ELECTRONIC ARTS

Here’s one way to beat the tech-slump blues: employ a suave secret agent, a teenage wizard and a handful of hobbits. That was the strategy of Larry Probst, CEO of video-games giant Electronic Arts, based in Redwood City, California. As each new generation of console hardware makes video games look more like movies, Probst wanted to snap up franchises with repeated success at the multiplex — like James Bond, Harry Potter and The Lord of the Rings — and put them to work in the virtual arena.

The plan paid off. The Harry Potter games alone have sold more than 20 million units worldwide. After some down years, the video-game industry as a whole is growing, but EA is exploding: its revenue shot up by over 40% last year to $2.5 billion, almost three times that of its nearest rival, Activision. Oddly, the company is getting more out of doing less: the number of games EA produces fell from 68 in 2000 to 58 in 2002. “We do fewer things, and we do them better,” says Probst. “We don’t just throw something at the wall and hope it sticks.” Of course, Probst has seen his share of duds — such as Sims Online, a multiplayer version of the best-selling PC game of all time; it garnered a disappointing 82,000 subscribers worldwide. “Everybody thought that would be a home run,” he shrugs. Still, Probst can absorb the blows. At 52, he’s seen it all. He is famous for rarely smiling, and comes across more like a stern high-school principal than the emperor of electronic fun. But he has been the boss for 12 years and understands how to foster a creative environment. Like Harry Potter’s Hogwarts, EA is divided into competitive teams; each works on a separate game, each wants to outsell the others. But they also share innovations — so the realistic-looking blades of grass, say, from Madden NFL 2003 also find their way onto Harry Potter’s Quidditch field. Result: 22 of those teams sold more than 1 million copies last year. That’s as close as the video-game business gets to a Hollywood ending.