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EA: In Two Years, Digital Revenue Will Outstrip Physical

How much longer before digital sales outstrip retail sales in the gaming industry?

Some say not for a while, but Electronic Arts COO Peter Moore says it'll only take two more years. Speaking in a keynote conversation with ESA boss Mike Gallagher at the Digital Entertainment World Conference (as summarized at GI.biz), Moore addressed the rise of digital delivery.

Right now, publishers use a blend of physical and digital, and the recently released consoles create a "tremendous competitive environment, which ultimately benefits the market." However, Moore believes mobile gaming is on the rise and digital revenues will surpass that of physical game sales in only two years. And if we want to survive the upcoming transition (a transition from which the music industry has yet to recover), gaming must embrace "creative destruction."

Moore said the online environment has been "incredibly valuable to EA" in building customer relationships. The bottom line is that EA's customers used to be retailers but now they're cutting out the middle man, and the customer is the gamer. It changes everything. Social media is another critical aspect of the future of the industry.

Yeah, things have changed. And that's probably the biggest understatement I've ever made.

Tags: peter moore, ea, electronic arts, digital gaming, digital video games

2/24/2014 9:52:14 PM Ben Dutka

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Comments (27 posts)

MRSUCCESS
Monday, February 24, 2014 @ 10:23:07 PM
Reply

This is EA we're talking about. This is no surprise.

I would be fine with having my games digitally but I wouldn't feel like I own it unless I have something tangible. I bought Catherine on the PSN and what if the PSN store is down? I wouldn't be able to download something that I supposedly own. U_U

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WorldEndsWithMe
Monday, February 24, 2014 @ 10:24:34 PM

All I can think of is to fill hard drives and then swap them out. That way you are prepared for the apocalypse.

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WorldEndsWithMe
Monday, February 24, 2014 @ 10:25:57 PM
Reply

Yeah, so, those of us who like to write about gaming are gonna need to see those sales numbers some day!!!

Honestly, why are digital sales hidden from public knowledge?

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LimitedVertigo
Monday, February 24, 2014 @ 10:27:09 PM

Someone will come along and answer this for you. I'm not that someone.

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Lawless SXE
Tuesday, February 25, 2014 @ 7:05:44 AM

Because there's no real way to track them outside of the figures that are officially released by the publishers? And they don't really see the need to deliver the digital figures on every single game at this point because retail figures remain fairly indicative of what's happening in the digital realm?

Just conjecture.

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LimitedVertigo
Monday, February 24, 2014 @ 10:26:30 PM
Reply

Because of Steam a majority of my PC games are in digital form. I've bought quite a bit off the PSN with the PS3 and expect to continue with the PS4. I have to admit though I'm pissed that content purchased for the PS3 doesn't work on the PS4. I can understand people being anti digital for this reason alone.

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WorldEndsWithMe
Monday, February 24, 2014 @ 11:01:34 PM

It is BS.

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Beamboom
Tuesday, February 25, 2014 @ 2:44:26 AM

Distribution method has nothing to do with platform incompatibility though. So I don't understand it if people are being anti digital for compatibility reasons.

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BikerSaint
Monday, February 24, 2014 @ 11:11:50 PM
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NO...NO....OH, Hell NO!!!!!!

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kraygen
Monday, February 24, 2014 @ 11:51:42 PM
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I also have a lot of digital content due to steam, but not because it's digital, but because I get entire collections of 3-4 games for $10 and triple a titles on sale for $5. Even then I only purchase them if it's games I'm unsure about or ones I already own on ps3, but don't have the dlc but is included in the steam version.

If it's a game I know I'll love I won't buy anything but a disc copy.

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PlatformGamerNZ
Monday, February 24, 2014 @ 11:54:42 PM
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yeah well i'll believe it when i see it and if anything that'll be well as it is on PC but consoles well that'll take some time i know i don't buy much stuff on console digitally but if they are talking about games in general that excludes 'mobile' i don't see this happening for some time yet and more than 2 years

happy gaming =)

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Cabalavatar1
Tuesday, February 25, 2014 @ 12:03:05 AM
Reply

I have a lot of digital content in general, but I buy digital only when it's cheaper. Considering the cost of the disc (negligible), warehousing, and shipping (and shipping again!) for disc-based games, I know that digital is cheaper. When PSN and XBL don't recognize this obvious fact, I refuse to buy digitally.

