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Electronic Arts: Digital to Earn more than Retail in 2011

by | @FanboyAttack | on January 8, 2011

Electronic Arts CEO John Riccitiello recently spoke with Industry Gamers about digital distribution and its potential in 2011 and beyond and his remarks were pretty surprising.  The CEO  thinks that in 2011, digital distribution and free to play games will finally outpace retail boxed goods.  With that statement comes the realization that the company has shifted an appropriate focus towards this segment of their product lineup.

Riccitiello had this to say: “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 micro-transactions,” he toldIndustryGamers in a recent interview.

Riccitiello also elaborated on how profitable the free to play segment has been recently: “Our highest ARPU (average revenue per user) are free-to-play games among paying users. You think about that and say, ‘how can a free game be the game they pay the most for?’ We have people who are giving us $5,000 in a month to play FIFA Ultimate Team. And it’s free. Dirty little secret.”

But the most important thing for publishers at this point in the industry is to have the flexibility to cater to all customers and as the CEO explained  “I actually don’t think that there’s a lot of mileage in trying to decide exactly how consumers want to buy their entertainment content. They may want to buy it 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. 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,”.

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