The FirmThe Conquest of OriginThe Firm - RSS 2.0
The problem was, creating worlds took a lot of disk space.
Seventy Cents Times Eighty Zillion
By 1992, Origin faced a cash shortfall caused by factors almost entirely outside its control.
Origin was a publisher, which meant manufacturing boxes and stocking them in the retail channel. In that primeval pre-Myst era, computer games shipped not on CD-ROMs but on 3.5-inch, 1.44-megabyte high-density floppy disks. Origin games, in particular, required lots of disks - often eight to ten disks that cost about 70 cents apiece. Cost of goods became such an issue that while Strike Commander was in development, the team jokingly suggested shipping the game pre-installed on its own 20MB hard drive. (Strike shipped on eight floppies in 1993, but CD-ROMs finally became commonplace in time for a later expanded edition.) Wing Commander was a huge, unanticipated success, and the high cost of manufacturing it consumed all the company's ready cash and more.
In a single year Origin's payroll skyrocketed. Prior to Wing Commander and Ultima VI, Origin games were created by a programmer or two, with some contract art and writing. Wing Commander had five core team members; Wing Commander II suddenly had 25. Star designer Chris Roberts, among others, drew a substantial salary.
While Origin's cash reserves were tapped harder than ever, the Apple and Commodore 64 platforms collapsed, taking with them many small retailers. Origin not only lost the sales of its Apple and C64 back inventory, but it suddenly had to eat bad debt from failed companies in the channel. Worse, Richard Garriott had chosen to develop new projects first on the Apple platform rather than the technically inferior IBM PC - "a horrific mistake," he now says. Retooling the pipeline would take six months.
Normally in this situation - high short-term expenses, but higher long-term potential - a company borrows money. But as bad luck would have it, at that time there was no money in Origin's home state, Texas. The savings-and-loan industry had collapsed following a real-estate bubble. With half the state's financial institutions unable to lend money, banks could ignore small businesses in favor of big, safe corporations. Just a year or two later, this crisis passed, but Origin got caught at just the wrong time.
As the Garriotts dipped into their own savings to make payroll, they contemplated options. Richard says, "Ultimately we chose EA because EA's vision for the future, their prediction of platform shifts, and their planning to meet that challenge was right on."
And, too, Trip Hawkins had left EA. "Had Trip still been there, there's no way we would have gone with EA," said an Origin staffer involved in the deal.
Starting Out Fine
Origin's employees on the early years after the purchase:
Spector: "For the first couple of years, EA's acquisition of Origin changed the place for the better in nearly every way. EA brought some much needed structure to our product greenlight and development processes. And we certainly got bigger budgets! We were able to do more and cooler things than we'd been able to do before. In most ways, though, EA gave us a lot of rope - enough to hang ourselves, as it turned out!"
Garriott: "We doubled the size of the company from 200 to 400 that first year. We went from 5-10 projects to 10-20, and staffed those projects almost entirely with inexperienced people. It won't surprise you to learn those projects were not well managed. That was totally Origin's fault. We failed, and we ended up killing half of those products. That's probably what set up the EA mentality that 'Origin is a bunch of [deleted],' pardon my French."
Spector: "Once it became apparent we were getting a little crazy, EA started taking a firmer hand with us, integrating us into the machine in subtle and not so subtle ways, and that's when things started to get a little less pleasant. Every company has its politics but, in my relatively limited experience, EA was an incredibly political place - lots of empire building, folks jockeying for bigger, better jobs, competing for resources, marketing dollars and so on. And there were certainly people at EA who, let's just say, lacked confidence in Origin's development management and - less sensibly, I think - in the Austin development community in general. There were a lot of strange decisions."