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EA not expecting sharp transition to new consoles

Wed 24 Feb 2010 1:04pm GMT / 8:04am EST / 5:04am PST
BusinessPublishing

"Multi-billion dollar" investment wouldn't benefit consumers; games played longer this cycle, says CFO

Electronic Arts' chief financial officer Eric Brown has said that the publisher is not expecting any new console hardware in the near future, as development costs would run into "multi-billion dollars" and current consoles are already fulfilling consumer's high-definition needs.

Speaking during the Goldman Sachs Technology and Internet conference, Brown said that consumer technology is currently at a peak, and there's nothing on the horizon that would seem significant enough to convince users to upgrade to more powerful technology.

"We don't see a sharp and distinct console transition like we've seen in the past. In the past the primary drivers were significant upgrades in silicon in the GPU/CPU combination that drove higher resolution for the games," he told investors.

"Today we have two of the three consoles that operate in full high-definition and are running games at 60 frames-per-second. If you step back and say if it's a multi-billion capital dollar investment for the next generation, the question I would ask is if you were to produce that then what would you display it on? There's really nothing in terms of broadly available consumer viewing technology other than 1080p flat panel televisions and so you could upgrade in theory but you wouldn't get the obvious graphical benefit that we saw really drove the sharp transitions in the prior cycle."

Brown acknowledged that this console cycle has seen a significant change in consumption of games, but it also provides plenty of opportunities Ė the company is changing its business to take advantage of different habits and tastes.

"I don't think the console cycle is broken, but it's fair to say that this console [cycle] is different to previous console cycles. The packaged goods market is quite healthy at the top of the charts, the key thing is to place games in the top 20 or top 25," he added. "There's been a concentration of demand in the top portion of the charts."

According to Brown, users of the Xbox 360 and PlayStation 3 are playing their consoles longer, helped in part by online and additional digital content.

"One of the things that's important to keep in mind here compared to the fiscal cycles several years ago is that actual gameplay is up despite the rise in social media and mobile computing. We see this is in our data looking back over the past two to three years, console usage for the high definition consoles is definitely up."

"Players in this cycle expect deep, rich multiplayer online experiences and they also expect to be able to customise their games through digital content, so that places a premium or additional importance on online capability and also the ability to download to a hard drive. These are challenges on the one hand but also opportunities because digital content allows the traditional ARPU (average revenue per user) model to be extended, and multiplayer online play creates persistence."

Comparing this console cycle to the last, he also noted that the price of boxed goods has remained higher for home consoles.

"Front line pricing is actually holding better than before. At this point through in the last cycle, ASPs (average selling prices) were down at roughly 30 per cent or so. At this point in the cycle, if you look across platforms, ASPs are down 9-13 per cent. Front line pricing model is holding better relative to the last cycle overall."

9 Comments

Jack Loftus
Contributing Editor

95 0 0.0
""Players in this cycle expect deep, rich multiplayer online experiences and they also expect to be able to customise their games through digital content, so that places a premium or additional importance on online capability and also the ability to download to a hard drive"

How nice that what customers "want," according to Brown, so seamlessly dovetails into EA's upcoming Project Ten Dollar strategy!

Posted:4 years ago

#1

Sander Stricker
Product Manager Games

6 0 0.0
"Players in this cycle expect deep, rich multiplayer online experiences"

Bottom left of this page:
"EA culls online support for multiple titles
Xbox 360, PlayStation 3, PSP and PC games affected"

Posted:4 years ago

#2

Jack Loftus
Contributing Editor

95 0 0.0
@Sander: YES.

Would love to see GamesIndustry.biz editors raise these points during interviews, earnings call, etc.

Posted:4 years ago

#3

Daniel Harty
Audio Capture Specialist

18 0 0.0
The cutting of online support for specific titles needs to be taken in context.

The online support cut was for titles whose online service maintenance costs outweighed end user demand. The level of depth and sophistication which a gamer currently expects when purchasing a new title with online modes or extended, periodic content is changing and it's necessary to adapt - placing resources where they can be best leveraged to deliver end user satisfaction with efficient, sustainable business models.

Posted:4 years ago

#4

Kevin Clark-Patterson
Lecturer in Games Development

288 23 0.1
I predict we are at least 5 years away from any new console release from MS or Sony. Especially with their respective motion sensor hardware being released later this year.

I believe the Wii may however have a 'cosmetic' & HD update before that time!

Hopefully Wii online, PSN & Live will become even more feature filled and help deliver greater and deeper content experiences.

Edited 3 times. Last edit by Kevin Clark-Patterson on 25th February 2010 10:32am

Posted:4 years ago

#5

Tameem Antoniades
Creative Director & Co-founder

197 164 0.8
I wonder if apple / google will be the suprise new entries with a disruptive new model and catch everyone off guard. Does cloud gaming have near-term legs?

Posted:4 years ago

#6

Sander Stricker
Product Manager Games

6 0 0.0
If cloud gaming is the future there is no need for new consoles ever. They could just use the current consoles since they are already connected to the internet, or any network adapter with TV output will do.

Posted:4 years ago

#7

Jim Webb
Executive Editor/Community Director

2,210 2,051 0.9
Tameem, the infrastructure required for cloud computing to provide the same or greater gaming experience we enjoy today is a long way from feasibility.

Not to mention that a solid business model for it has yet to be mapped out to make it worth the heavy investing required to compete against the big 3 (or for their own new "console").

Maybe some test runs could be undertaken in high density markets such as those in Japan or South Korea but I can't foresee anyone rolling out a whole global platform for at least a decade or more. And even then the volume of people that will not have access to a network capable of providing the required bandwidth would so high that I don't think the industry would want to alienate them.

Posted:4 years ago

#8

Kevin Clark-Patterson
Lecturer in Games Development

288 23 0.1
I think Apple will continue with the Mac computing route, not forgetting it has very strong ties in mobile phone and portable device markets. A Mac based console...canít see it personally.

Google surely has the financial backing to enter the market but as a gaming platform, I feel it better they stick to what they do best - monitoring and recording our every online move while digitising the analogue world!

And the current gen are doing just fine imho, still not maxed out! :)

Posted:4 years ago

#9

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