EA Expected to Make Games for Microsoft
Microsoft Corp. is expected to sign a major software-development pact this week with video-game giant Electronic Arts Inc., a deal that will boost Microsoft’s much anticipated X-Box game machine and undercut rival Sony Corp. in the battle to control digital entertainment.
The deal with Electronic Arts, the world’s largest game maker, reflects industrywide concern over the fate of Sony’s PlayStation 2 and optimism that Microsoft will emerge as a serious contender in the post-PC world.
The two powerhouse companies have been in talks for months, sources said, and an announcement could come as early as Wednesday.
Microsoft officials could not be reached for comment. An Electronic Arts spokesman said that “at this time, there is no agreement for EA to develop titles for the X-Box.” But EA “likes the X-Box technology and if a licensing agreement is struck, we think EA titles would look great on X-Box,” said spokesman Jeff Brown.
For EA, the decision to team up with Microsoft was a delicate one, as the software company gets about half of its revenue from games it develops for Sony, according to P.J. McNealy, an industry analyst with the research firm Gartner.
EA “has got to walk the fine line between maintaining relationships with Sony while looking out for their own best interest,” said McNealy, who has not been briefed on the Microsoft deal. “They need to go where the dollars are, and right now, I suspect EA sees X-Box as a winner.”
Because EA builds software products for other gaming machines, “it is somewhat expected that they would support other platforms,” said Molly C. Smith, a spokeswoman for Sony Computer Entertainment of America, the U.S. arm of Sony Corp.
The nearly $7-billion-a-year U.S. video game industry, which rivals Hollywood’s box-office receipts, is controlled by Sony, which holds an estimated 53% of the console market. But Sony has faced enormous criticism over the troubled roll-out of its next-generation machine.
PlayStation 2 was expected to be the year’s hottest holiday gift, the first consumer device to allow users to play games, surf the Internet and play DVD movies on their TVs. In late September, Sony dropped an early lump of coal in the stockings of retailers by drastically cutting the number of coveted PlayStation 2 video consoles it would put on store shelves this fall.
Sony blamed the delay on a parts shortage, which has stifled production of numerous electronic products this year, including the Palm hand-held computers. Unable to meet its own goals, Sony slashed in half, from 1 million to 500,000, the number of consoles it made available Oct. 26, the system’s launch date.
Microsoft’s X-Box, slated for release in the United States in the fall of 2001, is essentially going to be a stripped-down computer that connects the television to the Internet. It is one of several key efforts that the Redmond, Wash., giant has made this year to compete in the Internet arena.
One EA designer said his team has been doing “exploratory brainstorming” on games for X-Box, and sources said the company has discussed devoting up to 200 developers to create games for the device.
Microsoft has already announced agreements with more than 150 game developers to create games for X-Box, including industry heavyweights such as Konami, Capcom and Eidos. Analysts say the anticipated deal with EA is more crucial than these because of the depth of the software firm’s licenses and properties.
In addition, Microsoft has purchased a number of game-development companies over the past few months, including Bungie Software, to make sure it has a lineup of games for the X-Box.
