EA CEO: Digital Sales to Overtake Retail in 2011

[Tom Goldman]

EA CEO: Digital Sales to Overtake Retail in 2011

John Riccitello believes digital goods will overtake brick-and-mortar retail sales in 2011, without question.

EA CEO John Riccitello has gone on record stating that he believes sales of digital goods will overtake traditional retail sales by the end of 2011. He says that free-to-play MMOs will lead the way, along with the purchase of content distributed across various digital platforms, such as social networks and portable devices.

EA even hopes to morph the way it traditionally sells goods to match various methods that consumers have proven they're preferential towards, including subscriptions and microtransactions. In an interview with IndustryGamers, Riccitello said: "At the end of [2011], the digital business is bigger than the packaged goods business, full stop. No questions in my mind. Then, you know, I think that we'll find ways to even sell our packaged goods content in chunks and in pieces and subscriptions and microtransactions."

Riccitello points to the success Turbine had by transferring FIFA Ultimate Team [http://www.amazon.com/Lord-Rings-Shadows-Angmar-Pc/dp/B000GR9P76/ref=sr_1_3?s=videogames&ie=UTF8&qid=1294509641&sr=1-3], where players are paying EA as much as $5,000 a month each. That's soccer/football fans for you though.

Free-to-play games are EA's highest ARPU (average revenue per user) titles. However, Riccitello says the key isn't transferring every game to a subscription or free-to-play model, but offering flexibility. "[Consumers] may want to buy [content] on an iPad; they may want to get it through the social network, they may want to pay for it through micro-transactions and monetizing, or they may want to pay for it all at once," he added. "They may rather pay a subscription price in order to count on what their costs are going to be, but they may want to pay for it all at once and never have to pay for it again. We're in all of those businesses 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."

Digital distribution is already exploding, and it may not even hurt retail that much right away, which is still doing pretty well in certain circles [http://www.escapistmagazine.com/news/view/106701-You-Wont-Believe-How-Much-GameStop-Raked-in-Over-the-Holidays]. Riccitello simply indicates what might be a shift in focus away from traditional retail channels in 2011.

Source: IndustryGamers [http://www.industrygamers.com/news/ea-ceo-digital-to-overtake-retail-this-year/]

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[GiantRedButton]

happened with pc games a few years ago, if thats a good or bad thing is left to argue.
But since digital sales aren't tracked it led to the myth that pc gaming is dying (i know lol^^)
Interesting to see that consoles follow the same direction just slower.

 

[Assassin Xaero]

I doubt it will happen with consoles. With PC games, I'm not sure if it was caused by digital distribute or came from it, but when I go to retail stores, they have only a dozen at most. Like at Walmart, they didn't have Lost Planet Colonies the day it was released, but they had Starcraft and Halo.

 

[Piflik]

Why would publishers even want that...I mean...everybody and their grandmoms can distribute software digitaly by themselves...in the long run it would make publishers obsolete...

 

[Woodsey]

I doubt it will happen with consoles. With PC games, I'm not sure if it was caused by digital distribute or came from it, but when I go to retail stores, they have only a dozen at most.

Little bit of both, but mainly because of DD I suspect.

Retail stores seem to want to compete without bothering to make themselves attractive to customers - a tiny selection, high prices and rare sales does not a happy gamer make.

 

[The Cheezy One]

Eh, we'll see, but I doubt it. Even with PC gaming, I enjoy having a disc I can use to prove I have something. This may be forced out, however, with the rise of Steam, etc.

 

[RatRace123]

Eh, I don't think so, I wouldn't want that, nor do I forsee it.

 

[Atmos Duality]

I'm curious how the 3DS wildcard fits into that prediction.
You can install games, which implies some form of online authentication (otherwise, piracy will be overtly rampant) but I'm certain Nintendo isn't going the "Online only" route of distribution either (ease of use. Remember their target demographic).

