Electronic Arts announced today that John Riccitiello will step down as chief executive officer and as a member of the Board of Directors effective March 30.
"This is a tough decision, but it all comes down to accountability," Riccitiello wrote in his resignation letter to the board. "The progress EA has made on transitioning to digital games and services is something I'm extremely proud of. However, it currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued in January, and we have fallen short of the internal operating plan we set one year ago. EA's shareholders and employees expect better and I am accountable for the miss."
EA warned of earnings "at the low end of, or slightly below previously issued guidance" for the fourth quarter in its announcement. The company will announce quarterly and fiscal year 2013 earnings on May 7.
Riccitiello will be replaced by Larry Probst who will assume a "day-to-day leadership role as Executive Chairman" in an effort "to ensure a smooth transition" and lead Electronic Arts' executive team. The company is searching for a permanent replacement CEO, with internal and external candidates being considered, EA said in a release.
Probst was EA's CEO from 1991 to 2007 and has served as Chairman of the Board since 1994.
"EA is an outstanding company with creative and talented employees, and it has been an honor to serve as the Company's CEO," Riccitiello said in a statement. "I am proud of what we have accomplished together, and after six years I feel it is the right time for me pass the baton and let new leadership take the Company into its next phase of innovation and growth. I remain very optimistic about EA's future — there is a world class team driving the Company's transition to the next generation of game consoles."
Riccitiello joined EA in October 1997 as president and chief operating officer. He left the company in 2004 to become a founding partner and managing director of Elevation Partners as well as chairman and CEO of VG Holdings, the holding company behind BioWare and Pandemic. He returned as CEO of EA in 2007.
Riccitiello's resignation letter to the board is below.
March 17, 2013
Mr. Larry Probst
Chairman Electronic Arts
I hereby offer my resignation as CEO of Electronic Arts effective with the end of our Fiscal Year 13 on March 30, 2013.
This is a tough decision, but it all comes down to accountability. The progress EA has made on transitioning to digital games and services is something I'm extremely proud of. However, it currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued in January, and we have fallen short of the internal operating plan we set one year ago. EA's shareholders and employees expect better and I am accountable for the miss.
I have been at the helm as EA's CEO for six years and served as COO for nearly seven years starting in 1997. I know this company well, and I care deeply about its future success. I leave knowing EA is a great company, with an enormously talented group of leaders and the strongest slate of games in the industry. I could not be more proud of our company's games, from Battlefield and FIFA, to The Simpsons: Tapped Out and Real Racing 3. We have built many great franchises that will serve the company well in FY14 and beyond. In particular, I am confident that the investments we have made in games for next-generation consoles will put EA in a strong leadership position for many years ahead.
In offering my resignation, my goal is to allow the talented leaders at EA a clean start on FY14. I look forward to working with you in the coming weeks on an effective leadership transition. I'm extremely honored to have led this company and proud to have worked with all the great people at Electronic Arts.
As part of Riccitiello's separation agreement, he'll receive 24 months of salary continuation and continued vesting of unvested stock options until Nov. 30, 2013, with those options exercisable until Feb. 28, 2014.
Probst wrote on EA's The Beat blog that Riccitiello's tenure "has been marked by bold decisions, a big vision for online games, a passion for product quality and an enduring respect for the people who work here."
While Riccitiello drove digital revenue at the company with games like FIFA and Battlefield, as CEO he was responsible for a handful of recent high profile misfires: EA has failed to ship an NBA simulation video game for the past three years; MMO Star Wars: The Old Republic, which reportedly cost upward of $200 million, went free-to-play in November; and military shooter Medal of Honor: Warfighter was received poorly by critics and customers, leading EA to take the game out of rotation.
"Looking ahead, EA's strategy and future are rock solid," Probst wrote of EA's post-Riccitiello potential. "Our business is built on more than a dozen powerful, globally recognized brands. We are clear leaders in the fastest growing category in games — mobile — and we are positioned to lead on the next generation of consoles. Most importantly we have deep reserves of talent — new faces and industry veterans who form the core of EA's leadership. We have an important year ahead of us and I look forward to working with all of you as we navigate the path to future success!"