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Retail

EA's Soderlund: Physical retail could be gone in ten years

EA's Soderlund: Physical retail could be gone in ten years

Tue 21 Aug 2012 3:29pm GMT / 11:29am EDT / 8:29am PDT
RetailPublishing

"I think it's going to be sooner than people think," says executive vice president of EA Games

EA

Patrick Soderlund of EA has shared his thoughts on the future on the industry, and specifically the time when boxed products will no longer be a commercially viable way of selling games.

"I think it's going to be sooner than people think. I think it's going to be sooner than ten years," the executive vice president of EA Games told CVG.

"That's my personal opinion, and might not be what EA thinks."

He admitted that it was a tricky subject, made trickier by the different attitudes to physical goods that the new generation of gamers have.

"We know that packaged goods work, and the majority of our current revenue comes from that. That's still a viable business model," he explained.

"If you don't adapt you become irrelevant."

"In the long term, we'll see more and more people gravitate to downloaded content. I happen to think that there's something about physical content, like books, that's collectable and satisfying to own. I still want physical content but I'm not part of the new generation of gamers. I remember a time when I bought a cartridge and excitedly read the manual on my way home, imagining what the game was going to be like. Maybe kids don't have that anymore."

He also spoke about the evolution of franchises across multiple devices, and warned the the industry had to adapt.

"Looking back five years and looking at today, there is such a vast difference to how I consume entertainment and how I connect with people. We just have to embrace these changes rather than be afraid of them. I think some people are so surprised by the changes that are happening that they become afraid of it."

"They try to stick to what they know and that's the danger. If you don't adapt you become irrelevant. I absolutely believe that's the case."

18 Comments

Hugo Dubs Interactive Designer

163 24 0.1
EA's Soderlund: Physical retail could be gone in ten years
Is that taking a position to say "could"
In 10 years, so many things could happen. MAybe people won't play F2P anymore :)

Posted:2 years ago

#1

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,481 1.1
It will happen when the overwhelming majority of markets have the Internet infrastructure capable of going completely digital and consumers no longer demand a physical product. And I don't see that happening in under 10 years.

Posted:2 years ago

#2

Mats Holm Technical Process Analyst, EA BioWare

55 50 0.9
Average internet speed in modern markets today, around 11mbs, internet speeds on average double every year, done so since 1992, if trend continues, in 2022, the average internet speed will be above 10gbs.

Posted:2 years ago

#3
Fat chance. Went to Germany for gamescom recently, and to be honest there was barely enough wifi to send a email which was not helped by hundreds of activision, ubisoft, muppets all sending emails, and downloading files and hogging the net with traielrs all at the same time :)

Posted:2 years ago

#4

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,481 1.1
Mats, speed isn't so much the problem is as access, stability and latency. And even then the concept of average speeds mean that a large portion of the users do not meet that speed. Don't think I'd want to shut off half of my potential customer base just because the other half can receive digital downloads at adequate speeds.

Posted:2 years ago

#5

Hugo Dubs Interactive Designer

163 24 0.1
I agree with Jim!

At first, when you say 10gbs, it is not what you really got, but what they deliver at the beginning of the pipe...
After, 5gbs is enough to play PSN games with a perfect NAT. The problem is stability.

Posted:2 years ago

#6

Mats Holm Technical Process Analyst, EA BioWare

55 50 0.9
Hugo: Unless you have the marketing materials from 2022, I would not say that 10gbs is what they are offering in the beginning of the pipe, or what comes out my router, that is for the future to hold. However, what we know, is that the average internet user, today, has access to 10mbs internet, right into their homes, and it has grown to this point, at a nearly constant rate, over the last 20 years. If this growth continue, and frankly, Internet is mostly made up by sand, so there is no limit on the amount of fiber we can make, we could have 10gbs coming in and out of your local router. (I am also currently on a 100mbs plan, but I am getting around 122mbs, so I am getting much more than they offered.)

Dr. Wong: That is a limitation in Wi-fi technology, and not general internet speeds, expect that to grow a steady rate, as long as the spectrum crunch is avoided in some fashion.

Jim: Speed and Access is the only problem, and as both of these are growing exponentially, within 10 years, the people who will not have internet will be on par with the people who do not have cell phones, due to not having any coverage. Latency and Stability is only an issue if you are arguing that streaming will overtake physical media, but this article only talks about Downloadable media, not streaming.

What we need to remember here, is that people who have only dial-up like connections now, won't upgrade to ADSL, and then to slow cable, and then to fiber. The jump will jump right into fiber.

