Maybe That's What He Wants Us To Think.... Maybe...

Implications: If John Riccitiello thinks that there will be less consolidation, then I have to think either he doesn't see any viable merger/purchase options - which is crazy - or he wants us to think that so he can buy another company and reclaim the #1 publisher status.

Analysis: Interestingly enough, while the EA CEO is talking about a changing model for video games, the newly named Activision Blizzard has already achieved a couple of them.  World of Warcraft is a subscription juggernaut, and Guitar Hero could be a console micro-transaction windfall buying single songs for $1.99 like iTunes - if Guitar Hero learns to be more like Rock Band in that arena.  There are already offers of free games due to advertising (Double Fusion & Eidos, for example, with Price of Persia), and the casual market is about ready to take off online and eventually on mobile devices (if the carriers play along) from an ad-supported and micro-transaction perspective.

So instead of acknowledging that their competitors are already doing some of what he said should happen, John Riccitiello says the opposite to make us believe that EA won't acquire anyone soon because top talent has already been scooped up.  Funny thing - he also says that consolidation will continue, and that EA recently acquired BioWare, maker of the awesome Role Playing Game, Mass Effect for the Xbox 360 & Windows.  They also have invested a lot already in EA Mobile, Pogo.com, and have aligned with Massive for in-game advertising, with Sony possibly on line with their dynamic solution in 2008 that EA can also partner with.

Unfortunately for EA, they're missing out on micro-transactions.  Without a strong shooter title like Halo or Call of Duty, or direct ownership of Rock Band, EA will not reap the short term benefits of Map Pack or Song Pack content downloads.  Games like Crysis or Army of Two may change some of that, but Sports have carried the load for EA for a long, long time.  Even if you're a hard core fan of Madden, I can't see the number of people paying for old-school digital jerseys making a difference in revenue or profits.  Even sponsorship would only add so much to the bottom line.  If you can read between the lines, EA needs to make additional purchases of IP to play harder in the non-sports category.  Certainly, BioWare is a start.  But the makers of Assassin's Creed, BioShock and a host of other content may be needed to expand their offerings beyond their current core, or to build out a strong casual game network online (vs Pogo & EA.com only) or in mobile.  We'll see what happens, but to get back to being #1, EA will have to partake in additional consolidation.