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EA is "going to be a 100% digital company, period" says Gibeau

EA is "going to be a 100% digital company, period" says Gibeau

Mon 02 Jul 2012 2:59pm GMT / 10:59am EDT / 7:59am PDT
OnlinePublishing

EA's Labels president also tells us that NPD's monthly reports are "totally irrelevant"

Electronic Arts is one of the publishers in this industry that is at the forefront of the digital transition. The company recently had its first year of digital revenues over one billion dollars, and now EA is expecting that number to jump closer to $2 billion (guidance of $1.7 billion in digital revenues this year). For EA Labels boss Frank Gibeau, the business is clearly at a tipping point. He told GamesIndustry International recently that EA clearly will be 100 percent digital in the near future.

We asked Gibeau point blank when the company will have most, if not all, revenues coming from digital products. It's not as far off as one might think.

"It's in the near future. It's coming. We have a clear line of sight on it and we're excited about it. Retail is a great channel for us. We have great relationships with our partners there. At the same time, the ultimate relationship is the connection that we have with the gamer. If the gamer wants to get the game through a digital download and that's the best way for them to get it, that's what we're going to do. It has a lot of enhancements for our business. It allows us to keep more that we make. It allows us to do some really interesting things from a service level standpoint; we can be a lot more personalized with what we're doing," Gibeau enthused.

"We're going to be a 100% digital company, period. It's going to be there some day. It's inevitable"

Frank Gibeau

EA isn't about to abandon retail and its valuable retail partners tomorrow, though.

"But if customers want to buy a game at retail, they can do that too. We'll continue to deliver games in whatever media formats make sense and as one ebbs and one starts to flow, we'll go in that direction," Gibeau continued. "For us, the fastest growing segment of our business is clearly digital and clearly digital services and ultimately Electronic Arts, at some point in the future - much like your question about streaming and cloud - we're going to be a 100% digital company, period. It's going to be there some day. It's inevitable."

The fact that more and more of the industry is going digital opens up new avenues for EA and other gaming companies.

"For us, we're focused in on the fact that the gaming market overall is broad. You have more people playing games now than ever before in the history of the industry. There are more markets available to us - Asia, Brazil, Russia - a bunch of emerging markets that are legitimate and growing fast. We have more devices that we can publish across now. We used to publish across three platforms; now we're publishing across 14 or 15," Gibeau said.

"[NPD] is an irrelevant measure on the industry. It's totally irrelevant. We don't even really look at it internally anymore"

Frank Gibeau

"The advent of IP televisions and streaming - we'll be prepared for it. That'll be a way that we'll generate content and deliver it to customers in a high quality way. The next generation of hardware is going to come out. It's difficult to speculate what generation next would be after that, but there are opportunities in cloud and streaming that are very interesting to us and we have relationships with Gaikai and other companies where we've investigated a lot of that stuff and we clearly see our IP and our capabilities on the digital services front translating over very easily there."

Gibeau believes that some industry observers and investors are not grasping the complete picture. And part of the reason for that is the constant decline we've seen through NPD's monthly retail reports. Gibeau went so far as to say that EA all but ignores NPD's data now.

"I think one of the problems with this industry right now is that people tend to look at it like they're looking at an elephant through a straw. They only see a little parts of it and they're not looking at the total picture, right? Between Facebook, social, mobile, free to play on PC, Asia, consoles... it's a vibrant, growing, huge market. An occasional bad report from NPD, which measures a sliver of what's actually happening in gaming gives people an erroneous impression," he stressed.

Gibeau continued, "My point is it's an irrelevant measure on the industry. It's totally irrelevant. We don't even really look at it internally anymore. We're more focused on our services and how we're connected with consumers. The number of Nucleus accounts we're growing, the amount of engagement time that we have, the amount of services that we're running - those are more important metrics for us than unit sales according to NPD and North America. So your original question is about what comes next. It's growing. It's booming. It's big. Things are good. If cloud and streaming come on line at scale, we'll be in the position to do it and we're excited about it."

Update: NPD has now reacted to Gibeau's comments. Please read that here.

19 Comments

Tim Carter
Designer - Writer - Producer

550 268 0.5
Now if they would only put as much emphasis on the quality of what moves inside the pipe...

Posted:2 years ago

#1

Andrzej Wroblewski
Localization Generalist

100 68 0.7
Digitalization will inevitably put packaged goods sales experts out of work, so quality must naturally follow the transition -- otherwise it just means "no quality" and "no nice packaging".

