Electronic Arts’ controversial project to include a $10 online pass in all its games is vital for its future. Still EA’s chief financial officer Eric Brown said at the Deutsche Bank Securities Inc. Technology Conference in San Francisco that it could help EA monetize the large number of used game consumers out there.
“We think that used games in America at this point are perhaps 20 percent of overall business,” said Brown. “That’s not captured in any statistic. You add back 20 percent and you probably get a slightly different view of packaged goods.”
“The price is $10, which seems to be gaining user acceptance the acquisitions, the take rates are quite high, well north of 60 per cent on the titles we’ve seen so far, he continued. “There hasn’t been any significant push-back from the consumer, because I think people realize that if you’re buying a physical disc and it requires an attachment to someone else’s network and servers, people know bandwidth isn’t free. So the fact that we’re diffusing or covering online costs is not viewed to be unreasonable. We’re well into this program and there is no consumer backlash.”
What EA is more optimistic about, however, is its DLC. “We don’t expect to be able to attach an additional $10 to every used purchaser. What we’ve had more success with is a digital extension to the core product called Ultimate Team, described Brown. FIFA 10 generated just over $30 million in gross DLC sales so that’d be above and beyond the revenue that we made just selling the physical disc.
“Now that still represents a single digit uptake on revenue, but if we can take it from single digit to 20 per cent or so of the full franchise in the mid-term, that revenue on the margin is very profitable to us, he continued. “70 or 80 percent fully loaded net margin digital revenue stream, and so if we bring that well north of $30 million to 60/70 let’s say, a lot of that’s going to drop to the bottom line.”
Despite diminishing sales at retail, Brown sees the highest level titles doing better than ever and opening up even better opportunities for DLC. “Instead of selling one product with a unified $60 price point we see people buying a $60 disc and then bolting on hundreds of dollars of DLC. We’re happy to have $500 worth of extra content to sell, said Brown. There’ll generally be half a dozen different pieces of DLC available for a title, and GameStop’s in a really good position to explain to the customer what the DLC is, what pack number one and five and four and six provides, because they have a staffing model and a customer service model geared exclusively to games. So we view them as a very important current and future market partner for all forms of DLC.”
Brown also noted that the PS3 business is picking up steam and surpassing the Xbox 360. “They’re actually up about 34 percent calendar year to date, so PS3 is much stronger than the 360 which is in turn stronger than the Wii, said Brown.
Source: GamesIndustry.biz