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EA: “we're going to be a 100 per cent digital company”

by Mark Tyson on 3 July 2012, 16:12

Tags: Electronic Arts (NASDAQ:EA)

Quick Link: HEXUS.net/qabi5b

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Electronic Arts Labels boss Frank Gibeau was interviewed over at Gamesindustry International yesterday about the future of games distribution. In a candid interview Mr Gibeau repeatedly stressed that digital distribution is the future and EA “will be 100 percent digital in the near future”.

EA recently had its first year of digital revenue clear the $1 billion milestone and the company expect that this year the figure will be approaching $2 billion. Through digital downloads the company can have a direct relationship with the buyer with no intermediary, that benefits both gamer and the content creator, in this case EA.

When questioned about the timescale to become a 100 per cent digital company Mr Gibeau answered “It's in the near future. It's coming. We have a clear line of sight on it and we're excited about it. Retail is a great channel for us. We have great relationships with our partners there. At the same time, the ultimate relationship is the connection that we have with the gamer. If the gamer wants to get the game through a digital download and that's the best way for them to get it, that's what we're going to do. It has a lot of enhancements for our business. It allows us to keep more that we make. It allows us to do some really interesting things from a service level standpoint; we can be a lot more personalized with what we're doing” The fastest growing segment of EA’s business is digital so of course they should go with the flow. Mr Gibeau continued “…at some point in the future we're going to be a 100% digital company, period. It's going to be there someday. It's inevitable.”


EA has worked with Gaikai, only recently acquired by SCE, to deliver cloud streaming games and sees this as another trend for the future. Mr Gibeau believes that EA’s use of online services to get games to the end user, via Facebook, mobile, PC streaming and others, has impacted its NPD sales chart ratings significantly. Thus the NPD retail chart figures are mostly ignored by EA now as it “measures a sliver of what's actually happening in gaming gives people an erroneous impression” and “it's an irrelevant measure on the industry. It's totally irrelevant.”

Digital does seem to be a channel though which video games sales can be made to be almost “frictionless”. The traditional blockbuster games producers have seen how the mobile games download market has developed and made gaming minnows into big fish and definitely want a piece of the action.



HEXUS Forums :: 25 Comments

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If that is the case then EA best have a look at the following court case ;

http://arstechnica.com/tech-policy/2012/07/top-eu-court-upholds-right-to-resell-downloaded-software/
I've always thought that Steam and others like them could have a 2'nd marketplace where people can sell at an agreed price and the vendor takes a cut.
Lee @ SCAN;2522917
If that is the case then EA best have a look at the following court case ;

http://arstechnica.com/tech-policy/2012/07/top-eu-court-upholds-right-to-resell-downloaded-software/

wonder how this will effect blizzard etc with digital and have to be created to play game accounts?
“Through digital downloads the company can have a direct relationship with the buyer with no intermediary, that benefits both gamer and the content creator, in this case EA.”

I couldn't disagree more. This provides a number of bad situations for the consumer, the first of which is price fixing. If EA are the only retailer of EA games and they want it to retail at £50 they can set the price at £50 theirs no going to places like Amazon or Play to get a better deal you either pay the £50 and enjoy the game or don't.
Secondly it eliminates the secondhand market, because its digital contant only we have no resale. This is very bad for console gamers as (or so is personal to me) it prevents stacking up 3-4 older games and trading them in for a brand new title.
Finally another problem here is I will no longer be able to take my games to say a friends for a LAN party or just to let them try the game unless I take the console/HDD with me.

This is without even considering the effect on the highstreet retail industry which will lead to loss of jobs etc. Or the complex T&C that you must sign basically stating you never ever actually own the game and can only play it when/if they see fit.

I'm sorry but the move to a total digital game environemnt favours one person and one person only and that is the entity that is selling them. Period!
Spank
I've always thought that Steam and others like them could have a 2'nd marketplace where people can sell at an agreed price and the vendor takes a cut.
Sounds quite sensible. Similarly I thought either some kind of “rental” arrangement (where you could hire a game for a month at a time), or one where you could trade back a game for credit against a new(er) title would have been a great idea.
Sacred
I couldn't disagree more. This provides a number of bad situations for the consumer, the first of which is price fixing. If EA are the only retailer of EA games and they want it to retail at £50 they can set the price at £50 theirs no going to places like Amazon or Play to get a better deal you either pay the £50 and enjoy the game or don't.
Agreed, and you can guarantee that if EA can get away with it, then they will. “Oh dear, our profit for the quarter is down. Ah, I know, put £2 on the cost of Fifa 14, that will sort that out”.
Sacred
Secondly it eliminates the secondhand market, because its digital contant only we have no resale. This is very bad for console gamers as (or so is personal to me) it prevents stacking up 3-4 older games and trading them in for a brand new title.
Ah, but EA (and others) will argue that if we've all moved to digital (and it'll come - remember that Microsoft also appear to be pushing this!) then there's nothing physical to trade back. Funny that an MS Office license has a defined value, but the license to play BF3 is - according to EA - worthless. ;)
Sacred
Finally another problem here is I will no longer be able to take my games to say a friends for a LAN party or just to let them try the game unless I take the console/HDD with me.
True to an extent - I'm sure I've seen some “promises” that your friend will be able to download a game and then get you to use your “license” to activate it. Still nowhere near as easy as taking a CD and slapping it in a drive though. Perhaps some bright spark may come up with a way to “export” a game to an HDD crate/flash drive/etc so you can play it elsewhere before “importing” it again to play it on your own PC? Perhaps even some arrangement where you can “authorise” other PC's/consoles for your content - with a check that you're not playing that content on more than one device at a time.
Sacred
This is without even considering the effect on the highstreet retail industry which will lead to loss of jobs etc. Or the complex T&C that you must sign basically stating you never ever actually own the game and can only play it when/if they see fit.
This is the BIG deal for me. GAME is effectively dead if digital only comes to pass, and it'll also hit HMV hard too. And if you don't own anything, then what's to say that EA/Activision/et al can't withdraw your “right” to use that at some future point. E.g. if I've got COD:2 as a digital copy and Activision decide that they want everyone to “upgrade” (at cost of course!) to MW4, so they deactivate all the earlier/legacy games as an incentive to move on - after all, they claim, “we need to recover the space on our servers occupied by these ancient titles”. What's the betting that the EULA with these digital downloads will give them license - no pun intended - to do what they want, and us punters no rights at all?

I'm already very disconcerted by the way that EA and Activision are making it harder to do second hand, and also the way that they're trying to inveigle additional costs into game prices - specifically paid DLC or these “optional” (real quotes there instead of air quotes) loyalty programmes such as COD:Elite.