EA’s Future Looks Digital

John Riccitiello

While analysts have been pounding EA’s 2009, the company is trying to maintain a hopeful facade, saying that this year was a transitional period. EA CEO John Riccitiello believes that it’s all part of moving to a digital future. Take a look at some of the things he said to Gamasutra:

My kids are still listening to music even though Tower Records is gone.

We felt that the company we want to be had 1,500 fewer jobs dedicated to packaged goods.

We’re trying to become a company that looks more like a direct-to-consumer business.

While experts continue to debate when digital distribution will be the norm (not the Norm from Cheers), there’s no doubt that it will eventually become the standard (as the excellent Chris Taylor noted). It’s certainly something that videogame publishers will have to adjust to. I’m sure EA will still be a dominant name when that time rolls around, but I wonder if it will ever be as dominant as it once was. I also wonder which kings digital distribution will dethrone and which new kings it will crown.

What are your thoughts on how digital distribution will change the videogame publisher landscape?


Author: RPadTV


63 thoughts on “EA’s Future Looks Digital”

  1. The publisher who sells digital goods without DRM will win.

    I will not buy a console that relies on digital distribution. I'm locked to that machine for the content I purchased and I am up the creek after the console's life cycle is done.

    The writing is on the wall though. Activision will overcharge the hell for strict digital content…the sheep will buy it and the rest of the companies will follow suit. Sorry, but I don't really see the indy developers making a dent in the market. Example: CoD on App Store is $10. That's a damn Iphone game. Imagine what they will charge for a console game.

  2. Well we see 70$ as the new pricing model, We have to maintain the servers and bandwidth and yadda yadda yadda…….Wont be getting anything from me thats for sure. DLC and small arcade games are one thing, I happen to like my collection of game boxes, instructions, game art, and a physical game to hold in my hands and enjoy.

  3. I would personally love not to have to change discs to play a game. If the DRM rules were fair I'd be more than happy to support the first person to get in on DLC. I think the iphone app store, XBL, and PSN have shown that Indy developers love to get in on the DLC action.

    Also, I don't get the whole theory that game prices should go down if DLC is introduced. I would still be happy to pay $60 for a good game and hopefully some of that money they aren't spending on packaging/manpower/discs ends up on the creative side for the game

  4. perhaps, but I remember back when tapes were almost dead and the CD was introduced, they said prices would go down and they never did.

  5. @Hrolf – see that just doesn't make sense to me. prices will keep going up over time becacuse the dollar is worth less than it was yesterday. a 1980 Ford Mustang would have cost a lot less back then than a 2010 does now. The gaming industry hasn't changed quite so drastically but it's a good comparison.

    Like I said I'm ok with it staying at 60 for GOOD games. I think that money spent on hard copies could be better spent on the creative side of the game development. but that's just me.

  6. @shockwave

    The content should be cheaper for a litany of reasons. Have you never taken cost accounting??

    1. No shelf space

    2. No packaging (huge expense)

    3. No labor to package (huge expense)

    4. No labor to deliver content (huge expense)

    5. Very slim chance content will go on clearance. Content is clearanced in stores to make space for what is considered non-obsolete inventory.

    6. The elimination of the used market

    7. The elimination of the rental market ( most people never consider this one)

    8. Invasive and restrictive DRM that does not allow me to do what I want with the content I buy.

    Simply put…if you are merely selling me a license to use the content, then I expect it to be at least 60% cheaper if not more. There are alot of costs the content provider is saving on at the expense of limiting the consumer's choice. Consumer choice is the intangible value in the whole scenario. It's quite difficult to put a price on something intangible, but rest assured intangibles are quite often more valuable than liquid items.

    Why don't we just call a spade a spade here: This is the way content providers feel they have to go in order to prevent a used market and rental market from impeding their profits. This has nothing to do with helping out the little guy or being convenient for the consumer. Fact is these companies lose more money to people selling their games second hand and rentals. Piracy doesn't even come close. It's just the easiest one to point a finger at because another word for pirate is thief.

