EA's Brown On Big-Ticket Lessons From The Digital Space
Big strides into the mobile and DLC markets will help Electronic Arts realize 20 percent of its revenues this year from digital sources, the company says -- and there's still a lot of room for growth in the packaged goods space, too.
"The opportunity for merchandising on a smartphone is a little bit different from the way you would market... a traditional packaged goods product," CFO Eric Brown told audiences at UBS's 38th Annual Global Media and Communications Conference.
In a world where shelf space, aisle displays and retailer circulars are irrelevant, "we have the benefit of fairly well known brands -- Madden, Need For Speed, FIFA -- when these appear on a list of applications, the unaided awareness is extraordinarily high... and so we have a persistent advantage versus newcomers to the game that are trying to establish a new property," adds Brown.
"This has served us well thus far and will serve us well in the future," he said in comments listened in on by Gamasutra.
Also helping power EA's digital push is the performance of console downloads. The company discovered surprising opportunity with last summer's Xbox Live and PlayStation Network downloadable Battlefield 1943 -- built by developer teams that were "between projects", with a budget in the "single-digit millions, the product turned an extremely high margin.
It reaped $16 million in revenue, according to Brown, who called it "an industry first in terms of the delivery mechanism." Brown also said the step-up in revenue that Bad Company 2 saw from its robust incremental content was "pretty pronounced," and in FIFA's new Ultimate Team mode, "we see people spending $500, $600, $700 on digital card packs."
The next content pack for Bad Company 2 will be set in Vietnam, a move Brown said was geared to "compete head to head with Call of Duty: Black Ops."
"We've at least in part kind of cracked the code of how to extend the revenue derived from a physical disc to the digital world," Brown said. Now, the company's goal is to bring as many of its top-performing brands into the digital space as possible.
That's not to say the company will join the naysayers who believe physical goods are immediately on their way out: "Contrary to what certain industry representatives might suggest, interactive entertainment overall... is a growth marketplace," Brown suggests. "Even within packaged goods, there are really good growth drivers... [there is] ongoing strength in high-definition platforms for at least the next three to four years."
He called the launches of Kinect and Move "a perfect example" of platform extensions that remain possible on home consoles, and that more and more publishers will be looking at ways to take a high-definition game disc, augment it with further content and experiment with DLC.
Right now, EA expects to see "three quarters of a billion dollars in diversified digital business" for the year on the whole. "We think we're growing most rapidly in DLC for the console; the majority of our growth -- 85 percent -- is organic versus acquired, and as we look to the future... we think digital starts with the disc and the high-definition platforms."