Bob Katz is the Managing Director of Electronic Arts Australia. He is also something of a fixture in the games publishing business. Having started out in the heady days of Atari's meteoric rise to fame, he has seen more game systems rise and fall than he can remember. Today he runs the Australian arm of Electronic Arts, with a keen eye on the future of the turbulent games industry of the present.
First of all, can you describe a typical day in your role as Managing Director?
We're based on the Gold Coast, so a lot of my time would be spent on operational things there [at our warehouse]. Day to day stuff would include just keeping an eye on the warehouse, around the operational side of the business but also some of the planning. The marketing people are based there as well. So we're working with people like Brendan Geraghty (Marketing Manager), who makes plans for incoming product. Then, every couple of weeks I'll spend time in Sydney and Melbourne, because that's where our customer base is, it's good to get away from the Gold Coast. And speed up a bit.
How would you describe the Australian games business in 2001?
Pretty vibrant. I think if there was such a word as "anticipatory", it would be that. We're just waiting now, for the floodgates to open where we're clearly at the end of a transition. September is traditionally the month, [whatever year you're in] where the business suddenly goes 'Bang'. Everything goes quiet over the winter months, and you wait. The signs are there, you're starting to see the business picking up, the vibe around the business is picking up. Everybody's sort of second-guessing what's going to happen with the PS2, with Gamecube, with Xbox, even with Gameboy Advance--so there's quite a buzz around. I think it will pretty much building up from now.
How does it compare to other countries? Is there anything unique about it?
It takes the best parts of probably three countries. Quite a few places through EA, I mean it reminds me a lot of the US. That's...particularly in the way that retailers work. You don't really have the big, mass-merchants--the people like K-Mart--in Europe. So a lot of similarities there.
In terms of the gamer, I think there's a lot of US-centric elements to it, but far more 'vibey' like Europe is. A kind of real, 'gamey' market is Holland. That comes to mind. Similar size--I don't mean geographically--but in terms of population. The interest is there, the communication is there. So you've got this buzz here, and in other sites that you don't really get in big countries. There's a lot of enthusiasm in small pockets, because of the size of the population.
EA Sports is famous for its high quality sport simulations, offering the widest range from one publisher, as probably number one sports games publishing house in the world. How do you manage to hold this position in the marketplace?
Practice. Our biggest secret weapon is our studio system. Over the years, the systems and processes they've refined consistently put out good product. They're an amazing bunch of people. They're not seen, to a large extent--you don't really see them but you work with them, you appreciate them. The other thing is that we spend a fair amount of money developing product. You can't really underestimate how much it now costs you. Madden, I stand to be corrected but I think its something around ten million US a year. So it's big bucks. So you can see why the publisher community is consolidating with the big guys--EA, Vivendi, Activision, THQ--and getting larger.
And the small guys, the Eidos', they're struggling. The budgets now to create hot product consistently, are scary. Hence, it makes it difficult. One of the challenges set for us, was to try and get more local content. We're already working on Rugby and Cricket, those have come to fruition or are about to. The V8 product as well, the racing product. I think the only one that we'd love to do, but we struggled to do, was the AFL product. Simply because you can't use any of the other products as a basis for it.
Are you planning to expand your range of sports games? Are certain sports considered as having too marginal an audience to justify the expenditure on a video game in its image?
The challenge is doing it well. If you have a brand like EA Sports which has a consistent set of values, high production values, you can't afford to put out stuff that's not very good. In Australia the cost of a studio production here is relatively low compared to the US. And it is in Europe, it's cheaper in Europe than in the US. But, even so, it's still a big expense to develop a product. For something like Cricket it's a significant amount of money for a relatively limited market, something that isn't global, that won't sell globally but rather in half a dozen countries. So with those products, we've succeeded, I think, in getting high quality products out. But the challenge is, if you then drill down to AFL (as an example), it's not viable for us. And it's not something that people in other countries are going to play because it's a great game, even if it is. Because they could choose Madden.
They just culturally are not interested?
It just doesn't have the exposure. US football has exposure--has a huge following in most countries. AFL doesn't. That's why we'd be limited to pretty much just Australia. I think historically, we've used another game as the engine for it. And it doesn't really work. To do this properly you would need to spend a very significant amount of money to develop it from the ground up. So for the past year we've spent time looking at ways of doing that. And we've looked at using the Madden engine, looked at using the FIFA engine. It's very, very, tough. And also the AI (Artificial Intelligence) is quite different as well. We looked at Rugby, we looked at using other products as a basis for it, but the conclusion was that for us to do it properly, we couldn't. I believe Acclaim have a product coming out, so good luck to them, because it's a challenge. It's a real challenge.
Regarding subscription-based games, would you consider publishing online sports games in a competitive online vein? Would that revenue model of allow less massively-popular sports to get their own EA Sports game released?
