Retail sales are a clearly diminishing part of the industry as parts of it shift to digital download. Electronic Arts, the biggest traditional games publisher in the world, is a great indicator for the way companies are changing to adapt to the increasingly digital world.
“Electronic Arts is now tied with Activision-Blizzard as the #1 western digital gaming company, in terms of digital revenue,” writes Bryan Cashman. “And while Activision-Blizzard’s digital revenue is still driven largely by monthly subscriptions for World of Warcraft, EA’s more diversified portfolio of digital titles may give a stronger indication of how the broader digital ecosystem is performing for games.”
Digital has grown for Electronic Arts by 40 percent every year over the past five years. Meanwhile, smartphone and tablet game revenue has increased 120 percent year-over-year.
Digital revenue is primarily driven by add-on content for games, in-game advertisements and mobile and tablet software. Meanwhile, full game downloads are only a small portion of their digital revenue, though they are pushing that more with their Origin service — it’s telling the number that access Origin via mobile.
“The digital world, according to EA, is one supporting multiple business models and multiple devices. The days of creating a packaged good, shipping it, and moving onto creating another game, are gone. As indicated by EA’s digital revenue sources, games are now services — services to deliver ads, to sell updates, or to connect to for online interaction on mobile or tablets. Perhaps the next “cycle of gaming” will not be found in new consoles, but instead, in new ways to deliver and please consumers in a digital world,” concluded Cashman.