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Golf clap for Electronic Arts (NASDAQ: EA ) . The video game developer just won the unfortunate distinction of "Worst Company in America" this year in an online poll of readers at Consumerist.com.
Microsoft (NASDAQ: MSFT ) did much better in the survey. It never made it out of round one of the March-Madness-style contest that pits companies against one another over which one has offended the most consumers lately.
Still, Mr. Softy should be paying close attention. EA's dominating win highlights the risks around video gaming that Microsoft would be smart to avoid. As it puts the final touches on its latest Xbox console, Microsoft needs to get these issues right -- or else it could find itself a real contender for next year's title.
Make it work
EA boosted its chances for a win this year by severely botching the rollout of its latest SimCity title. The company's servers just weren't up to the challenge at the launch. And it admitted as much recently, saying, "We owe gamers better performance than this."
But EA could have avoided the problem if it gave its users the ability to play SimCity without an Internet connection. Instead, it forced every player onto a system that wasn't ready for the influx.
Microsoft hasn't confirmed any details about its new gaming console, but one of the biggest rumors floating around has it that the next Xbox will require an Internet connection to function. That could be an exaggeration. However, if Mr. Softy is going to tie any functionality at all to its own platform, it'd better be ready to handle all the users that need it. And it'd better have a backup plan in case something goes wrong. You only get one chance at a product launch.
Make it flexible
What angered EA customers even more about the online connection requirement for SimCity, though, was that many saw it as an intrusive digital rights management scheme, or DRM. Users thought EA was trying to strictly limit play so that it could sell more copies of the title. EA denies that charge:
Many continue to claim the Always-On function in SimCity is a DRM scheme. It's not. People still want to argue about it. We can't be any clearer -- it's not. Period.
EA users apparently weren't accepting that explanation. And the controversy over just the potential of tighter DRM schemes shows how little consumers like the idea. Microsoft and Sony are rumored to be considering locking their new systems from the ability to play used games. Obviously, it's a tempting idea to cut out middlemen like GameStop and centralize gaming purchases through your own platform. But the firestorm of complaints aimed at EA is more evidence that the move would turn many of the console makers' customers against them.
Consumers value flexibility and reliability in their game systems. Mess up even a bit in either of those areas and you'll hear about it from your users. Hopefully, Microsoft won't have to learn that lesson the hard way.
What you can learn about Microsoft
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this special premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report and stay up-to-date on the latest news by clicking here.