Electronic Arts' EA.O Chief Executive Officer John Riccitiello poses during E3, the Electronic Entertainment Expo, in Los Angeles. Credit: Reuters/Phil McCarten/Files
Riccitiello will step down from his post and leave the company's board on March 30, after having overseen a near-two-thirds loss in the company's market value since he became CEO in April 2007.
EA and rivals like Activision Blizzard Inc have seen growth fall off sharply as more gamers flock to free games on social networks or on mobile devices. The biggest traditional games publishers have tried to buy startups and invest in mobile platforms but face intense competition from entrenched players like Rovio or Zynga.
"We have fallen short of the internal operating plan we set one year ago," Riccitiello said in a resignation letter filed with the Securities and Exchange Commission.
"EA's shareholders and employees expect better and I am accountable for the miss."
In January, Electronic Arts slashed its fiscal 2013 earnings forecast after a weaker-than-expected holiday quarter marked by disappointing sales of its "Medal of Honor" title. It also forecast non-GAAP revenue for the fourth quarter ending March 31 of about $1.025 billion to $1.125 billion.
EA's former CEO and chairman of the board, Larry Probst, has been appointed as executive chairman as the company begins its search for its next CEO, the company said.
The news of Riccitiello's exit did not come as a surprise, Mike Hickey, an analyst at National Alliance Capital Markets, said.
Whether it has been the company's performance guidance, the loss of key development talent or botched product launches, Riccitiello has had "a track record of mis-executions," Hickey said.
"The stock that has underperformed encapsulates all of the issues," Arvind Bhatia, an analyst at Sterne Agee said. "And this most recent quarter was the straw that broke the camel's back."
Under Riccitiello's watch, the company grew its digital and mobile games businesses. Analysts say the company's revenue from mobile games has been a bright spot in recent quarters.
But the company has had high-profile slip-ups in recent months. Its latest installment of the popular city-building game "SimCity" - released earlier this month - was marred by server glitches and angered gamers who could not access the game for days.
New game hardware could potentially boost sales in the troubled video game sector, according to analysts. Consumers are holding back from buying hardware and software as they wait for rumored next-generation versions of Sony Corp's PlayStation and Microsoft Corp's Xbox, expected later this year.
"We believe timing makes sense for a CEO transition at the end of the fiscal year, and ahead of next generation console launches and a strong second-half title lineup (Battlefield and EA Sports)," analyst Colin Sebastian of R.W. Baird said in a note.
Electronic Arts' stock climbed 3.4 percent to $19.35 in after-hours trade, from a close of $18.71 on the Nasdaq.