  7. @shockwave again

    Also your post was trying to tackle inflation..while inflation is very real and does happen…the costs associated with putting out a product have to be accounted for still. Inflation alone doesn't drive the price of something upward.

    In fact, deflation can just as easily occur. Hard to hang an argument on inflation.

  8. @smartguy – I'll say it a third time. All of those costs to the developer save could go into the creative design of the games. If you want them to be cheaper then you may be disappointed.

  9. I agree that maybe the cost should come down but as it stands a lot of these companies are losing money anyway.

    Does anyone here think that digital games for Xbox (#) or PS(#) will ever cost $20-30 new?

  10. @Rpad, well you have me in that I don't completely understand the relationship between the developers and publishers of games. I just think that games becoming cheaper is not going to happen as long as they keep getting better.

  11. @shockwave

    So you never rent games or use gamefly? ( i personally don't do either. I just buy..i'm the minority)

    You just don't understand a balance sheet for a business. It's ok.

    Also, that's quite naive to think a developer will sink the money back into the product instead of adding those funds to retained earnings.

    If you expect that, you will be sorely disappointed. I guess you don't mind being raked over the coals, but at least you don't have to get up and put a disc in.

    (don't take any of this the wrong way, i argue about this stuff in school all the time. not just games)


    Indeed retail markups. However check how much Table Tennis is on Live and then price check it at walmart. That shelf space issue again.

  12. @smartguy – I should hope I can run the balance sheet here at the office. I am the COO and part owner after all, lol.

  13. @smartguy – just say yes or no. you expect to one day pay $20-30 for a new release digital distribution game?

  14. @shockwave

    if they are losing money, then they should put out a better product or actually compete price wise at launch with their products.

    Example: NFL2k5 brand new: $20. Development costs were low since the game engine really hadn't changed over the course of many years. The licensing was pretty much the only dynamic cost. (dynamic meaning fluctuating).

    They could also try and releasing their content at different times of the year instead of at Christmas season. Whenever there is a crowded market, you will inevitably lose out on sales because there is more competition.

    Creating a business model that screws the consumer is a good way to lose even more money if not go out of business altogether.

  15. @smartguy – I don't need the school lesson. I graduated some time ago.

    All I can tell you is that consumers expect to pay between 50-60 for a new game and I doubt that will change even if it is digital. Just don't get your hopes up

  16. @ The Smartguy/Shockwave convo

    From my experiences producing my own music, I've spent $1000 to $1500 on 500 to 100 cd's (depending on package quality, deals, etc) that I (personally) sell at shows for $10 and a store (that usually won't pay more than $9 a piece) will sell them for $14.

    With MP3's (at 99 cents a piece) I save ridiculously more money and make more as well. All the production costs are in recording which can be done for ridiculously cheap if you have your own studio.

    Long story short, digi distro is great for the artists and a bane to the labels… my kind of market.

  17. Yes.

    Qualifying my answer: because pubs/devs have to realize that in order to get me to buy an intangible item they will have to compete with one another in price and compete for my bandwidth which is surely to be capped before digital distribution takes off. That is the other part of the looming scenario. ISP caps and broadband availability.

    For what it's worth, I have no problem with a company using digital distribution for their products…as long as there is an alternative to where I can buy the product. Simply only having the MSN or PSN stores to buy content is a monopoly.

    Just look up table tennis as a good example of things to come.

    I did not mean to insinuate that you have no clue what a balance sheet was.

  18. @N8R – a perfect example of why the "artists" are the ones who would succeed in a digital market. More money to the developer means eventually a better product in my opinion.

  19. @shockwave

    the school lesson was there because you first qualified your answer with "i don't like changing discs". It merited going into some depth.

    Also…why does everyone think that Sony is going to jump on board with digital distribution? They have to milk bluray for quite some time.

    Still you can't argue the fact that the ISP caps will kill the digi model.

