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Jens Uwe Intat - Part Two

EA's European publishing VP on the developing markets within Europe, and the benefits to all of the console price drops

In the first part the interview with Dr Jens Uwe Intat, VP of European publishing at EA, he talked about piracy, digital distribution, second-hand game sales and offered an insight into how the music industry's business model is changing - and how that influenced EA's overall strategy.

Here in part two he talks more about the impact of Blu-ray, the developing markets within Europe - particularly Russia - and how the software market is benefitting from the current spate of console price drops. How much difference does Blu-ray make when it comes to packaged goods games?
Jens Uwe Intat

I think it's the perfect example of the next offer for our developers - now you can use so much space, the box is a certain size and now they might use half of it, maybe three quarters - wait two years and they'll use the whole storage space. Doesn't that imply a problem for Microsoft in two years then, given that the Xbox 360 doesn't currently support Blu-ray and all that extra space on the disc?
Jens Uwe Intat

Yes, but I'm 100 per cent confident that Microsoft will figure that out. But space on the disc will definitely be an issue in the next couple of years?
Jens Uwe Intat

I wouldn't say it's going to be an issue, I would say that we're going to use whatever we are offered fairly quickly. What's your view on the European market at the moment - is it a mature market now?
Jens Uwe Intat

I think that Europe is definitely not maturing at all yet. Within EA, Europe is actually a very big market for the company - EA does 40 per cent of its revenue outside of North America, which for a North America-based media company is pretty exceptional, so we're very proud of that point.

We think it's not just an interim driven by exchange rate, although that has exaggerated it. We think it's a trend that we'll also see in the future, and if you look at the size of the population in Europe as compared to North America, it should be a bigger market here eventually.

If you look at territories in particular like Russia and Germany, we have a lot of potential to catch up still. The UK market is probably - in terms of potential compared to size - comparable to North America if you look at installed base per household, and if you look at per capita consumption it's actually slightly stronger.

But if you look at territories like Germany, with 80 million people compared to 60 million in the UK, the market is still much smaller, so there's still a lot of catching up to do. And then there are markets that are still fairly small, like Russia, which is worth about USD 250 million right now. If you take that population, and the speed with which the Russian economy is growing, there's a huge potential.

What we're doing in order to capture that, coming back to Germany, is to invest a lot of money and activity in things like Games Convention. If we look at Russia, we put a local team there last year, we opened an office in Moscow. We go direct to our biggest customers, we do advertising with local people there, who localise the products. So we are putting a lot of effort into capturing a market of that size, because we see that it's at the tipping point of going mass market. How quickly do you think the console market can grow in Russia?
Jens Uwe Intat

At the moment it's a very PC-heavy market, maybe 80-90 per cent of the market is PC software. We do see two things that we're trying to support though - Microsoft and Sony are also investing heavily to capture the Russian market.

We're actually hearing that for some entertainment appliance manufacturers the Russian market is the biggest in Europe now, selling more TV set and music players than in a country like the UK. So they see growth in high-tech appliances there.

What we're doing, on top of going direct to retail and doing local advertising, is that we localise the products - which we think at the end of the day is the biggest lever for people to buy hardware. You don't buy a PlayStation 3 to sit at home just because it looks so nice. You want some good games with local content, and we think we'll actually be able to move more and more people into the console market in Russia. World of Warcraft recently launched in Russia - what are you plans there for Warhammer Online?
Jens Uwe Intat

We will actually have a localised version of Warhammer Online for Russia - in Spring I think we're going to launch that. It will be a little bit later than in the rest of Europe, but we definitely will have a localised version because we see exactly that trend in Russia - they love MMOs, but they love the localised version. We'll definitely address that. On the localisation issue, people seem to be suggesting that companies are better at it now than ever before. How has it been for EA?
Jens Uwe Intat

We actually don't feel that we have any problems convincing our colleagues in North America to localise products. What helps our discussions is that Europe is huge in size and potential, and when we're discussing things we can say how much of a product we can sell in non-localised, and also in localised form. With the wait that Europe has in the meantime, we're actually in a very good position to localise the products that we think should be localised.

That actually differs between target groups and types of titles, but we don't feel any issues being a US-headquartered company. We've even built a huge globalisation centre in Madrid, where we have all our European activities focused, and it's definitely second-to-none in the industry. In terms of the next-gen console space, the race seems to be finally well underway - with all three machines having momentum, is that the best situation for you?
Jens Uwe Intat

It is definitely nice to see in particular that while in the last generation all three - Nintendo, Sony and Microsoft - went with a very similar type of hardware frame for the same consumer. But at least Nintendo this time went for a very different one, so I would still see that Microsoft and Sony are still heading in a somewhat similar direction, with subtle differences. I would say that Microsoft is still more online-oriented, with Sony catching up there, while Sony still has the highest tech-spec machine.

But Nintendo clearly going in a different direction really opens the market for both people who never had a console and now have one, and for quite a few people who now have two consoles - one high-tech machine where they're playing the latest edition of Need for Speed, and then the Wii where they play with the whole family, or when they have friends over, and play a different style of game.

So it's definitely good for the software industry. We're at the point in the life cycle with new SKUs, price cuts - it's speeding up the take-up of particularly the Sony and Microsoft machines. It's a good place for everyone to be in, as opposed to at launch when it's much harder to make money.
Jens Uwe Intat

I think as an industry we're really in an enviable situation now - both software and hardware actually - because there's very strong momentum right now. The competition between all three will accelerate the sales of all three platforms across Europe. There have been some interesting announcements in the past few months with respect to some of the partners that EA is working with now in the business - how important is that in the scheme of things?
Jens Uwe Intat

Very important. A couple of observations - we do have a dedicated department, EA Partners, within EA which actually works on those relationships. And we do have dedicated people in the territories with partners' products also. So we are using, in Europe in particular, our retail strength in order to use that established pipeline.

But we're also using our local know-how in marketing and advertising - for us it's economically attractive, and also a fun part of our business. We're working with a couple of really great people in the industry, which we're really proud of.

And actually, for our own developers, it's a nice discussion partner, and a nice bit of internal competition to have. John Carmack at the EA press conference at E3 this year - that's a level of buy-in to EA that might not have been evident 12-18 months ago. Is it a sign of change?
Jens Uwe Intat

It definitely supports our ambition within the company that we want to put a lot of emphasis on the creative talent, both internal and external. The creators of our games are the ones that actually create the experience for our consumers. If we have external people who are using our marketing, distribution and publishing networks, we as a company can be feeling proud for two reasons.

One is that they seem to think we have a strong network, and secondly they seem to think that EA is actually a cool place, and not a bureaucratic company that nobody would like to work with. So we're feeling very good about it.

Dr Jens Uwe Intat is senior VP and general manager for European publishing at EA. Interview by Phil Elliott.