Posted:2 years ago

#7

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,481 1.1
Mats, I think you are looking at average speeds of current users rather than thinking in terms of the entire consumer market. Average speed of those that already have Internet is increasing but what about those that don't even have Internet or access to broadband is limited/non-existent? I agree they won't increase incrementally (dial up, ADSL, cable, fiber) but the question is will they have cable/fiber at all?

There is still a very large portion of the US that can't get cable Internet. Fiber is only available to very limited areas. The 10 year plans I read from telecommunications companies doesn't give me much hope for ubiquitous fiber in 10 years.

And we've said nothing about data caps.

Posted:2 years ago

#8

James Prendergast Research Chemist

735 432 0.6
Personally, I think infrastructure is fixable and will improve over the next ten years so that's not as much of a problem as what I'm concerned with: access and fairness.

Very few digital platforms support all countries in the world, let alone give equality to those countries they do recognise. Where I am right now we don't have a PSN store or the XBL marketplace... it's just idiotic considering English is the second language and so we could use the UK store. Until publishers (including other forms of entertainment) and console makers do this we're never going to have a digital future because you're locking out a huge potential customer base and increasing the level of piracy by not providing a fair offering to those countries.

Unfortunately, the pace of publisher mindset change is a magnitude or two slower than internet infrastructure improvements...

Edited 1 times. Last edit by James Prendergast on 22nd August 2012 7:53am

Posted:2 years ago

#9

Bruce Everiss Marketing Consultant

1,692 594 0.4
One of the world's most popular games is Runescape with 200 million accounts created.
This has been happily working as a browser game on the interwebs since 2001, when bandwidth was vastly less than it is now.
Obviously online will always be slower than accessing a local SSD. But often in the real world the latency of the TV that the game is being played on is greater than the latency of the internet connection.

As for specialist physical retail. At the current rate of process they will all be out of business before too long.

Posted:2 years ago

#10

Dave Herod Senior Programmer, Codemasters

528 788 1.5

Posted:2 years ago

#11

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,481 1.1
Bruce, I'm willing to bet you can take a zero off of that total to get the actual total unique account holders. Two zero's off to get the total number of consistent players. Most of those accounts are dupes and 10 minute trials.

Posted:2 years ago

#12

John Bye Senior Game Designer, Future Games of London

484 455 0.9
As I said when Runescape announced those numbers, "7 billion hours / 200 million accounts = 35 hours per account on average, over a period of several years". Which suggests to me that the vast majority of those accounts are inactive. Show me MAU and DAU and I'll be more impressed.

Posted:2 years ago

#13

Kieren Bloomfield Software Engineer, EA Sports

96 87 0.9
You can still buy music on CD and vinyl...

Posted:2 years ago

#14

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,481 1.1
Kiernen, stop bringing reality into the debate. No one wants to hear how consumer predilections dictate market direction against technological advancements. That's just too much truth.

Posted:2 years ago

#15

Bruce Everiss Marketing Consultant

1,692 594 0.4
The thing about music is that it is linear and non interactive, so it remains the same regardless of distribution method.
With games,as soon as you go digital you tend to create a different product with things like FTP and IAPs. Also the purchase price moves relentlessly towards zero because that is what each incremental sale costs. So it is very difficult for digital and physical versions of the same product to successfully live alongside each other.
The main problem with Xbox 360 and PS3, the reason their market is falling off a cliff, is because they are wedded to physical distribution of plastic and cardboard and to bricks and mortar retail. This business model is incredibly expensive to run. Shipping, warehousing, retail rents, salaries etc etc. All this keeps the end user price ridiculously high. $60 for a game does not stack up well with very many alternative leisure spends. So, as ever, customers are voting with their wallets. Our industry really cannot ignore this massive shift in customer behaviour.
The very simple fact is that customers are no longer prepared to pay high prices to maintain the high street edifice.

Posted:2 years ago

#16

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,282 2,481 1.1
Bruce, when music went digital, the medium did change. People stopped buying full albums and bought individual songs. The cost factor also changed and it has affected the retail music industry a lot but it does still exist.

As for why the X360 and PS3 markets are dropping....geez, Bruce, does it really need to be pointed out that they are at the end of their life cycles? As happens at the end of every single console life cycle since the 70's? Do you really think they are slowing in sales simply because of their physical nature? Do you believe that the converse is then true? If digital distribution were not as prevalent as it now is that they'd still be maintaining their peak sales rate after 6-7 years on the market?

Posted:2 years ago

#17

Fran Mulhern , Recruit3D

863 707 0.8
"As for why the X360 and PS3 markets are dropping....geez, Bruce, does it really need to be pointed out that they are at the end of their life cycles?"

Of course it needs to be pointed out. This is Bruce you're talking abut.

Posted:2 years ago

#18

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