If the crystal ball that EA CEO John Riccietiello is looking into is correct, than 2011 will be remembered as the year that digital broke... broke retail sales, that is, as he believes that digitally distributed software will overtake retail packaged goods this year, and he makes a pretty compelling argument.
Above: “You will pay more often for that which does not exist. For real.”
In a recent interview with Industry Gamers, the EA head is decidedly clear on the subject. "At the end of , the digital business is bigger than the packaged goods business, full stop. No questions in my mind.”
Citing the success that Turbine recently enjoyed when it tripled its revenue with the now-freemium Lord of the Rings Online, Riccitiello says that business models like these will “find their own feet."
"We’re very careful about making sure we price appropriately for platform and also for the intellectual property,” he added.
No strangers to the success of the free-to-play model, EA’s biggest ARPU (average revenue per user) games are similar to the LotRO model, and they’re proving that he’s right. “You think about that and say, 'how can a free game be the game they pay the most for?' We have people who are giving us $5,000 in a month to play FIFA Ultimate Team. And it’s free. Dirty little secret."
Finishing the interview with advice to publishers about being flexible, the CEO also says that it’s not worth it if said publishers decide how consumers want to buy their content. Be it iPad, social network, micro-transactions, or subscriptions, it’s best to let the consumer base decide which model emerges as the best. “We’re in all of those businesses,” he said, “and I think the way this is going to work is that the models that the consumers like the most are going to grow the most."
Above: This, friends, is what “triple the revenue” looks like - boozed-up short people
Will the micro-transaction/subscription/free-to-play models take over the gaming industry? This being January and 2011 still having a long way to go, it’s a little difficult to side with it; especially if the three major consoles and their slew of packaged retail content have anything to say on the matter. Still, it may not be a bad idea to upgrade that hard drive. You know, just in case.
[Source: Industry Gamers]
Jan 10, 2011