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Digital video games sales to outnumber packaged ones in 2011
By Johan Keyter 11 January 2011 | Categories: newsElectronic Arts (EA) CEO John Riccitiello is predicting that 2011 will be the first year in which online sales will outperform the sale of traditional over-the-counter goods.
According to Gamespot, Riccitiello and EA CFO Eric Brown were optimistic about the future of the digital goods market while speaking at UBS's 38th Annual Media and Communications Conference last month.
Speaking to analysts and investors, Brown said that EA is expecting that up to 20% of its revenue this year (about $750 million), will be from digital business, the majority coming from full-game downloads and extra downloadable content (DLC).
According to Riccitiello however, that figure could be more than half for the industry as a whole. In a recent interview with Industry Gamers, the EA CEO said that in his opinion the digital goods market will surpass packaged goods this year.
"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 to content in chunks and in pieces and subscriptions and micro-transactions," he said.
Riccitiello also stated that EA sees its highest average revenue per user from free-to-play titles such as FIFA Ultimate Team and Tiger Woods PGA Online. "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."
In his speech the EA CEO also referred to Warner and game developers Turbine and its latest successes with The Lord of the Rings Online after moving the game to a free-to-play model. "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 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."
Time will tell whether Riccitiello's predictions will come true or not, but with so many new titles featuring DLC and with services such as Steam, Xbox Live and the PlayStation Network doing well, it certainly looks like 2011 may be the year of the download.
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