Electronic Arts Replaces CEO Probst

Electronic Arts Inc. replaced Larry Probst as chief executive on Monday, naming former EA executive John Riccitiello as the new leader of world's largest video game publisher. Riccitiello, who will become CEO April 2, joined Redwood City, Calif.-based EA in October 1997, rising to president and chief operating officer before quitting in April 2004.

Probst _ criticized on Wall Street for allowing EA to rely largely on sequels to current hits instead of encouraging innovative new games _ will remain executive chairman of EA's board of directors.

Probst emphasized Monday in an interview with The Associated Press that Riccitiello was his protege and hand-picked successor _ and the switch in no way diminishes Probst's 16-year tenure as CEO.

"This is the perfect time to turn over the reins. We've navigated through the most difficult times," said Probst, who's been with EA for more than 20 years. "The right time to put a new CEO in place is when good times are ahead, as opposed to challenging times. That's the recommendation I made to the board, and they agreed unanimously."

After Riccitiello left EA nearly three years ago, he co-founded a private equity venture capital fund, Elevation Partners, focusing on technology and entertainment. His partners were Bono, the lead singer of the rock band U2, and veteran venture capitalist Roger McNamee, an early investor in Amazon.com, Cisco Systems Inc. and Seagate Technology LLC.

EA has been a winner for long-term investors, and the stock has increased nearly 70 percent since 2002. The company has a lock on sports titles _ one of the biggest, most reliable and most lucrative segments of the gaming industry.

EA's most popular titles are "Need for Speed Carbon," "FIFA 07," "The Sims 2 Pets" and "Madden NFL 07," with each game selling more than 3 million copies last quarter.

But critics question whether EA is becoming overvalued _ and whether it's been resting too long on the laurels of established hits.

They worry that scrappy startups _ which distribute games inexpensively on the Internet _ could generate more buzz and eventually dethrone the reigning video game leader, which makes vastly more money from shrink-wrapped "off the shelf" titles rather than downloads. They wonder why another company _ and not EA _ could come up with the delightfully quirky "Guitar Hero."


"They've got franchisitis," said Billy Pidgeon, games analyst for research firm IDC. "A big part of their success is franchises, but it's not necessarily the way to take risks and move aggressively forward. EA has been one of the more risk-averse companies, and we'd love to see John take more risks."

EA stock lost $1.23 on Monday to close at $51.96 on the Nasdaq Stock Exchange. After the CEO announcement, the stock gained 44 cents in extended trading.

Technology analyst David Gardner, co-founder and co-chairman of Alexandria, Va.-based Motley Fool, praised Riccitiello's experience as an executive at companies as diverse as Sara Lee Corp., Wilson Sporting Goods Co., Haagen-Dazs International and Clorox Co. But Gardner planned to take a "wait and see" approach to the new CEO.

"They managed to bring in someone from the outside who is an insider _ that's great because he's familiar with the company and won't get swallowed up by a foreign culture," Gardner said. "That said, this isn't a 'show me the money' announcement that will immediately affect the stock. It's going to take at least a year for us to start seeing significant changes in the company under John."

Riccitiello emphasized that he would strongly push the company toward mobile and online gaming, and he'll try to gain a bigger stake in the lucrative Asian market, dominated by Nintendo Co. But he sharply defended the company's core business and said EA has no plans to divert resources from sports sequels.

"The next book under Harry Potter is a sequel," Riccitiello said. "'Madden' is the most successful game franchise in the history of the industry. FIFA is a close second. The EA sports franchise is a huge and important business, and as a consumer of these products I can say not many gamers are critical of sports sequels."

One of the most highly anticipated new titles in the gaming world is "Spore," the brainchild behind "Sims" developer Will Wright, considered one of the gaming industry's most creative artists. Through its Maxis Software brand, EA will release "Spore" _ an interactive game where players evolve from single-celled organisms into intelligent beings that are part of a complex, real-time civilization _ later this year.

Riccitiello was bullish about "Spore" and the growing revenue derived from interactive entertainment, a category that includes subscriptions to online gaming sites, in-game advertising and micro-transactions from online players. But he took pains to emphasize that he would not mastermind a broad strategic shift for EA.

"Larry's by far the most successful executive in the industry, and I had the pleasure of working with him for seven years," Riccitiello said. "This is an incredibly fortunate situation."