On Monday EA Games president Frank Gibeau talked to us about the strategic direction of the company, as well as its disagreement with Activision over charging for social connectivity.

In today's concluding section, he covers transmedia entertainment, the need for original games and the rise of digital. There's also more on the company's offensive against the Modern Warfare machine ...

We've currently got this transmedia concept blooming – the idea that games are part of an entertainment package that includes "linear media" such as books and movies. Is this a serious part of the EA strategy, too?
The expansion into linear is more tactical than strategic for us. It's about getting the intellectual property into more hands and exposing more people to it. If you do a film and it's good, everybody has a great time, but it doesn't change our value as a company.

What we have thought about differently though since last year is the idea of games as IP universes that then express themselves across different platforms. What's really important is thinking about, say Need For Speed as an intellectual property – real cars, real fast – but you can play it as a free-to-play title on the PC, you can play it on a mobile device or a console, but they're interoperable, they talk to each other. Because, on the server side, I know from your nucleus account how you registered, where you're coming in from, what you like, what type of games you enjoy, how long you play, and other titles you'd potentially be interested in – and I can offer those up to you to opt into if you want.

So when you think of an IP universe you stop thinking about 'what are my Xbox 360 sales?' and you think about "how big is my worldwide audience?" Now, linear media plays a little bit of a role in there, because if you have a TV show or a comic, it expands the IP, but what happened with Need for Speed last year is far more interesting to me – we got Criterion in on the game, we put it out as Hot Pursuit, we grew the audience, grew the sales on console, but at the same time we launched Need for Speed Online as a free-to-play title and quickly had 5 million registered users. And what we found was, the majority of those users were new to NFS, because we could see if they'd ever check in with a nucleus account before. And our top markets were Russia and Brazil, where we don't even sell packaged goods – they just get pirated!

Amid all this talk of intellectual property, where do original games fit in? Can they still remain a key element of your strategy?
Look, this is an entertainment business, sequels have to start some place. This industry has a very fickle and demanding fanbase and you have to constantly bring in new ideas both within established franchises, and in new IPs. Big console new IP starts are something that we will continue to do, but what we're really interested in right now is starting new IPs that are direct to consumer, where the cost of entry is cheaper from a development standpoint, we can succeed faster – or fail faster! – then, if customers liked it, we can build it up bigger. What you'll see from EA is a lot more IP starting with mobile games, social games or even on Xbox Live and PSN, and these may evolve into larger console games. But we will do large console new IPs, but probably not as many as we have done in the last two years.

Why did you put out more in the last two years, then?
We had to re-stock the shelf a little bit! We let go all these properties such as Lord of the Rings and James Bond – we had to replace them with something. We've gone through that process and we need to be selective about what we bring to market.

Meanwhile, looming over the whole of E3 is this big face-off between Modern warfare 3 and Battlefield 3, you may have already been asked about this…
It has come up once or twice… (laughs)

Peter Moore always said he took these sorts of things personally. Do you? Or is this just corporate machinations as far as you're concerned?
No, you're talking about hundreds of hours of people's lives, building and working on these things! If you don't have total commitment and passion to the craft and the art of games, you're not going to be a particularly effective competitor. It's the same for sport, and it's the same for business. I can tell you from the top down that we're going after them, we're leaving nothing behind. We're going all out. Whether it's PES vs Fifa or Madden versus 2K Sport, we take these things very seriously – frankly, we enjoy them. We like to compete. It's good for customers – they get innovation that might not have been there otherwise. They get more buzz, more choice, and it will grow the category.

The interesting thing about Battlefield versus Modern Warfare is, they're very differently shaded games, they're very different experiences; it's not like buying two football games, where it's all the same teams. You can buy and enjoy both experiences. We're proud of what we have in Frostbite – it's a generation ahead of anything else that's out there right now. Dice has been together for 10 years, it's a tight team and they know what works.

