EA: Digital will overtake retail in 2011

By Fred Dutton Published 7 January, 2011

Micro-transactions and F2P are the future.

EA boss John Ricitiello believes that digitally delivered content will bring in more business than traditional packaged games by the end of 2011.

Speaking with IndustryGamers, Ricitiello explained that much of the shift will be thanks to an increased prevalence of micro-transactions and the emerging free-to-play model.

"At the end of [2011], the digital business is bigger than the packaged goods business, full stop. No questions in my mind," he explained. "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."

"Look at what Warner and Turbine did with Lord of the Rings Online. While I still think the majority of their revenue is from people giving them the premium subscription for $15 a month, there's a lot of people coming in and they upgrade. I'm not sure that $15 deal is that great a deal, but that's a separate issue.

"I guess to best answer your question," he continued, "I think these business models are going to find their own feet. We're very careful about making sure we price appropriately for platform and also for the intellectual property."

Ricitiello went on to cite FIFA Ultimate Team as an example of how digitally delivered free-to-play titles can be hugely lucrative.

"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 $5000 in a month to play FIFA Ultimate Team. And it's free. Dirty little secret."

EA isn't the only outfit seeing the benefits of free-to-play. Earlier today, Lord of the Rings Online developer Turbine revealed that its revenues had tripled since the game ditched subscription fees.

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About Fred Dutton

Fred Dutton is Eurogamer's US news editor, based in Washington DC.

Read more articles from Fred by visiting the Fred Dutton archive page.

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Comments (54) Latest comment 1 year ago

Comments for this article are now closed, but please feel free to continue chatting on the forum!

  • X3Entente #1 1 year ago

    before you know it, the fucking main menu will be sold separately

  • ZizouFC #2 1 year ago

    This again...

  • Dolly #3 1 year ago

    Not on my watch, motherfunker

  • MattEdWithCheese #4 1 year ago

    slightly misleading, they will make greater profit because it's cheaper to make and sold at a premium

  • Xardan #5 1 year ago

    EA really love their DLC.

  • Emmit_Assassin #6 1 year ago

    What did I say 2 years ago about them chopping up games and selling half of it afterwards as DLC? Frickin told you.

    @X3Entente - Thats not right. The main menu will be the ONLY thing you'll frickin get. A main menu of all the expensive DLC they chuck out on day one after you realise you paid £36 for a main menu and frick all else.
    Its also funny how games are so priced because they have to cover production costs, yet GoD games cost MORE than high street packaged games.
    Edited by Emmit_Assassin at 07/01/11 @ 23:38

  • TRUTH #7 1 year ago

    I will stop buying as you own nothing but air

  • JamieR #8 1 year ago

    Well the amount of games sold for the iphone on the app store is big but they are like only cheap games. I can see this been true but they will be retail for some time to come, i bet... maybe.. i dunno

  • Inigo #9 1 year ago

    If digital is so important then why do they hate steam?

  • chasejamie #10 1 year ago

    No it won't.

  • bad09 #11 1 year ago

    "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."

    EA good guy direction been scrapped then I take it Ricitiello. Why are some of the big publishers in this industry so intent on putting me off gaming, they're starting to succeed as well....

    *sigh*

  • OnlyMe #12 1 year ago

    Prophecy says that once gaming has reached it's highest potential, the god of micro-transactions will kill gaming once and for all. For it is said that the kings and queens is decieved by it's promises, while the peasents has seen the signs, but have no power to stand against the forces of evil.

  • dsmx #13 1 year ago

    They've got no choice, game budgets are ballooning and they have to make the money back somewhere

  • coolbritannia #14 1 year ago

    Someone paid $5000 in a month?!

  • SeesThroughAll #15 1 year ago

    No, micro transactions and nickel-and-dime are not the future. Downloadable games that are better value for money are.