  20. No worries smartguy I'm happy for a debate. I personally don't see how ISP caps are going to happen. with HDDs getting bigger and bigger and the internet becoming faster it only makes sense that digital distribution will take over more. I don't think digital distribution will fail because of caps I think caps might fail because of digital distribution. It's hard to say what's going to happen yet. I don't know what my cap is from Comcast but I've downloaded a lot and haven't reached it yet. I think caps will continue to increase exponentially as time goes on.

    Sony and Bluray are another thing all together. I think Bluray will probably be the last form of physical media to be widely used personally. That's if it is ever widely used.

  21. @Smartguy;

    Just because the savings are 60%, doesn't mean we (the end consumers) will see a 60% discount on digital copies of games/licenses. If the developer can make a digital only game for 60% less than making a hard-copy of the game, I have to assume that they are going to keep the majority of those savings if they can. The end consumer may see around a 10% to 20% reduction in price versus the physical copy is my guess.

    Also, as you previously mentioned, the DRM is a key issue as I'm sure the reason a lot of gamers have and play a lot of games is because they buy used games or rent them. If DRM is done how the developers REALLY want, it would mean the end of the used game and rental market as we know it. The market would have consumers that would want to own the game and do what they will with it and the creators would want everyone to purchase a copy at full price weather it be first-hand, second-hand or third-hand. I really don't see a "middle ground" for this argument. It is either one way or another.

    … and don't even get me started on bandwidth issues.

    I just don’t see digital distribution taking off any time soon. It’s kind of like digital books to me. Sure you can read whole books on your Kindle or iPhone, but most people I know (including me) like to have the physical book to read, gift, or let someone borrow after you are done reading it. Also, they can make you look cultured and shit when you put them all on a shelf.


  22. @Smartguy – never underestimate the power of convenience. I no longer have a CD collection because several years ago I said to myself. I'd just rather have everything on my iPod. You know?

  23. Iceman has a good point. Look at the Xbox Like Games On Demand, I can get all of those cheaper at Gamestop AND save the HDD space AND have an actual disc.

    Most of them sell new for $20 too. It also makes the rating system a little moot. Why can't a 12 year old download GTA4?

  24. @shockwave

    Understood. Did you pay for all that music though? Music is thrown around alot, but if you didn't pay for it then it's hard to see the value lost. However, I much prefer having my music library on my MacBook.

    Comcast has a 250gb soft cap. Which means they don't enforce it necessarily and won't charge you for overages. How can they? They don't provide a meter for you…oh wait :http://www.dslreports.com/shownews/Comcast-Releasing-Promised-Usage-Meter-105731

    If you want a glimpse of what US ISPs are trying to do, check out what canadian, australian and european ISPs charge. They quantify it by saying it's more fair to the end users who don't use as much bandwidth. I'm all for paying for fair usage, but to say fair usage is everyone still paying $50 per month but now there is a 40-100gb limit with $5 overages per gig isn't fair usage billing. That is a damn scam. Fair usage billing would mean that each gig of data you consume would be billed per bye or per gig. Let's not forget to include the cost each gig of data costs a carrier.


    I know 60% won't happen for me the consumer, but you have to negotiate high to get something good. What really needs to happen is the damn copyright laws need to be revised. The entertainment industry is just ridiculous. Ten years should be plenty on electronic copyrights. This 70 year stuff and the push for copyrights in perpetuity is insane.

    Perfect world: No caps on my broadband, a la' carte channel selection for tv (see local stations, espn, nfl network), no DRM.

  25. @N8R – I would assume that would be covered under the parental control settings?

