Wednesday, 3 March 2010

EA Sports Digitises Modern Consumer

Last week IQGamer brought to you an editorial surrounding the hotly debated issue of preowned software and the issues it presented to the videogames industry. At the forefront of this debate was EA, who with their new Project Ten Dollar scheme were effectively trying to reduced sales of second-hand games, whilst finding ways to expand the shelf life of new titles and increase their return on the sales made at the till.

The main counterpoint against preowned software sales of new releases, was an increase in the amount of DLC that all EA games would be receiving, featuring sizable chunks of enhancements to new titles, that when activated, would provide gamers a few more hours of fun after they finish the main game, or something that would simply complement it. At the same time questions were raised about how this course of action would affected the trade in market for older games, especially last years annually updated sports titles. Surely by EA having exclusive DLC for those titles would harm their resale down the line and devalue them even further a year on down the line?

Well yesterday, at the Morgan Stanley Technology conference in San Francisco, EA Sports president Peter Moore addressed at least one of these concerns in addition to outlining future plans by the company. He first talked about how successful the uptake has been towards the recent DLC additions with some of this year’s key sports franchises, sighting Madden 10 as a prime example.

"I think we need to move much quicker, in particular with Madden, through a digital world," Moore stated. "You're going to see more announcements there how we digitise our Madden consumer."

Moore also stated that whilst discontinuing the PS2 of Madden has hurt overall sales of the title, it has helped to grow sales of its Xbox 360 and PS3 versions at a faster rate than seen before. Effectively, he was presenting the notion that many people would upgrade to newer hardware specifically to get their sports fix, if it became unavailable on their currently owned consoles.

In addition he stated that the digital plans seen in other key EA releases could also become part of Madden and other sports titles as well, referring directly to their very own Project Ten Dollar without going so far as to giving it an actual name.

"What we're starting to do now is actually start to see growth on next-gen platforms, and perhaps more importantly you're going to see digital subscriptions, digital microtransactions; all those things that we seem to be able to drive hard against all our franchises, against the Madden consumer."

He then went on to add:

"What you should be looking for from me is 'How do I get an extra $4 or $5 dollars?', which is high margin digital revenue from that install base rather than continue to sell more packaged goods," he said.

Afterwards Moore finally addressed the issue of how its (EA) plans for DLC in new sports titles would affect the retail market, and how they understand the importance of the ability to still have a large percentage of people trading in older sports titles for the latest instalment. They also addressed how they hoped to keep a current sports release active for longer with the consumer, discouraging them from trading in the title straight away after they appear bored or to lose interest in the title. This was particularly important, as in last week’s debate and retail spat against ‘Project Ten Dollar’, various concerns were raised as to how this would affect the already struggling retail business, and the value given to any software the consumer wanted to trade in.

In a interview with, Chips managing director Don McCabe voiced his concerns on the issue surrounding not only the second-hand market, but particulary the resale of old sports titles:

"The person you're pissing off the most is the consumer," McCabe told "This affects [them] directly - they pay the same amount of money and yet the resale value is much reduced. From a retailer's point of view, they'll just readjust [the price] bearing in mind you have to buy the voucher."

"They are effectively what I call a franchise software house in that they upgrade their titles; FIFA, Madden all of these are effectively the same title upgraded each year. And people trade in last year's for this year's. You go anywhere and you'll always find second hand copies of FIFA 07, 08, 09 - it's one of the ones we get the most of."

Peter Moore seemed to at least recognise these concerns, and that he and EA were looking to still find away making it attractive to trade in older sports titles for the latest instalment year on year, respecting that a huge amount of sales come from people replacing last year’s one (sports title) with this year’s latest, whilst also growing the revenue made from the latest sports releases through DLC.

"It keeps the disc in the drive longer, it stalls trading the game in, it allows me to be able to take further advantage of that consumer over a longer period of time," he said. "Even if we do get second sales, we see that as an opportunity to drive digital margins."

"Sports games, because their seasonality runs out, are always something tempting to trade in. We've got to be able to build business models around allowing that consumer to trade it in and then monetize them," he added

"We're certainly going to do a lot of that this year."

Ultimately it seems like EA’s sports division have some weighty plans for digital content to be at the forefront of all of their titles, and whilst they do recognise the importance of trading ir certain titles to get a hold of the latest releases, they also want to fully maximise not only sales of the initial game disc, but also post retail through the route of downloadable content, keeping gamers from trading in their titles for longer. Perhaps at the same time, EA will at least for now, let all major features be fully accessible in their sports titles without the use of download codes. Certainly, in order for a worthwhile trade price to be around when a new instalment arrives, they do need to do something which doesn’t completely alienate those customers, whilst at the same time taking advantage of them after they have the game.

As time goes on we expect to see more similar announcements by other publishers, especially if EA’s solution actually works, and does provide a more stable retail platform for new software sales. What we have here is only the beginning of perhaps a market in which preowned and new sales are balanced out accordingly, with margins being more controlled and DLC expanding the revenue stream allowing publishers a little more room to breath in today’s hostile gaming climate.

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