  • TRUTH #16 1 year ago

    I was all for download at first-then my console broke down, I realized that the games on the hhd were lost for good - had to buy a new console contact Sony and take ages to sort it out...i couldn't take take games to mates house to play, borrow a console, sell the games, borrow a console, exchange the games, trade the games, swap the games, borrow them to someone...the only way I could play them was to repair the console (that will machine redundent) or buy a new one...This also goes for dvds, cds - these will last forever unlike unseen downloads

  • natashaspice #17 1 year ago

    No not really

  • Chakitty #18 1 year ago

    Isn't a sale made up of thirds? Retailer, Manufacturer and Delivery. If you cut out two-thirds. We should be paying a third of a store price? Until this happens it won't take off!

  • citizenHUNTER #19 1 year ago

    I want an explanation of that $5000 a month thing... is gaming going the way of gambling... irresponsible and addictive, charge per play or something...?

    The way I see it is that right now lots of different interconnected little things are heading towards a collision course. We have games companies desperate to getto a download only model so their costs are massively reduced and thus reap far more profit plus they have total control and wipeout the second hand market which they feel is killing them.

    We also have ISP's trying desperately to reduce people's usage which will sky rocket if everyone downloads 5GB games every other day, so they're gonna try and ramp up prices which admittedly at least they have reason to call for since the government won't help them out putting the actual infrastructure in place to make all this deliverable.

    Then we have consumers, who just want to play games, who used to be able to buy and own a game but that process now feels more like a rental model.. even if you only buy it it's stored in a protected file which has lots of clauses attached - hassle if your console breaks down, you can no longer 'take a game round to a mate' and of course you can no longer sell it on either. Digital commodities BOUGHT like this seriously need to have a backing up option available to all users, a back up that they can create and keep and use to 'reinstall' the game in future for whatever reason or to 'take round to a mates'.

    The vital sticking point where everyone meets to have a bit of a barney is over pricing, and this is the part that really does irritate me, the utter pig-headed arrogance of the games publishers in trying to push downloads as nothing but a good thing, a convenience to the user. It would be a convenience if they did chop out all of the regular costs from the download RRP. No retailer getting a cut should immediately reduce the prices by what.. 10-20% bare minimum. Not 39.99 for a download. A price which doesn't fluctuate ever until they choose to, and of course inevitably it will be the only route. At least the Apple App store has seriously competitive pricing, even for complete games, something like Broken Sword which works beautifully on an iPad or iPhone can be purchased for often as little as £2.50 or thereabouts, and Apple happily lets you copy the file to anywhere you want.. make multiple copies even so losing it isn't a problem, plus if I let my girlfriend add my iTunes account she can get the game too for no extra charge (I believe up to 5 licenses can be granted access so you can share all your apps within a family say).

    I was fucking shocked to see in the PSN store a new NeoGeo section.... flogging each game for over £7. The games are historic, some classics yeah, some not so classics, but really, tiny pieces of data running on an emulator, big deal, and they're charging £7 a title. If this is their intentions down the road then really they're happy to see their business shrink and flounder. They could take a hint from Apple and charge maybe 59p or £1 for each of those, still be making a huge profit on what is essentially ancient data that has cost virtually nothing to them to give to you. They'd actually make some decent sales and earn some money, as opposed to earning nothing whatsoever since they're so greedy and no one with any sense will give them the time of day.

    Rant over, but Publishers will seriously need to wake up and stop being utter greed merchants with their monopolising getting to their heads. They'll only suffer in the long run, and thus so does everyone with a vested interest in gaming.

  • brod #20 1 year ago

    "I want an explanation of that $5000 a month thing... is gaming going the way of gambling... irresponsible and addictive, charge per play or something...?"

    In Asian markets it has been like that for many years already. Western publishers are just now starting to catch on, unfortunately.

    I hate the 'micro'transaction business model and all the terrible game design decisions that accompany it.

  • Caimbeul #21 1 year ago

    Oh no they wont....

  • Demiath #22 1 year ago

    If "digital" means Steam then I like it, if it is all about making people use meaningless publisher-specific products like EA Store/Download Manager I'm not so happy with it.

  • lockload #23 1 year ago

    "We have people who are giving us $5000 in a month to play FIFA Ultimate Team. And it's free"

    Most likely with stolen credit cards or they are retards

  • metalangel #24 1 year ago

    Wasn't the $5000 a month thing people buying those card packs trying to get better players?