Very much so. EA only really has an online presence in the US at the moment. And with the turmoil of the dot-com world of recent times, that has been in turmoil too. But it's been honed down into a business that makes money, a business that succeeds. With the addition of POGO last year, it's turned the corner and going strong. We've just launched Majestic, sent that out the door and we've got some very strong, very addictive content. Ultima Online goes from strength to strength unbelievably. Nobody, I don't think, anticipated the level of support that product would get. And four years, looking down the line we've got 300,000 [subscribers] globally and about 3,000 subscribers on the Australian chart. And we haven't really promoted it over here. We're just starting to--Jamie (Jamie McKinlay, online business manager) is spending a lot of time now doing that.
On the topic of Ultima Online, going forward, would you envisage that game making it onto other platforms, making it onto a console rendition?
I don't know. It's hard to say. I was speaking to one of the producers of Ultima Online about it two or three weeks ago. And the cost of developing these fractions is so huge that you would have thought the benefit of moving to other platforms would be there. I don't know, because the major console manufacturers haven't announced their online plans fully yet. UO locally doesn't need broadband so we play it over analogue lines, but again the nature of the game and the nature of a console is, well...we've seen time and time again how you can have a solid PC game and when it gets onto a console, it just doesn't work.
Issues like storage capacity, bandwidth?
I don't think that that's necessarily the issue. It's more the nature of something that would run on a console versus something that would run on a PC. I think it's probably the game content that would be the dynamic that makes you decide whether or not you would do it. And equally, it's hard to do it until you know exactly how the consoles are going to be Web-enabled.
Do you have a positive opinion of the future potential of online gaming? How do you see online gaming evolving over the next few years?
We already have a significant presence locally, in the online community. Particularly in UO (Ultima Online). And it's great to have. Australia's one of the few countries that's lucky enough to have its own Shard, its own local server. We're really pleased with that. And now, in promoting it, I think we understand it through our US colleagues.
It's a very different model to the box (shrink-wrapped retail software) business. With the box business, the hard work is developing the marketing edge, getting it on the shelf. Then you're mostly done. There's only providing technical support, addressing issues, but that's a relatively small part of the whole workload. But with online, the work kind of starts when you ship it, when you build. With an online product you wouldn't expect to wipe your hands of it. You expect to continually spend money on it.
In terms of sometimes fixing it, in most cases it is just upgrading it, adding new content, making it interesting, making the news and maintaining the community. All the stuff you see in Ultima Online. And irrespective of the nature of online product, if you want to keep people interested you've gotta have a changing world and you've gotta have a community. And you've got to commit resources and money to doing it. And that's why Ultima Online has been successful. It's also the reason that Everquest's been successful. People have a reason to keep going back. Adding new challenges. It's the same thing when The Sims Online comes along, we'll do the same with that, we'll do the same with Motor City Online.
Need For Speed - Motor City Online is an upcoming online racing game -- what do you think is the most exciting part about this product?
I think the breadth of the environment--the fact that you have a huge list of cars. If you talk to the guys that are into this world, some of our warehouse guys, you take a look at their cars. One of our guys just got a new set of wheels, a new set of alloys -- they look stunning. And you have discussions about it. It's that kind of mindset. And the game allows them to live their dream. So you don't need to go and get stopped by the Queensland transport service or the police, you go do what you want, you race people, you race a car, you win a car, you bolt new bits on.
When we launch that here, fairly down the line, we'd like to have Australian content. And we've had a very strong relationship going with HSV (Holden Special Vehicles) for a couple of years now and that continues. Those guys are absolutely incredible. From the race team performance to the back, they have these amazing souped-up performance cars. Just amazing. Their content, their vehicles will work in quite a few new games, coming over the next few years. Motor City is perfect. The dream would be to have every HSV from day one, to now. And that's what we're working towards. And the same for Ford. It's quite a scene-setter.
So Motor City is a game that will definitely be launching here in Oz?
It is. We're trying to work out the business model--online's a whole new world for all of us so we're trying to work out the most simple way of doing it. The cost is significant for all of us, so we're checking things like whether it's possible to host it from the US. Get a fast pipe over from the US to address latency issues. I would have thought it would have been around six months away.
Is Majestic, the cloak-and-dagger game that incorporated phone calls and faxes into gameplay, affected by similar issues?
Yeah, it's a slightly different set of reasons. It's very tailored for North America in construction and content. We're looking at that, we've looked at launching it. And again, same story, it's just investigating the best ways of doing it. Very scary product. Really, really good product.
Could the game potentially call your house in the middle of the night?
Yeah. Or messaging you, you might get this really sexy blonde, kind of calling and leaving you a voice message at home--you've got to think about these things. Try explaining to your wife that it's a videogame. Yeah. An example -- our head of HR, a guy in the US called Rusty, he was playing it early on, about six months back. And he was waiting for this one specific message to come through, and it said "you've got to call this number within the next ten minutes". And he was on this really heavy call to his boss. So he had this dilemma, this struggle: "Do I hang up on my boss, or risk losing the videogame?". It's a very cool concept and it seems to be working.
So the Australian launch is a big question mark?
I wouldn't say it's a big question mark, it's more a case of when and how we do it here. But we're very fortunate that we speak the same language. Don't underestimate the benefits of that. Places like here and the UK, a select group of English-speaking countries will get it earlier, if the economics make sense.