    I think Iceman does have a good point. but until Xbox fixes their proprietary HDD situation I won't buy new titles digital. (that's assuming they'll ever offer a new title digital on the 360)

  26. at the risk of sounding like some sweaty souther preacher yelling "marijuana is a stair stepping drug!" *wipes forehead*

    but if the entertainment industry can go straight to digi distribution and eliminate second hand markets…what is stopping other industries from trying the same thing? The car industry is surely reeling right now. Why don't they step in and say "you can only buy parts from the manufacturer, and we won't service any car over 6 years old". Byebye Autozone and used car salesman who says "I only have quality cars on my lot" *wipes forehead*

  27. @Smartguy – Ya some songs are probably still on my computer back from the America Online/Napster days of yesteryear. When I got iTunes though I stopped downloading songs illegally.

    I too don't want to see caps on everyone. lord knows people who only use 10-50GB per month aren't going to pay less than $50. it's just us heavy users that are going to get screwed out of $100 or more. That pisses me off because America has the slowest average speeds in the world and yet we still pay the most for what we get.

  28. @shockwave

    Also if you look at their net operating profits each quarter they are doing outstanding. TWC wanted 40gb caps on their TOP TIER with $5 overages. Their lowest tier had a 1gb cap. The low tier was still $20-$30 per month.

    I'll believe it is about being fair when the prices are transparent and the bytes are metered like kilowatt hours. .05 per gig isn't so bad lol.

  29. @ Napster/AOL days

    I would steal my own songs if it were possible. We musicians should concentrate on making our ends the way we always did… live shows.

    Support local music, go see a band.

  30. @shockwave

    yes, but with a reasonable per byte charge. That way I don't have to worry about overages, losing the bandwidth I purchase every month, and would pay less when I don't consume as much. Seems logical to me. Interesting side note about it though; if I were charged per byte billing…could the ISP block me from doing what I want with the connection? Could they stop me from streaming certain items, or using P2P? The electric company doesn't tell me what to use in my house as far as appliances go, or how much tv I can watch. Water company doesn't say "only 2 minutes per day per shower".

  31. @N8R

    From your point of view….why do some artists think they are entitled to a life of luxury? I'm sure you know what I mean.

  32. @smartguy – I think you've come up with a reasonable system. I mean, in all actuality internet is becoming almost as much of a necessity as power and water.

    Hopefully we won't see that kind of blocking going on but with P2P under fire all the time I'm sure ISPs would love to block you from doing it. Then again maybe they wouldn't care what you do with it so long as you are paying per byte

  33. Steam prices go down over time and Gametap is a video game rental service that relies on digital distribution. To think that the way console makers sell digital games it the way it will be later on down the road is stupid. Publishers are going to want their games to be hosted on their servers in order to hold the most money after the sale. Sony and Microsoft will have to relinquish allot of control in order for the industry to go digital. The only issue left is sell backs/trade ins.

  34. For real N8R, well said.

    And I'm sorry, I wouldn't want full on digi distribution. I like having a dvd stand, and drawers full of game cases, and my bookshelf full of fantasy novels and strategy guides. Not letting anyone borrow my system for a game a friend doesn't wanna buy or can't. Which btw I am finally getting my ps3 fixed if I haven't said it already.

    I've learned the hard way that I now have to remember to constantly back up my ps3 hard drive. B/c if the internal power source goes out, there's no way to back up your data. And Sony's gonna reformat your hard drive 99% of the time. Whee. Good news is I get to start Oblivion over.

  35. @ Smartguy

    Well, it is indeed hard work to make it to a certain point. I suppose anyone who works that hard for anything would feel the same way.

    But.. the thing about the music industry is that a fall from grace is incredibly easy. 2Pac said it best when he told Biggie that the best time to be a musician is when your on the cusp of making it (Cobain said the same thing). Once you're at the top, the only place to go is down.

    That said, I think there are alot of artists who just can't come to terms with that especially when they worked their ass off to get where they got.

    If that's not the case, then it's zealousness. Plain and simple.

  36. @Cami – woah woah, I'm seeing different options here. If you just took out your HDD and put in a dummy hard drive they could reformat that one when they fix it? PS3 comes back to you and you put your HDD back in. power loss shouldn't affect your save data.