    As for EA, they can't wait for this. Being able to fuck people around with the online features is all well and good, but those pesky discs prevent them giving their customers a full-on shafting for the entire game. We've all seen them turning off servers... imagine if they could turn off entire games to force you to buy the new edition!

  • Xboxfanuk #25 1 year ago

    I am 100% behind him! I love free-to-play model and I love digital. Unfortuntely retail is still ruling the roost with consoles so it might be awhile before we see digital on demand games be resonable prices on 360 (and movies as well). But someday like all new tech it will become massive and cheap.

  • superbeast2010 #26 1 year ago

    Post deleted at 10:57:39 01-02-2012

  • Sephija #27 1 year ago

    I don't think it will, many people like myself like actually having the physical product of case, disc, manual etc rather than just downloaded data. It's like downloading music, i'll buy individual songs but if I want an album i'll go out and buy the album.

  • KDR_11k #28 1 year ago

    Strongly disagree. With the vast majority of consoles (especially Wii and DS but the others don't have anywhere close to 100% coverage either) not connected to the internet that's not feasible. The vast majority of customers will still depend on retail to get your product.

  • StooMonster #29 1 year ago

    After a short time EA will turn the servers off, and ask you to rebuy everything in new and shiny version.

  • TRUTH #30 1 year ago

    Having a physical product you can take it with you any where, lend out, borrow it, put it on your hdd, have art work and info (esp on music cds) which make so much more attractive, also quality is always better on cd in sound picture on all media, never the threat of corrupting the hdd or using up space on console...the most important thing is - when technol
    ogy moves on you won't lose anything or be stuck with one company or even if you move abroad or out the city downloading could become impossible

  • kongzi #31 1 year ago

    why the hell did they even bother developing all those home-consoles when in the end they become like insert coin-machines. Fuck this.. not buying a new console anymore, I'm off to the arcade, kids.

  • butler` #32 1 year ago

    "Emerging f2p model" - in the West maybe, for ultramegagamescorperations, for the rest of the world its old hat

  • RevanNL #33 1 year ago

    EA really is trying to be better then Activision in every way, now they try to take the position of biggest-dick-as-ceo away from Kotick.

  • PlugMonkey #34 1 year ago

    "after you realise you paid £36 for a main menu and frick all else. "

    @ Emmit_Assassin.

    You're really struggling to understand the concept of "FREE to play", aren't you?

  • swisstony #35 1 year ago

    did the critics of this read the article. They're making more money this way. It's all very well calling someone a retard for paying 5k in a month for game content, but they need one retard to cover a 1000 forum whingers fleeing in the other direction.

    If this model wasn't working for some of the reasons outlined here, then why is it making so much money? It is working. QQ.

    Also, for many of the games adopting this model, but of course not all, it's redundant to moan about them turning the servers off, the games are free to play anyway. It cost you nothing and hopefully entertained you for a while. Heck, by a few 'outfits for your avatar' or some 'xp boosters' or whatever they sell and you're funding further development in a game you might enjoy.

    The users tend to define which franchises remain, by investing in them and directly showing companies that they want more, and will pay for more. It's a more direct relationship with customers and concomitantly, a much more interactive engagement i that respect. More than ever customers who play these games ongoing will voice their ideas/concerns and it will behove makers of free to play games to alter their games to suit, or risk losing revenue. As such, the post launch experience of a game will be driven by it's customer base to a large extent.

    You all just got more power to define a gaming experience in a way you want.

  • damoxuk #36 1 year ago

    The words "free to play" or a misnomer as like all games of this ilk to get the most from thme you have to pay to get "upgrades" , new levels, unlock new area's (i.e Micro-transaction). In the end you probably pay more than if you bought it at full retail.

    Of course Free to play / micro-transaction works well for MMO's where you focus on one game only so can invest time and money if ALL games became like this would your Credit cards become a mass of micro-transactions on every game? No because that would cost to much. And i'm afraid will just put people off.

    Yes you can play the Free to play for free - if you want half or less a game or have the shittest gear / weapons etc but the whole point of gaming is to get better thing's so of course you'll pay. Dirty gits EA - dirty gits indeed.