Regarding the Gamecube and Xbox simultaneous launch -- what kind of effect do you think these overlapping marketing campaigns will have on the industry?
I think it'll boost the industry. I think that you'll see that even before you got to this point, a lot of publishers have been really queuing up to release PS2 stuff. And I think with GT3 (Sony's Gran Turismo 3) going out the door here it's really boosted our harvest to the point where we can consider really spending a lot of money on high profile advertising. An example is Rugby, advertising that on TV would not make sense, because the install base was still relatively low. Which is not a bad thing, just a fact of life that machines take a bit of time to get established. We've passed 100,000 PS2's out there now. Come Christmas, you could hope to see that double at least.
So you're getting to the point where publishers will now feel a lot more confident spending money on TV. Once you do that, exposure for the industry gains through Sony's advertising. And then, down the line with Microsoft as well as Nintendo as well as publishers like us and the other large publishers. So you'll see a lot of money coming through. Which will broaden the whole category. People will suddenly go "Wow, can you do this with PS2?". You look at some of the products now that are coming out, in the second generation product you'll start to see that. GT3 is a good example. If you look at SSX Tricky, it's hard to put down.
How is Electronic Arts going to engage the new consoles releasing into the marketplace? Are they all equally attractive as platforms?
They are, I think the honest answer is that we're trying to work it out. There's two answers to that. Collectively, as Electronic Arts around the world, we're dedicated to both, and also the Gameboy Advance. So we're on every platform right now, now that Dreamcast has kind of come and gone. We're on PC as well and on the three new consoles and we're on the hand helds. The challenge is really understanding what's going to happen globally but also locally. How well each of them can succeed here. It's just a little too early to tell. You've got three very good organisations behind them, but in a country with a population the size of Australia, how many consoles is each of them going to get out is a big question mark. Sony had a good start and I think now, post GT3, they're starting to really roll.
So the numbers of the console wars is a reality here in Australia?
Yeah I think so, that's the million dollar question; "is there room for three?". I obviously don't know the answer. Because we're global, we're fortunate in that we will have the option of supporting whichever of the platforms rules out. I guess the bigger debate passed locally is getting local content onto those platforms. That's the discussion we're sort of having now. The trouble is chicken and egg. You want products out relatively early--you need to start now, but, which console's going to be the big one? We're supporting all of them, I guess we'll have to wait and see about it.
Do you think a successful online network will be an important key to a next-generation console's success?
Down the line, yes. I think that the platform owners have to establish what their online strategies are and make people aware of that. I would imagine it will evolve in some way to cater for broadband, you'll have an entry point, you'll have particular channels. If you look at EA dot com, you have specific channels, if people's interests are in a particular direction then they feed people down that particular direction. So if you're only into parlour games, playing Backgammon or Poker or whatever, you can go do that stuff.
Would you say that eventually the online game framework could overtake boxed sales?
It's funny--"No" is my straight answer, it depends on where the horizon is. In twenty years time, you know. If you're looking at ten years, I can see both growing continuously. There's an analogy which may not come across too well. When we started EA in Europe, we managed the whole of Europe from one country. So you had people that were responsible for accounts in Germany and all the rest. And then when we opened offices up in each country, the people in the UK felt threatened. All that really happened, because it just grew, was that actually, they lived together.
So I think that's what we'll see for the foreseeable future, which is you'll see the box business continue to grow, rapidly, for something like three years. And you'll see another business evolving. Which will overlap, it won't necessarily steal from the box business. You've got both businesses, they both thrive. I think the difficulty will become developing products for the online worlds. Because it's a very specialised area of development.
Maintenance especially post-launch is very essential. So you could expect to spend twenty to twenty-five million on rolling out a system, a rather big system for an online game. And that doesn't include post-launch. People play these games twenty four / seven, play them at all hours of the day. If they've got a problem, they want a solution right then.
Would you expect the advent of robust online play on consoles to have an effect on the popularity of online PC gaming?
Again I think they can exist side by side. I think they'll have different kinds of content, different types of product. The one that I'm excited about which, again, once we actually understand what the online console platform is, will be The Sims Online. A lot of work still needs to be done in just honing it in, getting it ready for launch. But that's the most exciting product that personally I've seen.
I've been in the industry for about twenty years, and like you do, I see every sort of product come and go. And a few of them jump out--there's one that breaks the mould. And The Sims did that as well. And SimCity did in its day. And The Sims Online, the nature of it is that it--as The Sims does--attracts females, males, young and old, and you feel that you want to come and get involved.
You can imagine if you're doing that in a single player sense, with The Sims all of a sudden you can interact with people all around the world. Build your own communities. It's mindblowing. You've got 300,000 people playing Ultima Online, which has content which is superb, but some people don't like that kind of content. All of a sudden, you're drawn there. And it's the same with Motor City--it draws horizontally, it's exciting content for people. Well, that's a pretty kind of male-oriented one. But all of a sudden you'll find that on console those would fly, those would be so exciting.
So again, we'll probably do them, we'd love to do them, but how do they fit in with the technology and the way the business model is going to work in the market?
