EA: Digital revenues to overtake physical in two years
Peter Moore cites importance of direct relationship with gamers, says EA's customer is now consumers, not retailers
In a keynote conversation with Entertainment Software Association boss Mike Gallagher at the Digital Entertainment World conference, Electronic Arts COO Peter Moore talked about industry lessons learned as the business transitions more to digital games.
For now, games remain a hybrid of physical and digital, and the quick sales of the new consoles are enabling the industry to coalesce around two great platforms that offer a tremendous competitive environment, which ultimately benefits the market. While he believes the console sector's in great shape, Moore does see mobile gaming thriving, and digital revenues should surpass that of physical game sales in just two years, he said.
Looking back at the music industry's transition to digital (which it still hasn't recovered from), Moore said that the games industry must embrace "creative destruction" - there's nothing an industry can do to stop a shift in consumer tastes and habits. The most important thing for EA - and much of the industry is headed this way with the digital transition - is that games are becoming live operations. That means they require a massive infrastructure with customer service and global billing. Moore noted that it's a completely different industry now, with a global network running live ops, and gamers deserve their games to be always up and available, and it's EA's job to provide this access. Moore acknowledged that EA is still learning a lot about what that takes.
The online environment has been incredibly valuable to EA in building a direct customer relationship. Moore said that EA's customers used to be the retailers, but now they're the gamers. In fact, EA has tripled its customer facing support staff resources in the last five years. It's changing how the publisher interacts with, and markets to, gamers. He eschews "marketing" and prefers "engaging". Social media has become crucial to success, and Moore noted that on Twitter a gamer will get a response from EA within 30 minutes to resolve a problem.
On the marketing end, Moore said that EA's TV spend is down 20 percent while the company has actually doubled its digital spend and engagement. Social media and community management are changing the rules. Don't spend tens of millions on TV to see if it lifts sales, Moore said; instead game companies can more effectively use digital channels and focus on performance-based marketing.
"TV ads today are chum in the water. It attracts customers, then reel them in with digital media so you can engage instead of pushing a message out," he remarked.
Thanks to Mark Friedler for reporting on this from Los Angeles
EA has long said one thing and done another when it comes to responding to what their customers want, and I don't see any change here. Nor is criticism likely to change this, since EA has already demonstrated a strong corporate culture of dismissing criticism. The good point, for the investors at least, is that I think this is unlikely to change their bottom line, since they're a company that's already designed to handle alienating more than a miniscule fraction of their potential market.
Edited 1 times. Last edit by Alfonso Sexto on 21st February 2014 8:12am
Video game entertainment transitioned from the arcades to people's homes not because somebody had a bright idea, but because consumers wanted it. In the same way consumers will nudge publishers into the right direction when it comes to digital sales.
And if the market of people wanting to have shelves filled with boxes proves to be very large, there is still the option of unlocking a game online at once and mailing some box for later enshrinement. For all we can guess about 2020, buying a "retro style box" for your games might be nothing more than a 10€ microtransaction games offer for old time's sake.
Edit:
Speaking hypothetically, if EA were to go digital only, then it would likely be done for the same reasons as not working with Valve - They see the money lost from cutting out a middle-man as the lesser of two evils. Right now, I can purchase the Retail Disc of Battlefield 4 from Amazon for £23. That is almost half the price of the standard Origin download, but the Retail Disc has both higher costs, and less margin for EA.
Edited 4 times. Last edit by Morville O'Driscoll on 21st February 2014 10:48am
It would have even worked for me if they had put another language besides "日本語" in the drop-down box they show me on the site.
Edited 1 times. Last edit by Morville O'Driscoll on 21st February 2014 12:50pm
Edited 1 times. Last edit by Petter Solberg on 21st February 2014 4:28pm
Retail vs Digital game sales are still like 75% to 25%
Retail vs Digital game sales are still like 75% to 25%
Also,
http://www.digitalspy.co.uk/gaming/news/a501111/simcity-sales-exceed-2-million-units-reveals-electronic-arts.html
Though that no-doubt counts mobile as well. As I noted in the other digital sales thread, it's all perspective. :)
Edited 1 times. Last edit by Morville O'Driscoll on 21st February 2014 10:32pm
Key word, Revenue. That is not made up of Digital and Physical game sales. That includes DLC and microtransactions, which I hate to admit it, people buy.
( http://www.businesswire.com/news/home/20130318006318/en/SimCity-Sells-1-Million-Launch#.UwhzFIW-YYQ ) And SC isn't even a particularly "core gamer", game. I'm sure BF4's digital sales vs retail have been higher. :)
@ Christian
This is slightly off-topic, but, anyways... Just like EA don't crow about how many Origin users they have now, I wouldn't read too much into them not crowing about extra Sim City sales. In any case, success is measured by cost of development, and they're going to have another bite-of-the-cherry when the offline mode for SC is enabled. Even with dev costs, I imagine that they'll gain quite a bit with selling the game with the promotion of "Now with offline mode!"
Once the platform makers align with the publishers, it'll be the ax for GameStop and the like. We'll switch to dedicated stores like MS/Apple Stores for hardware, or just order it online. It'll be delivered on the launch day, with digital titles pre-loaded before their release day.