiello's decision to resign from Electronic Arts? Do you think it will negatively impact the company, or help it? Tell us your opinion in the comments below.

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