Why does EA think in-game ads are better business than a Mandalorian game?

In a shockingly bad week for the video game industry, it's hard to pick out any one piece of news to be mad about. Microsoft's bone-headed closure of Arkane Austin and Tango Gameworks has us all seeing red. CI Games laying off more staff after posting millions in revenue is gross. Prytania Media's continued collapse thanks to incompetent leadership continues to make me feel like I'm living in a fever dream.

In the mix of all this, comments from Electronic Arts CEO Andrew Wilson about the publisher pursuing in-game advertising for its triple-A games are relatively low potatoes. And yet they are the ones that made me say aloud "what are we even doing here?!"

For context, Wilson told investors this week that the company has teams "looking at how do we do very thoughtful implementations [of advertising] inside of our game experiences." In other words, in-game advertising.

In a show of good faith, I'm sure these teams are looking more at in-game ads in games like NHL24 and The Sims 4 than in the next Dragon Age game or another Dead Space title (please EA, give me more Dead Space).

But I'd put decent money that these teams are examining whether real-world advertising belongs in live service games like Apex Legends or the upcoming Battlefield game. Brand crossovers already dominate the Battle Royale space, and the door may have been cracked open for Coca-Cola advertisements to flash on banners in King's Canyon.

I've grown so desensitized to Wilson's investor-first business jargon that the idea almost slid by me without any objection. But then a question hit me like a bolt of lightning:

Why does EA think in-game advertising is worth more investment then a Mandalorian video game?

Electronic Arts may be losing sight of the games business

In case you missed it, EA kicked off its 2024 layoff spree with the cancellation of a number of unannounced projects including a first-person shooter from Respawn Entertainment inspired by the Disney+ series Star Wars: The Mandalorian. The idea is a slam dunk. Respawn entertainment makes incredible first-person shooters. It's made an incredible third-person Star Wars game. All games carry some degree of business risk but come on, this is like having a high school pitcher step up to the plate against Shohei Ohtani.

My love for all games made by Respawn and the Star Wars universe obviously colors my view here. But in the brutal year of layoffs and cancellations we've endured since the start of 2023, this is one of the few times I saw employees at the studio who survived the cuts openly lamenting the cancellation on social media.

When veteran staff are willing to risk discipline from HR and criticize their employer, that's generally a sign that something's gone very wrong. It's a strong indication that the project wasn't just a good idea on paper, it was shaping up to be something spectacular.

I can see how a project like this could still be risky from a business perspective. When the project was cancelled, it came with word from Wilson that EA would be moving away from licensed games and doubling down on original IP. (Oh really Andrew? Why was a single-player Apex Legends spinoff at Respawn cancelled the year before? Why was BioWare, an original IP factory, getting cut to the bone?)

A Mandalorian game would come with affiliated licensing costs for Disney and be shackled to the popularity of The Mandalorian TV show. If Disney's Star Wars shows dip in popularity (and they might—some of the company's recent offerings haven't captured that spark of pop culture zest that the first season of The Mandalorian did), it might blunt the game's potential revenue.

But I think EA had an easy bet here. Its traditional "gamer" demographic has long valued The Mandalorian's core power fantasy: that of a lone masked gunman wandering a lawless landscape whose moral compass isn't guided by the same beacons as the Star Wars franchise's core heroes. (Heck, the show has been sometimes criticized having video game-type sidequest logic).

The show's pop culture power is already built on the work of the video game industry. Its allure is built on organic fan interest in characters like Boba Fett (a background character of so little initial interest to Lucas he consigned him to a goon's death in Star Wars: Return of the Jedi) that was nursed in part by games like Star Wars: Republic Commando and the Knights of the Old Republic duology. Bringing the Mandalorians home to video games is as close to a corporate virtuous circle as you can get.

Image via Lucasfilm Games/Disney.

There are no sure bets in video games, and I want to offer EA one last grasp of good faith: greenlighting or cancelling any triple-A game is not a decision made lightly, and I understand that somewhere on the balance sheet there was a risk of catastrophic losses if the game bombed.

But if in-game advertising is what's attracting the C-suite's attention more—then we're not talking about the risk of a game bombing. We're talking about losing sight of the game business itself.

For the love of god, get back to selling games

You've heard a lot of different names for what we're living through right now. I enjoy how writer Ed Zitron labeled it The Rot Economy, but like many of you I like referring to it as the brain-dead idea of "line must go up." I don't know what stage of capitalism we're actually in but we're definitely in a stage where investor demand for constant growth is driving companies to sabotage their core business models to pursue extractive revenue streams.

EA prioritizing advertising over solid bets on premium games is a crystallized version of this trend. Canny investors who want to make loads of money off of games shouldn't be encouraging these pivots, they should be asking C-suites this question: "What is the core business we are investing in?"

For some companies the answer is absolutely "you are investing in applications whose revenue will be bolstered by in-game advertising." For EA Games, that answer should be "you are investing in a company that sells games."

But instead it sounds like it's "you are investing in a company that produces engagement."

That philosophy doesn't need to throw out free-to-play games—players pay for those games with time instead of money, but its most successful ones have been built on the idea that they are games. They are recreational activities meant to help people relax. Sometimes they are products that show artistic excellence, sometimes they're little more than a carnival ride. Both are great product models because you know what, carnival rides deserve respect.

It's not just that Wilson is considering adding ads to the carnival rides, it's that he's doing so on the back of what he calls "the many, many billions of hours spent, both playing, creating, watching and connecting," saying that said "engagement" "happens to be on the bounds of a traditional game experience."

From the sounds of it, Wilson isn't in the video game business, he's in the "engagement" business.

A Mandalorian game does not guarantee monetization on "engagement." Advertising does.