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Paids apps' days are numbered, packaged goods will endure - EA CFO

Paids apps' days are numbered, packaged goods will endure - EA CFO

Tue 13 May 2014 2:01pm GMT / 10:01am EDT / 7:01am PDT
MobileOnline

Blake Jorgensen lays out EA's plans to create a stable business more about long-term engagement than hits

Electronic Arts has taken the "fewer, bigger, better" approach to game publishing and tweaked it to "fewer, bigger, better, longer." Speaking at the Wedbush 2014 Transformational Technologies Management Access Conference today, EA CFO Blake Jorgensen talked about the strategic change that has taken place at the publisher since his arrival in mid-2012.

"When I first got to the company, I found that everyone really wanted to be successful; we were just trying to be successful in too many areas," Jorgensen said. "So it's been a little bit more focused and disciplined approach to try and make sure we're staying true to what we need to do, which is to generate cash for shareholders."

A key part of the company's plan to realize that goal has been its growing digital revenues. Downloadable versions of packaged retail games, microtransactions, and mobile games have all been areas of focus for EA of late, and all are expected to grow considerably.

"Our view is we would like to develop a much more stable business, where it's less about the hits and more about long-term engagement with the gamers and getting them great content all the time."

"You could easily see a mobile business that's twice the size it is today. We're a $500 million mobile business, and there's no reason we can't be much larger than that," Jorsensen said.

The executive said the company already has a strong slate of mobile hits and tremendous opportunities to improve with brands like FIFA, Madden, NHL, The Simpsons, The Sims, Real Racing, and Plants vs. Zombies.

"Our view is if you have multiple franchises that are all $50 to $200 million, you can build a very stable mobile business that you can just continue to reinvest in," Jorgensen said.

So mobile gaming is huge for EA, but it's not even the publisher's biggest digital business, thanks to the success of microtransaction-driven efforts like FIFA Ultimate Team and Madden Ultimate Team.

"We're right around $750 million right now and that should double over time," Jorgensen said of that segment. "I just think that's where the business is going. Our view is we would like to develop a much more stable business, where it's less about the hits and more about long-term engagement with the gamers and getting them great content all the time. That I think becomes a less risky business, and hopefully a higher multiple business over time as well."

However, not every part of EA's digital efforts is poised for growth.

"I think paid downloads will probably go away," Jorgensen said. "That business is very small for us now, and at the end of the day, the consumer expects to get the game experience on a mobile device for free, and they know they can grow that experience over time by monetizing or continuing to play for free. And you're going to see a little bit of both of those, but I do think the upfront fee for downloading is probably slowly disappearing."

"I do think the upfront fee for downloading is probably slowly disappearing."

When asked jokingingly about the impending demise of retail (specifically GameStop), Jorgensen dismissed predictions of doom, but did acknowledge the growing shift toward digital for most consumers.

"I think the physical business from a publishing standpoint obviously will always be around," Jorgensen said. "Right now people still buy physical records, even though most of us probably don't. At the end of the day, we'll probably always have a physical business and retailers will always be around as a way for discovery and interaction for consumers. But I do think the consumers will find themselves more and more buying digitally, and the process of buying is less about the actual game and more about the experience over time."

In the near-term, Jorgensen said even EA's packaged games business is expected to grow, both with new titles and existing franchises. EA learned a lesson years ago when it believed Madden had peaked for good, only to prove itself wrong with the arrival of Madden Ultimate Team, which helps moves physical copies as well.

8 Comments

Andrew Jakobs
Lead Programmer

233 92 0.4
Well, microtransactions work for specifc games, but there are lots of games which microtransactions just won't work, so how should those games/apps make money? through ads? I don't think so, people dislike ads...

Posted:4 months ago

#1

Andrew Goodchild
Studying development

1,245 401 0.3
Probably by sticking them in anyway.

Posted:4 months ago

#2

Jim Burns
Research Asisstant

44 85 1.9
Paid apps meant the app store had some quality, not anymore

Posted:4 months ago

#3

Nate Ballantyne
QA Manager

22 23 1.0

Posted:4 months ago

#4

Rogier Voet
Editor / Content Manager

71 31 0.4
Unfortenately the world is full of People who have no clue what they are spending money on.

Posted:4 months ago

#5

Hugo Trepanier
Senior UI Designer

156 144 0.9
@Andrew the chapter-based model is great for that. Telltale is using it wisely and with great results too. I wish more games operated under that model.

You could also easily get a free game with very basic content and then sell more substantial DLC for a price. The only downside to that is the fragmentation of your player base for multiplayer titles.

Micro-transactions are not bad per se but too many games still use them very poorly. The perception of value is diminished because of that.

Posted:4 months ago

#6

Russ Cogman
Senior Game Artist

22 47 2.1
I have yet to have a "Freemium" experience that is even close to being as satisfying as a paid product. If that ever changes, please message my inbox.

Posted:4 months ago

#7

Justin Keeling
Founder & CEO

4 6 1.5
Wonder how many mobile games Mr. CFO Blake has had the pleasure of playing?

Posted:3 months ago

#8

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