Posted:2 years ago

#2

James Wells
Gaming Contributor - digboston.com

71 29 0.4
What the hell is "Nucleus"?
At any rate, this guy sounds like your typical CEO of a sinking corporation, spouting off hyperbolic nonsense hoping for attention.

Posted:2 years ago

#3

Graeme Quantrill
Mobile App Developer

42 8 0.2
No real surprise. EA dislike the pre-owned software route, had to deal with the issues with Game and obviously have their own digital distribution platform on PC and Mac markets.
It's a matter of time before consoles fall into line so perhaps it hints more at the next gen consoles and their ability to deal with digital and streaming.

Posted:2 years ago

#4

James Brightman
Editor in Chief

221 248 1.1
@ James Wells, Nucleus is a cross-platform community network EA created. It has around 220 million members.

Posted:2 years ago

#5
looking at an elephant through a straw
I got me a new fav qoute :)

Posted:2 years ago

#6

Morville O'Driscoll
Games Blogger & Journalist

1,484 1,254 0.8
Re: Nucleus. Googling for info reveals

"Nucleus will be build into all of the EA Sports titles, Spore, and Battlefield Heroes. The system will allow players to play games together, and also track scores and other game data across platforms" (from a 2008 press release)

So, that's Nucleus, AutoLog and BattleLog that all essentially do the same thing, just with some variations? And how widespread is Nucleus from a consumer point-of-view? I've played quite a few EA games over the years since 2008, and have never come across it.

Posted:2 years ago

#7

Abraham Tatester
Producer

70 52 0.7
"the ultimate relationship is the connection that we have with the gamer. ... It allows us to do some really interesting things from a service level standpoint."

And by this, I'm assuming he means turning off servers for games that are less than two years old.

Come to think of it, does anyone know if EA has removed any games from Origin, making it so people who bought a game are no longer able to download it? Has Steam ever done this? I've googled this, but don't see anything about it...

Edited 1 times. Last edit by Abraham Tatester on 2nd July 2012 6:57pm

Posted:2 years ago

#8

Morville O'Driscoll
Games Blogger & Journalist

1,484 1,254 0.8
@ Abraham

Indeed. EA are full of confusing messages regarding "service levels" for the gamer; I was going to buy Burnout Paradise on the PC recently. Until I realised that EA closed the DLC store for it, so the only way to get it was to pirate it. *slow-clap* Then there's the Mirror's Edge DLC which doesn't work on the Steam version of the game. And, as you rightly point out, server shutdowns...

As for your question regarding removing games, I don't believe either EA or Valve have done this. Speaking personally, I don't believe Valve would ever do this, but given their past actions re: closing servers and DLC stores, I wouldn't put it past EA.

Edited 2 times. Last edit by Morville O'Driscoll on 2nd July 2012 7:45pm

Posted:2 years ago

#9

Doug Paras

117 61 0.5
Pure Digital distribution is 10 or 20 years away at best. The worlds current Internet levels just won't allow or make people want to spend 30-40 hours downloading something to play. Until such things as download limits are removed and the average persons bandwidth exceeds 3-4 megs I just don't see somebody stop buying a physical copy.

Oh and lets not forget the chance you lose all your data should your hard drive fail.

Posted:2 years ago

#10

James Verity

132 25 0.2
go for it EA... I won't have to spend a penny on your titles... which is more or less the way it is at the moment... Small digital downloads on portable devices is fine... but 10-15+ GB games you can keep em... and if your games turn out to be a really small download, it'll just show everyone how you have all been lying about games getting bigger and bigger...

Edited 1 times. Last edit by James Verity on 2nd July 2012 10:01pm

Posted:2 years ago

#11

Morville O'Driscoll
Games Blogger & Journalist

1,484 1,254 0.8
Hummm...

@ Doug

Pure digital distro is years away, yeah. Even Valve's last game (Portal 2) was released on disc, and you factor in large file sizes alongside the fact that digital stores are still generally speaking more expensive than online physical retail, and you have something which isn't perfect for the consumer. Steam sales - and, indeed, their non sale tiered pricing structure - are steps in the right direction, but most games are still cheaper to buy on Amazon, HMV or Zavvi than Origin or Steam. Installing from retail disc to then download updates is by far the easier solution, until publishers start undercutting physical prices with digital.

