IndustryGamers - Informing the Games Industry

EA CEO: Digital to Overtake Retail This Year

Posted January 7, 2011 by James Brightman

It's no secret that the digital side of the games business is growing and growing quickly. Whether it's on Xbox Live, PSN, Apple's App Store, Facebook or some other PC portal, digital games are everywhere, and the free-to-play model has become particularly interesting to many publishers. Electronic Arts has been shifting part of its focus more in this direction over the last year, and EA boss John Riccitiello is quite bullish on the overall digital sector. 

"At the end of [2011], the digital business is bigger than the packaged goods business, full stop. No questions in my mind. Then, you know, I think that we’ll find ways to even sell our packaged goods content in chunks and in pieces and subscriptions and micro-transactions," he told IndustryGamers in a recent interview.

He continued, "Look at what I Warner and Turbine did with Lord of the Rings Online. While I still think the majority of their revenue is from people giving them the premium subscription for fifteen dollars a month, there’s a lot of people coming in and they upgrade. I’m not sure that fifteen dollars deal is that great a deal, but that’s a separate issue. I guess to best answer your question, I think these business models are going to find their own feet. We’re very careful about making sure we price appropriately for platform and also for the intellectual property."

The free-to-play model has been a huge boon for EA. Riccitiello noted, "Our highest ARPU (average revenue per user) are free-to-play games among paying users. You think about that and say, 'how can a free game be the game they pay the most for?' We have people who are giving us $5,000 in a month to play FIFA Ultimate Team. And it’s free. Dirty little secret."

The key for publishers is to be flexible, he added. "I actually don’t think that there’s a lot of mileage in trying to decide exactly how consumers want to buy their entertainment content. They may want to buy it on an iPad; they may want to get it through the social network, they may want to pay for it through micro-transactions and monetizing, or they may want to pay for it all at once. They may rather pay a subscription price in order to count on what their costs are going to be, but they may want to pay for it all at once and never have to pay for it again. We’re in all of those businesses and I think the way this is going to work is that the models that the consumers like the most are going to grow the most," Riccitiello said.

James Brightman has been covering the games industry since 2003 and has been an avid gamer ever since the days of Atari and Intellivision. He was previously the EIC of GameDaily Biz.