How do you prepare your creative teams for a future in which retail isn't going to be as important? With almost half your sales coming from digital content, is this a transition that dev teams have to be carefully prepared for?
It's exciting to the game designers, they find it liberating from the standpoint that they can now really see what gamers are doing. In the old days they'd work many man months on a game, ship it, and not be able to tell what's happening in the game, except anecdotally. Now they can actually see the telemetry data; they can say, "okay, 50% finished the game, 35% played 10% of the game …" they find it liberating – they can go live with less and learn what gamers like, then build accordingly. Battlefield Heroes is a good example: we put out the idea of a cartoon shooter, but then learned what items and modes players like, the fact that they wanted more maps, less vanity items, so we tweaked our development. From our perspective, it's like live theatre, when you have live feedback from the crowd you know what you need to do more or less of.

So our developers aren't necessarily bummed that they're not working on a disc-based property any more. But it does mean they have to exercise new muscles, they need to figure out new talents and techniques for how you think about compulsion loops in a live product, about free-to-play versus payment up front, about how to build telemetry systems and tag them into the content so you can see what happens. The good thing is, we've been doing that for the last two years, and we can see the results. Customer satisfaction is way up.

Is there a worry though that relying on telemetry data can sometimes stifle creativity? If you're always worrying about the majority of users, it might put developers off from trying new, offbeat ideas.
I completely agree. That's why we use research for deciding how to value the choices that the design team makes rather than having focus teams to tell us what to build.

With all due respect, you can't think out loud in those groups. "What makes a great movie? What movie would you like to see next week?" "Wait, I don't know!" We're not slavish to research or telemetry data – we use them as decision aids about the decisions we want to make and the stories we want to tell. We do make creative calls on IPs that we believe in. You have to have a ix of both – if everyone is always looking backwards at what worked before, you'll never get anything new. You have to take those risks, to try a different type of story, to break through.

Which of the nine games you've shown off at E3 2011 are you most concerned about, in terms of the decisions you've made and the potential rewards? Which do you feel is the biggest gamble?
Look, I'm a great believer in the Andy Grove quote, "only the paranoid survive"! I've been in the entertainment business for a long time and opening night you never know how it's going to go. You can have the pre-orders, the buzz indicators, but until those numbers start rolling in, you legitimately don't know. So I worry about all of them, quite frankly!

I'm convinced that we're building great games, but I'm still thinking, can I release an awesome game? Can I release it on the day we told everybody?! Can I get great marketing behind it? I think the answer behind most of these games is yes – it's to be announced on Star Wars in terms of date (laughs). But in general, we're trying something innovative in each category – and Battlefield is going into a heavyweight fight where the competitor has a 25m unit head start. They all have their unique challenges. I sweat 'em all.

Last year, you were pitching Medal of Honor against Call of Duty – that possibly didn't work quite as well as you'd hoped. What did you learn from that?
We learned that it's a tough category. We also learned that Medal of Honor did sell well, we were proud of it, but we wished it had done better from a quality standpoint. The key learning was, we wanted to get on to a common technology – the Medal of Honor and Battlefield teams are now operating in the same group together so they can share tools, technologies, innovations, without feeling like the same games.

Battlefield and Medal of Honor will be part of a rotation that we go after the shooter category with, and this year, with Battlefield 3, I think we have a generational breakthrough in terms of technology. We have a team that's been together for ten years. The Medal of Honor team was fairly new, they were using middleware and software that had already been out there, so… They're a great team, and we're going to continue to invest in them, but we're going to approach it slightly differently than we did before.

One thing Medal of Honor did achieve was a more mature and emotionally resonant story. Do you think that element is going to become more important?
Oh absolutely. As gamers become older and more sophisticated they're expecting deeper more complex characters and stories. In the case of Medal of Honor, it was more about comradeship than "yeah, let's go kill the bad guy". You'll see that in Star Wars: The Old Republic – it's more about your story and how it unfolds. That is a calculated business decision: if you tell an engrossing, engaging complex story, it's a better game, which leads to better sales and better player engagement, which allows you to sequel.

LA Noire was a really good example – it's story-driven, it's about character. The Mass Effect 3 demo playing downstairs (in which a small boy is killed by Reaper fire while aboard an escape craft) has stuck with a lot of people – it's much better than a soldier at the top of a mound of dead aliens, waving a flag. Games are an artform and they are evolving in terms of the types of experiences they offer and the stories that they tell ...