@ James V

Compression techniques in games vary massively. I know Far Cry 2 isn't a huge game, or technically amazing, but it fit onto a single layer DVD for the PC. Less than 4.7gb isn't a massive amount to download. Then again, there's Rage, which is, what, 22gb, and most of that textures? So swings-and-roundabouts, yes, but my point is that download size isn't indicative of game size.

Also, I do wonder how many people are like me sometimes. My PC is left on mostly 24/7, as it serves media to the rest of the house, so downloading during the night to play in the morning is quite easy.

Posted:2 years ago

#12
Ocean, Infogrames, Ubisoft, Activision, THQ and now EA - holed below the waterline and their CEO comes out, wields a lot of weird phrases and 'pie-in-the-sky' opinions, and then rushes back into his big office, closes the door, and hopes he has calmed the chattering classes for a period.

When your debt gets out of control, promising the Earth will not address the problem, nor trying to be more than you actually are! I am saddened that the players have left the building, and just left a company run by men in suits - reminds me of the mess of Midway a few years back!

Posted:2 years ago

#13

Adrian Herber

69 23 0.3
One thing about this interview definitely pleases me: a large company like EA openly acknowledging that NPD sales data is not a useful metric anymore. NPD sales data showing a decline seems to be the backbone of most arguments that (PC) gaming is dying, and it's just rubbish.

Between a growing indie scene, MMOs, Steam, other digital distribution, and the rest of the world's sales, NPD sales data has not been a reliable 'pulse' of the industry for many, many years.

Posted:2 years ago

#14

Nick Parker
Consultant

279 143 0.5
@ Doug and @Morville

Digital distribution will move from download to streaming so the size of the hard drive and the time to receive the content, assuming bandwidth speeds are there, become much less important.

I'd like to see the faces of EA shareholders when they hear that the backbone of the business is becoming "irrelevant". If NPD is irrelevant, the interest in the market sales performance of EAs current and near future IP (on packaged goods) and of it's competitors must be irrelevant to EA. I think this statement is a few years premature.

Edited 1 times. Last edit by Nick Parker on 3rd July 2012 9:57am

Posted:2 years ago

#15

Morville O'Driscoll
Games Blogger & Journalist

1,484 1,254 0.8
@ Nicholas

Well, yes and no. Streaming will come into its own eventually, yeah, but not for everyone.

For one thing, there's the assumption that people will want to rely on an external server to play games they've bought. You only have to look at the chaos of the D3 release to know that's not going to readily happen. And what about people who aren't always connected to the internet? Everything from moving house to business flights affect internet connections, why should that mean they can't play large games? And then there's the question of why someone playing, say, Baldur's Gate Enhanced on their iOS device would stream it rather than download to the HD, given its relatively small size. And then there's LAN parties... I can't see people streaming a game of Crusader Kings 2 to play on a LAN, for example.

All that, before you even get to input lag, bandwidth speeds and download caps.

Streaming is the future, but it's not everyone's future, just like, currently, digital stores aren't for everyone.

Edited 2 times. Last edit by Morville O'Driscoll on 3rd July 2012 11:29am

Posted:2 years ago

#16

Rick Lopez
Illustrator, Graphic Designer

1,269 941 0.7
Just make good games, wether they are sold digitally or not. Dont milk your franchises like you made Bioware do. I think your aquisition of Bioware was the worst thing that happened to them.

Posted:2 years ago

#17

Felix Leyendecker
Senior 3D Artist

181 200 1.1
@Nicholas, it already kind of is that way, you can play diablo3 or WoW even if you only have 50% downloaded, it just keeps loading the data in the background. Serving up games like this actually does make sense.

Posted:2 years ago

#18

Doug Paras

117 61 0.5
DIII is the perfect example, last night I was on-line trying to play got an error when I tried to make a game with a friend, and then got an error and dced from he server. After that I was unable to log unto DiabloIII and play cause it required me to be able to connect to Blizzard servers which were having issues. I went on to play an hour of Diablo II which I could play offline before going to a movie.

Who is seriously going to pay for a service for a game they could easily play offline with a disk with the risk they won't be able to play @ all?

@Felix Leyendecker It should be noted your right, but while it downloads in the background you play with limited bandwidth. Playing with limited bandwidth on games that depend on the connection speed cause game play experience to be much lower.

Edited 2 times. Last edit by Doug Paras on 3rd July 2012 5:50pm

Posted:2 years ago

#19

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