 

[Worgen]

if they really thought this way then why the fuck havent they made warhammer online a free to play mmo yet, if any mmo could benefit from free to play its warhammer online since it needs big player numbers for its awesome pvp

 

[XT inc]

I dont think digi on consoles works well because the people who run it charge way to much for their games. I mean you cut out so much of their costs to go digital the lease they could do is cut you a few bucks. Hell I buy retail just because at least that way when I buy a 70$ game at the store I get the disc,box, booklet etc, that the 70$ digital version doesnt have.

 

[UltraDeth]

I hope not. What about those without online access? I don't know how to do any upload/download crap

 

[Gildan Bladeborn]

I can't presume to extrapolate from my own life out to the behavioral tendencies of the world at large, but in my own personal sphere digital sales have long since overtaken and left boxed retail sales in the dust. So this prediction doesn't strike me as particularly crazy - provided you're talking about a specific segment of the market: PC games.

I think I'm still inclined to be skeptical that we'll see a greater emphasis on digital transactions over brick and mortar in the console world by the end of this year - the trend is there but I just don't see digital sales overtaking retail that quickly in the console sphere, not when you examine the distribution of digital to retail console sales now.

 

[GodKlown]

considering previous statements listed before me, they provide the groundwork for both sides of the argument. what we need to face is the fact that brick and mortar stores are going the way of the dinosaur with digital media taking a large forefront. it may have had a slow start with technology playing catch-up, but as times are evolving, everything else must embrace the new pulse of the times or else face becoming extinct.
the big 3 have already made overtures about the next generation of consoles being strictly download for games. this future isn't completely unreasonable, given the amount of money thrown at MMOs and online digital distributors. you can't argue with companies wanting to go in this direction when the money trail clearly points to this being a better alternative for them instead of having to print manuals and copy discs to distribute when they can just post a download and let everyone serve themselves. we are very much a self-serve society, and companies are more than happy to provide the means to people who want to continue the trend.

 

[Keava]

Why would publishers even want that...I mean...everybody and their grandmoms can distribute software digitaly by themselves...in the long run it would make publishers obsolete...

You know actually putting boxes on shelves is not all and only thing publisher does? They fund the project, they provide advertisement campaign, they set up all those little details that help to actually sell the game.
Sure every developer studio could just sell through their websites but then the productions would most likely be lower on budget and would not come close to numbers of sales most big titles get.

Oh well, so far retail still proves to be cheaper for me in most cases, hurray for currency exchange working against me if im forced to pay in euro.

 

[Lord_Gremlin]

3 words: only on PC.

 

[thedeathscythe]

It's happened with PC sales, no doubt, but there's just not enough full length digital games for sale on the PSN and XBL to really make that statement true. As it is, the "brick and mortar" way of selling he speaks of mainly focuses on consoles sales, not pc sales. Unless he means strictly PC gaming will move to digital sales and they will completely abolish retail sales, then I think he's sort of overestimating the digital sales for 2011. I think by 2020 though, gaming will be purely digital, and I don't think I'm being crazy saying that. Saying 2011? Yeah, that's crazy.

 

[viranimus]

Again? I really wish these publishers would stop saying this. Who are they trying to convince? Us or them?

Its clear the publishers want this to take off as soon as humanly possible. Seems like a concerted effort to convince us that DD is bigger than it is and that its the wave of the future, because the sooner we adopt it, the sooner they can shave off parts of production cutting into their profit margins.

One thing I dont get out of this most recent statement is.. the notion F2P MMOs are going to lead the way. Ohkay... considering they are FREE should you really count those into digital distribution figures?

 

[scar_47]

I can see it for smaller games but full games not so much, the infrastructure just isn't there theres too many people that lack high speed internet and ISPs aren't just going to swallow the cost of all that bandwidth, renting games becomes a thing of the past I just don't see it happening on the next console cycle. As for music, movies, and books yeah I bet digital will definitely grow but theres still quite a few people who like having a physical object so I don't see retail disappearing any time soon.