EA: TV ad spend to be reduced "substantially"
Publishing giant looks to invest more money in game quality and online marketing
Electronic Arts is to cut its television advertising budget "substantially" as it refocuses its investment partly into online marketing, but mostly into making "good games".
That's according to senior VP and head of European publishing, Dr Jens Uwe Intat, speaking in a panel session at the IBIS/LBS Videogames Investment Network last night.
Responding to a question from the audience at the London Business School event about whether marketing costs would spiral in the future, he was clear in his view.
"I think they will actually not," he said. "Unfortunately for a lot of television companies it's likely that, as we spent most of our [marketing] money on television advertising, we'll reduce that substantially going forward.
"Part of it will go online, but most of it will actually be invested into making good games - despite the fact that a lot of marketing money is spent on a Call of Duty or FIFA, when we look at our research, most people actually buy a game because of a referral from a friend.
"So the product quality at the end of the day is still the dominant criterion," he added.
He went on to explain that the approach wasn't just relevant for EA's core games market, but also true for the business of recent $300-400 million acquisition Playfish.
"I think that's also true when I look at the other end of the spectrum and I talk to Kristian Segerstrale from Playfish - they talk about faster development cycles over time and obviously not taking two years to come up with a game," he explained. "They sit down every Monday to look at the past week's performance, and change the game features.
"But at the end of the day most of the money will still go into the game's development, and the smallest part should go into the advertising."
In general television ad campaigns have formed the backbone of the main publishers' marketing spend on major titles in the past - and this will be more bad news for TV companies, set against a backdrop of steadily decreasing ad revenue for them.
Meanwhile videogames are finding themselves as a marketing platform for non-endemic brands, with EA's The Sims 3 recently targeted by Renault to raise awareness of its Twizy zero-emissions vehicle.