With the rumors still flying around that Sony and Microsoft are planning new consoles for the second half of this year, and possibly as soon as holiday 2016, there’s a lot of people eager to uncover the truth and figure out when to flog their existing console and upgrade to the new one. It seems that Electronic Arts chief financial officer Blake Jorgensen has thrown more fuel onto the fire by commenting on those rumors, and it seems like EA is prepared for whatever eventuality they find themselves in – including a world where both companies launch upgraded consoles at the same time. Does this make the rumors more concrete? Maybe, maybe not. But EA has ensured their ability to survive what may come regardless.
During an earnings call for EA to investors looking back at their Q4 2015 results, Jorgensen answered a question relating to the mid-cycle upgrade rumors and how they’re affecting EA’s outlook on their future quarters for the rest of 2016.
Q: I’m curious of your assumption, if you were expecting any new consoles this year, any price cuts to existing hardware, or maybe any other sort of key considerations to that estimate? And then I realize obviously you can’t announce any new hardware plans from your partners, but there’s been wide speculation that you have a mid-cycle upgrade coming. I was curious if you could shape for us why a mid-cycle upgrade could be positive for the industry? And also if there’s any potential development expense to developing games in 4K.
Here’s Jorgensen’s reply to this part of the question, copied verbatim.
A: I can’t tell you a lot about what Microsoft or Sony or other console makers’ plans are. I think we’ve all seen some of the discounting that’s been going on in the industry, both through the holidays and post holidays. And there’s continued aggressive bundling across the industry, and I think all of that acts to continue to drive people into consoles.
In terms of any mid-cycle upgrades, once again I can’t predict, but what I can tell you is that what we’ve heard, I think, publicly from the console makers, is they’re realizing that the compatibility issue across consoles is an important consumer issue. As Microsoft has shown, they’ve tried to do with some backward compatibility on older titles and new titles. I think that’s going to be an important part of what a mid-cycle might look like, if there is one, which removes a lot of the risk associated with what we’ve seen historically with console cycles.
We don’t spend a lot of time worrying about it because we feel like our ability to develop for whatever new technology comes, the risk of that’s been minimized, because we’ve moved towards one single engine, Frostbite, and we’re able to port that to whatever platform, or point that to whatever platform is evolving or is upgraded. In addition, our business model is so much more diverse now than it has been historically, that the notion of a console cycle becomes somewhat irrelevant in our ability to generate strong earnings and cash flow.
So we’ll all be interested to see where Microsoft and Sony come out, if they do something at E3, or sometime in the year to come. But we’re excited about the continued growth in the business and not afraid of a cycle change, if that was to occur.
So it appears that the Frostbite engine has the ability to target multiple platforms at the same time. Almost all of EA’s games in the last three years have been based on the Frostbite 3.0 engine, and where it’s not needed, as we’ve seen in the case of the FIFA series and other sports games which uses the Ignite engine, the basics are still very much the same. Having such a capable engine as a base means that EA could port their games to whatever platform is more successful at the drop of the hat, and that includes running future Battlefield titles on Linux operating systems as well. EA pays some attention to the Mac platform, and Linux gaming is on the up and up.
Having backwards compatibility sorted out is also a key component in porting the back catalogs of PlayStation and Xbox to modern systems. Microsoft can do this reliably because they’ve figured out Xbox 360 backwards compatibility now, and they can run those games on any future system, so long as that system is x86-based. Sony, likewise, can continue to run their PS2 emulation software on new consoles, and so long as they stick to the x86 architecture, the next ten years of consoles will have full backwards compatibility with any game released from this point on. It’s a hell of a thing to finally see it in action.
On the subject of the “new” consoles, whatever they may be, it looks like EA’s prepared for just about any scenario where they can use Frostbite, and the same goes for other studios who use the Unreal engine, or Unity, or even their own engine that currently targets multiple platforms. If there’s ever going to be any credible evidence that there are slightly upgraded consoles coming soon, this is as good as any.