    Another option is taking the HDD out of the PS3 and backing up the files using a Mac or PC. the HDD should be able to be accessed by either of those if I'm not mistaken. I believe it is formatted as FAT32

  37. It is FAT32


    Iphone isn't on Verizon for reason.

    Steam prices go down because there is no used market for PC games and alot of hardcore PC gamers will pirate/steal the game. Steam has advantageous pricing for a reason. I like it. Sony and MS both suffer from the Ed Whitacre syndrome.

  38. @Shockwave – Well the only real problem is that I don't know "for sure" if the it is the power, or if it is my hdd that's causing the failure to begin with. The sucker just won't stay on longer then 2-3 seconds. I called SCEA and asked them about backing up my hdd. The woman on the line put me on hold for a minute or two then told me there's possibly no way even if I used someone's pc(if there's hope, I'll give it a try). And she said if I put it in someone else's ps3 it'll automatically reformat. I mean connecting it to a pc is worth a shot, but like I said I really don't know if it's the power itself, or my hdd.

  39. Thanks Smartguy I thought so. Cami. don't send your PS3 in yet you can still save your data very easily.

  40. @Cami – well at least try to plug it in to a PC. Another option you could try is putting another HDD in your PS3 if you have an extra one. If another HDD works fine then you might be out of luck but if it still won't work with a new drive then you know your data is good at least

  41. I haven't sent it in yet, I'm just waiting for the confirmation and packaging emails anyway.

  42. remember Cami you can use either a PC or Mac to backup. just copy all of the files on your PS3 HDD over to a new HDD. or simply copy them to your computer and recopy them when you get your PS3 back.

    If you need any help let me know I'm pretty good at file saving.

  43. slave the HDD from the PS3. You can browse its data like a flashdrive. I did the same thing with my old laptop hdd.

  44. @Shockwave562

    The PS3 HDDs are linked to their motherboard (I think). If you take the HDD out and back it up, then when you get the PS3 back from Sony and put the file back on the HDD, the PS3 will reformat the HDD as soon as you put it back in. (if the motherboard is replaced during the repair process that is) The only way it would work is if the motherboard was not replaced during the repairs. This is why you can't take the PS3 HDD out and put in anouther PS3.

  45. @sandrock, well she can still copy the files to her PC and then recopy them to her HDD when it arrives. Thanks though I didn't know that

  46. Thanks, will give it a try. Cause I do not wanna lose the *insert overly exaggerated number* hours of gameplay I had on there. I think I would actually cry.

  47. @Cami – good luck to you. I'm such a weirdo about backing my stuff up that I have 2 HDDs for everything, lol

  48. Isn't there a plastic clip you take off of the connectors on the HDD and it is just pins? That will connect to a PC.

  49. @smartguy – ya you're thinking of a ATA drive, not a SATA drive. the new connection is not the wide IDE one it's very small, and there are no more pins with the plastic. Some people still use IDE/SATA but you won't find it on newer model computers or game systems like 360 or PS3

  50. @Smartguy – ya the new drives are a lot faster and without the Slave/Master stuff they are a lot less complicated as well. practically plug and play

  51. the last hdd i did that too was from an HP laptop I bought 2.5 years ago or so. It had the damn clip you took off of it.

    HP selling me old stuff.

    I use Apple now.

  52. Apple is the way to go. I think Apple started using SATA around the same time they started using the Intel processor

  53. I've had my MacBook for close to a year now. It's built very well, and never crashes. In contrast, I personally never had a problem with Vista either. I did have a problem with the crap engineering HP used on the laptop I purchased though.

    What really sold me on Apple was the operating system (using snow leopard now) and the multi touch pad. Seriously the multi-touch pad is probably the best way to use a laptop. It is amazing.

  54. @Smartguy

    I don't actually like touch pads. If I'm going to manipulate something onscreen through touch, I'd rather touch the screen than touch a blank pad. Plus, the mouse courser never feels right with touch interfaces.

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