    The day Free to play / Micro-transactions become the norm is the day I stop gaming and do something different like piss into a hole :)

  • PlugMonkey #37 1 year ago

    I really don't think this is entirely negative.

    For example: If everyone will get to play a full, finished version of EVERY game before they decide whether they want to spend cash on it, what will that mean for all the shit-but-heavily-marketed games the same people whinging about this constantly whinge about being in the charts? Surely you can't bank on a movie tie-in and a heavy marketing budget if your whole business model is 'try before you buy'?

    All the doom-mongers: You've played which current F2P games that have fulfilled these dark fears of yours?

    My only real concern is that this all seems very online, multiplayer focussed. How the real immersive, single player, narrative experiences (like Bioshock for example) fit into this model?

  • metalangel #38 1 year ago

    @PlugMonkey: All those singleplayer games will still exist, except likely chopped into pieces like Dragon Age (or less cynically, but not by much, the Fable 2 episodes) and sold for more than they'd cost if sold in one chunk. Or hey! How about a discount for buying the whole game at once, to discourage you from only buying the first part and deciding you don't like it enough?

    ...

    I don't know what to say. I have bought a few games through Steam and that to me seems to be almost the ideal for this sort of thing. A huge selection, reasonable prices, there's always a sale with something you want on. The problem is, I know I can't trust EA to put together anything as good or cheap as Steam.

  • PlugMonkey #39 1 year ago

    You don't have to 'trust' EA. Either they offer as good value as everyone else, or people will go elsewhere. Same as it ever was.

  • BillyBrush #40 1 year ago

    Our highest ARPU (average revenue per user) are free-to-play games

  • Sevens #41 1 year ago

    Yeah. DA 2 alone will do that, what with Signature Edition DLC, Retailer DLC, Project 10 Dollar DLC and Post-Launch DLC. Well, then there'll be ME 3 which, to the aforementioned, will add the so-called "Online Pass". Bravo, EA.

  • metalangel #42 1 year ago

    @PlugMonkey: Ugh, of all the stupid things to pick up on out of what I said, why 'trust'?

    How about this: What if they decide their online store is the one and only option for their products? What if other publishers follow suit? Look at the prices for Games On Demand on Xbox Live!

    That should be the other big concern (after chopping games into tiny pieces)... everything stays at a ridiculous price forever.

  • Pulsar_t #43 1 year ago

    I actually clicked on the spambot's link >.<

    Anyway, as long as people keep buying DLC publishers will find ways to maximise their revenues from said 'medium'.

  • NotSoSlim #44 1 year ago

    Doesn't need to be end of physical media, just give people competitive prices for digital and people will bite.

    Steam has nailed it and needs to be followed if they are going this way

  • Sunyavadin #45 1 year ago

    If you count mobile games and bundled DLC codes for DLC with a price tag normally attached as a disincentive to second hand sales? Yes.

  • PlugMonkey #46 1 year ago

    FFS. Comment #1 is driving me insane. +38? Seriously? How does "free to play" mean that "before you know it, the fucking main menu will be sold separately "? How does it remotely indicate that coming in the future? Whatever you feel about the positives and negatives of digital media or free-to-play models, that statement is still patently bullshit. Free. To. Play.

    That doesn't stop the inmates smacking their heads against the + button though, does it? Christ, the internet is fucking depressing sometimes. When humanity finally destroys itself, the IQ of this planet will go up.

    @ metalangel
    I didn't mean to nit-pick, really I didn't. I only mean that Steam don't do what they do out of altruism and a moral imperitive. They do it because they've sold me 104 games, most of which I wouldn't have bought otherwise. It makes them money. EA will HAVE to be competitive that, or they will fail. The digital market should be an incredibly competitive one, more competitive than the physical media market as all you need to get your games to your customers is a server, rather than a global distribution network. Competition is good for the consumer, and Steam is already setting an encouraging benchmark.

    @ Nicky-ace
    I kind of agree with you. I have a large collection of retro games that I love having lined up on my shelf, and people won't be able to do that in the future. But I also love having 104 PC games ready to go without having to store them, or find the discs, or polish the scratches out of the disc. And I also like the fact that if I want to play Betrayal at Krondor, I'm not reliant on a 15 year old floppy disk, because I can download a modernised version from GoG.com for little more than the price of a pint of beer.

