I just completed another successful two day trip to Electronic Arts at their Redwood Shores headquarters. I enjoy my visits there and I was able to pick up a couple of new games for the boys too. So I should be a hero tonight when I get home.
The classes were great! On the first day I got an HR leaders group that went well. In the class I emphasized the role that HR plays in building a successful business. We focused on things like incentive compensation and stock options versus grants. Many in the group focused on benefits which is a large cost in any company. We really focused on income statement training and how they can impact it from the HR point of view.
The second day I worked with smaller class of developers and corporate staff. For this group the Duality game I teach that EA developed was very impactful. In this game the attendees get to run their own game development process from a P & L perspective. In the game the group learns about the challenges and tradeoffs managers have to make when developing a game. Duality is usually a big hit with these classes but there are always a few who want to cover more material. One thing I learned over the years is that people learn the material differently. What is good for one might not work for someone else.
Usually the game goes well and it did for these two days. One key to the game is learning how much better gross margins get as the game is transformed from a packaged good console game to a digital game. As EA has gone from 10% digital to almost 60% digital their gross margin percentage has gone from 50% to above 70%. I believe that transition more than anything else has driven EA’s stock from the low teens into the $60 range. It has been a great transformation.