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EA aims for 40/60% digital to physical revenue split

Wed 01 Dec 2010 10:55am GMT / 5:55am EST / 2:55am PST
Online

Focusing on PC and DLC, with Star Wars MMO "the biggest add to our digital revenues next year" - Brown

EA's chief financial officer Eric Brown has highlighted the importance of PC and DLC to the publisher's revenues.

Speaking to an audience at the Credit Suisse 2010 Technology Conference yesterday, he claimed that "A principal growth driver has been downloads for extra content, which includes microtransactions for free to play games. This would include Playfish, map packs for 360 and PS3 games."

The FIFA Ultimate Team virtual collectable card game in the last three iterations of the football series had been a major provider, he revealed. "There's really no limit to the card packs that you can purchase. we've seen people paying $500, 800, 1000 on digital trading cards so they can get the best possible line up of teams.

"This has driven net digital revenue of FIFA from $15 million for FIFA 09 to $31 million for FIFA 10. We don't know where the number's going to end up for FIFA 11, but we do know that we've sold more packaged goods units."

Brown also claimed that Battlefield Bad Company 2 had generated around $30 million in digital sales.

Also contributing significantly was "full game downloads... primarily of PC products. What we're starting to see, especially for first person shooter titles like Battlefield Bad Company 2 is a higher propensity for people to purchase the PC client digitally. This is an area where with our first person shooter games, our Sims franchise and others, we've been able to grow our digital business."

Brown stated that $750 million of the company's current revenues derived from digital, up from $430 million two years ago. The PC was the major provider of this, with consoles and mobile roughly equal.

Brown claimed that EA was determined to "more closely match the 40/60 per cent digital/packaged goods split that we see in the worldwide market today."

"Overall we're growing our digital business by more than 30 per cent per annum," he revealed. "In the first half of fiscal 11 we grew our total digital revenue by 35 per cent year over year. We're actually taking share in digital revenue over all."

Although EA has seen a 74 drop in its share price over the last three years, the CFO was confident about the digital-led future. "This is a very good market to be in.... The growth in digital that we've experienced over the last two years, 85 per cent of that is organic. We've built that from within our franchises versus having acquired new companies."

Brown also expected great things from the upcoming MMO Star Wars: The Old Republic, which he revealed would ship within EA's fiscal 2012, which begins next April - suggesting a 2011 release for the Bioware-made title. "The biggest add in our digital portfolio next year will be the launch of the Star Wars massively multiplayer online game."

Overall, EA was optimistic about the industry, though admitted that some platforms were in decline. "We're expecting to see a contract in standard definition software, from just under $14 billion to $10.5 billion. We're expecting to see growth on the high definition platforms from $11.4 billion to 13.3 billion."

Part of this growth he attributed to Move and Kinect. "Those motion controllers are off to a great start and what we like about it is it just reaffirms the thesis that the high definition consoles will see an extended life cycle.

"We're of the view that high definition is really the practical viewing limit, when you watch high definition content at 60 FPS that's the limit of what can be brought to the marketplace. There's no display that can go beyond high definition that you can purchase as a consumer today at any reasonable quantity.

He also saw the secondhand market as increasing from last year's $3.8 billion to 4.3 billion.

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