During a recent analyst financial call, Electronic Arts said the company expects revenue from its third-party EA Partners distribution business to be down $450 million in 2010 -- but an EA executive tells Gamasutra that's a sign of the variability of the distribution business rather than a signal of a long-term shift.
"Over the past three years, with the great products that have come from Valve and the fantastic products that have come from Harmonix via Viacom, the distribution side of our business has been extraordinarily robust -- probably once-in-a-lifetime robust," David DeMartini, the general manager of EA Partners, told Gamasutra in a new interview. That means EAP's 2010 faces tough comparisons to past years.
In addition to numerous retail Valve titles and all of the Rock Band games to date, EA Partners has handled distribution or publishing for Crytek's Crysis games, Flagship's Hellgate: London, Realtime Worlds' upcoming APB, and still-untitled games from Grasshopper Manufacture and Epic's People Can Fly studio.
Although little has recently been reported about the Grasshopper project, announced in 2008, DeMartini confirmed it is still in development, calling it a "mad masterpiece."
The deal with Harmonix owner MTV Games/Viacom comes to an end after the release of Green Day: Rock Band, with DeMartini telling Gamasutra he is "hopeful" the business relationship can be renewed, meaning the future of that particular revenue stream is uncertain.
And "the mix of distribution titles to [EA-funded] and [EA co-published] titles varies, based on what's shipping that year and on the distribution deals we have in place," DeMartini added, making EA Partners a more variable source of revenue than EA's own slate of fully-owned titles. For example, ZeniMax Media's acquisition of id Software eventually led to EA and ZeniMax agreeing that EA would no longer publish the studio's next major game, Rage.
He explained that EA Partners "covers the spectrum" in terms of fully funding games, co-publishing them, or serving purely as a distributor: Valve's games and the upcoming Green Day are pure distribution deals; Crysis 2 and the Grasshopper and Epic projects are closer to traditional publishing agreements; and APB is somewhere in between.
Despite the benefits of high-margin internal titles espoused by EA CEO John Riccitiello and COO John Schappert during this week's call, DeMartini claims EA Partners is "a critical business unit" that "continues to be a high priority for EA overall."
"The distribution business is lower-margin," he acknowledged, "because it's lower risk." In fact, he said, rather than scaling down, EAP is "looking to strategically expand the program with even more high quality partners."
"Partners want the flexibility EAP offers," DeMartini said, "and we pride ourselves in being able to complete all kinds of deals with our partners which are uniquely tailored to meet their needs and situations."