    And finally, one more thought on free-to-play: I payed £40 for Oblivion and played it to death. Every mission, every side quest. And on a F2P model, that would probably have cost me £80. Or even £120. And everyone's working themselves into a lather at that prospect. OK, fine.

    But what about the flipside? How many games do you buy each year, play for a couple of hours and never go back to? And yet you have to pay £40 for those too! Playing MAG for 3 hours cost me as much money as playing Oblivion for 100! What a rip off! Shouldn't someone do something about that?! Like, let me get that exact same experience for free?

    Nooo. ♫ You've got to ac-centuate the negative, and e-liminate the positive. ♫

    What an odd species we are.

    Edit: + 46 now. At least 47 people who read these comments threads are imbeciles.
    Edited by PlugMonkey at 09/01/11 @ 23:17

  • metalangel #47 1 year ago

    @PlugMonkey: the risk I see with companies making their own online store the only game in town for certain products is they won't need to be competitive. There could well be enough dimwits out there to pay whatever ridiculous prices they care to set to keep them going. I don't think Steam are good out of love for us, but they managed to completely turn my view on the whole download-only market with how well it works and how damned impulsive some of those prices are sometimes.

    Like I say, they are the diamond standard. Considering how EA currently treats its customers (with online passes, launch DLC and other shows of sheer contempt) it's incredibly unlikely they'll match the standard set by Steam. They'll nickel and dime in ways previously thought impossible. There is no evidence to make me think otherwise.

  • waynenot #48 1 year ago

    Is BB penetration/ quality and average Joe's ability to comprehend such things suddenly going to skyrocket in the next couple of months, then? I didn't know that - thanks, EA.

  • PlugMonkey #49 1 year ago

    @metalangel

    Indeed, if it turns out that the rich idiots massively outnumber the normal people, then I suppose it is possible that EA games will become the preserve of an elite minority. Like, say, Rolex watches. It seems to me though that the balance between highest price and highest numbers that gives the highest profit will be a fair way further south than that.

    And I don't believe that EA having their own store means they aren't in competition with Steam and other providers. Maybe that will be the only place to buy EA games, but how much do I really need an EA game if they're charging 10x more than their competitors? FIFA is going to have to be a hell of a lot better than PES if they're planning on charging more for it, and they could already do that if they wanted anyway. Activision do.

    The important thing to remember about F2P is that, while the marketing execs may get excited about the people who pay $5000, the point is just as much to get a small amount of money out of the people who currently won't shell out $40 for the whole game, but might shell out $5 for an 1/8th of it - so you get to save money at the other end of the spectrum.
    Edited by PlugMonkey at 09/01/11 @ 13:40

  • Noble6 #50 1 year ago

    In 2011 ? I doubt it'll happen that fast.

  • Ryboy #51 1 year ago

    You're just realising this now?

  • Lemming81 #52 1 year ago

    The digital age should have meant cheaper games because their is no packaging or retail cost. Typical that they seem to find reasons to charge more for it.

    Unfortunatly for them the digital age is also the internet age, and gamers aren't so easily taken for fools.

  • Mentat_Idaho #53 1 year ago

    I was looking online yesterday as I was considering buying Starcraft 2 through Battlenet, but it actually costs more online than it does in the shops over here. Only slightly, but still I was amazed that it wasn't less seeing as you get no disk, packaging etc. Why the hell would I want to pay more for less? I'll buy a retail copy thanks.
    Edited by Mentat_Idaho at 10/01/11 @ 01:16

  • Darth_Flibble #54 1 year ago

    If you look at DLC and rental film on consoles, the prices hardly drop permanently when they have been out for a while. If you want to buy all the DLC for Dragon age or borderlands its cheaper to get the GoTY edition of both. I got DA ultimate edition for 12.99 at Christmas and even at 17.99 it was recently, still a bargain. To get all the DLC from Live or PSN and its expensive. This shows what DD is going to be like. Apologists can say "oh its in its infancy" thats just rubbish. They are seeing what they can get away with (to see how weak minded some gamers are)