Fresh off the startling announcement that it would take a charge of more than $1 billion to cover costs of repairing defective Xbox 360 video game consoles, Microsoft (MSFT) announced July 17 that its top gaming executive, Peter Moore, was leaving to run the sports franchise at top independent video game publisher Electronic Arts (ERTS).
While the industry buzzed with questions about the timing of Moore's departure less than two weeks after Microsoft announced the repair charge (see BusinessWeek.com, 7/6/07, "Microsoft's Billion-Dollar Fix"), Microsoft executives, in an interview with BusinessWeek, say the moves are unrelated. Microsoft officials say Moore, who was not available for comment, wanted to return to the Bay Area for family reasons (EA's headquarters is in Redwood City, Calif.). Moore, the former president of San Francisco-based Sega America, moved to the Seattle area after taking a job with Microsoft in late 2002. He has a child attending the University of California-Berkeley.
"It's hard to arm-wrestle him to get him to stay," says Robbie Bach, president of Microsoft's entertainment and devices division. "He's done a great job. I would have loved to have him stay here."
A Good Fit
In September, Moore will take charge of EA's sports division, which delivers perennial million-unit sellers with its Madden NFL and FIFA soccer franchises. He will head one of the biggest of four newly reorganized units created by new Chief Executive Officer John Riccitiello. Former Electronic Arts studio chief Don Mattrick will replace Moore at Microsoft.
Perhaps ideally suited to the job, Moore once played professional soccer and worked with sporting goods companies before his stint at Sega. But his challenge will be to reinvigorate franchises that Riccitiello in recent interviews has called boring and too complicated for many would-be gamers. "For the most part, the industry has been rinse-and-repeat. There's been lots of product that looked like last year's product, that looked a lot like the year before," Riccitiello said in a recent interview with The Wall Street Journal.
Indeed, though still the No. 1 independent game publisher, EA is a company in transition. Its earnings tumbled 31% over the key Christmas selling season after it largely ignored the 7974.T Wii and focused on developing titles for Microsoft's Xbox 360 and Sony's (SNE) PlayStation 3 that cost as much as $30 million each. In June, the company reorganized to speed development of casual and family-friendly games that cost between $5 million and $7 million to develop and are well-suited to the Wii. EA this fall is rushing five exclusive Wii games to market and adding a "family play mode" to its popular Madden NFL franchise that makes it easier for novices to play.
Another challenge awaiting Moore is smoothing any ruffled feathers at headquarters of former fierce rivals. As the lead cheerleader for the Xbox, he's taken many swipes at Sony and Nintendo. EA makes games for all three companies, and winning support from his one-time competitors will be crucial to his success.
Sony extended an early olive branch. "We have an outstanding relationship with EA, and their sports products have been incredibly successful on all our platforms," said Jack Tretton, president and CEO, Sony Computer Entertainment America, in a statement. "I am sure this will continue with Peter now at the helm."
Back at Microsoft, Mattrick swaps roles with Moore. The former head of EA's development studios, Mattrick will take over July 30 as senior vice-president at Microsoft. His most pressing challenge will be how to deal with the continuing fallout from the repair fiasco and a resurgent Nintendo. Sales of the Wii console are on track to overtake Xbox 360 in the next year, despite a yearlong lead the Xbox had to market. What's more, Microsoft recently acknowledged it fell short of its goal of shipping 12 million consoles though June 30.
A "Very Good Place"
Despite the recent bad news, Mattrick says he doesn't have any major tinkering to do at Microsoft. Gamers continue to show wide support for the console, he says. Developers will be delivering more realistic and stunning games in coming months, such as the third installment of the lucrative Halo franchise. "The business is in a very good place," he says.
Affirming other recent executive statements, Mattrick says there's no Xbox 360 price cut in the offing. That's despite Sony's July 9 price cut for the PlayStation 3 to $499 from $599 (see BusinessWeek.com, 7/9/07, "Sony's Surprising PS3 Price Cut"). "That's not on my to-do list," Mattrick says.
Mattrick lives in Vancouver, B.C., and will work part-time from Microsoft's new offices there, commuting to Redmond, Wash.