Actually XBL is apparently already trying an approach of lowering digital prices. Let's hope PSN does the same thing.

I prefer buying digital because I don't sell my games, I don't like clutter in my house and mostly empty cases taking up space, and I'd rather not switch out discs if I don't have to. The latter is a minor concern.

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Bio
Tuesday, February 25, 2014 @ 3:54:34 AM

New PC games are still cheaper than their console counterparts 80% of the time. Only mega huge franchises like Call of Duty and Assassin's Creed are $60, and even then most of them have pre-launch sales up to 10% off. I picked up Borderlands 2 for $37.50 a few weeks before it launched.

In addition to that, prices for games on Steam drop exponentially faster than for physical media. I got Tomb Raider on PC for $12 less than 3 months after the game released, and that's a common occurrence.

There's no guarantee Sony or MS will follow the business model that places like Steam use, but Valve has posted definitive evidence that their business model of constant, steep sales actually drives up publisher revenue by a huge margin.

Ultimately, going digital will mean cheaper games for everyone.

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Beamboom
Tuesday, February 25, 2014 @ 7:11:38 AM

"Ultimately, going digital will mean cheaper games for everyone."

I hope you're right Bio, but don't forget that there is one huge difference between the platform Steam operates on and the consoles: The consoles have a closed eco system. There are no competitors on digital distribution on the consoles. There's only one store, controlled by the console maker.

If that will make a difference or not is yet to be seen, but at least so far I am far from impressed by the prices on PSN. Usually it was the last place prices dropped.

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Bio
Tuesday, February 25, 2014 @ 8:09:03 AM

Publishers will still have to compete against each other within those systems, though. Valve doesn't control sale prices on Steam, the publishers who own the games do, and it *should* operate the same way on consoles. The only reason it hasn't yet is because digital distribution on consoles is sorely lagging behind, as you pointed out earlier.

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Beamboom
Tuesday, February 25, 2014 @ 10:48:30 AM

Valid point. I don't know how things work on the console marketplaces either, but yeah it should be much up to the publishers. I agree.

Maybe it is cause console owners are used to pay a high price for most games, almost regardless? Maybe they just do it cause they can... *shrugs*


Last edited by Beamboom on 2/25/2014 10:50:47 AM

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Cabalavatar1
Tuesday, February 25, 2014 @ 12:04:08 AM
Reply

Anyway, bring on lower digital pricing, and I'll always buy digital. Now that Gamestop and Amazon have joined in on the digital download options, we can also get competing sales going, especially around the holidays and the summer.

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Kryten1029a
Tuesday, February 25, 2014 @ 3:33:22 AM

If anything you'll see prices drop more slowly in an all digital environment. New AAA PC games used to be cheaper than on console until publishers realized that they could charge just as much as they did for physical. That's why the likes of EA are pushing this so heavily: lower distribution costs, you can control the product even after the sale and the customer has even fewer rights than they do now. From a rEAper point of view, what's not to love about that scenario?

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matt99
Tuesday, February 25, 2014 @ 2:10:09 AM
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Over the last year I'd say about half of my big game purchases have been digital. At first I was really opposed to all digital but I'm coming around to it (granted I do have very reliable high speed internet and downloading a 25GB game only takes a few hours). And let's be realistic about this, physical media is still going to be around for the rest of this generation, so no need to panic yet.

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Beamboom
Tuesday, February 25, 2014 @ 2:47:22 AM
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When we look at the broader picture it's really just the consoles who are majorly lagging behind.

Every other arena the digital distribution has already completely taken over: Production software, operating systems, PC games, mobile software and games, it's all digital digital digital.
So if one look at the general software sales picture surely digital revenue must have outstripped physical sales for a long time already.

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Bio
Tuesday, February 25, 2014 @ 3:32:45 AM
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Digital is where it's at, IMO. Thanks to Steam I don't have to worry about backwards compatibility or having six different machines plugged in to play all my games; any PC I have is backwards compatible back to games from the 90s.

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Lawless SXE
Tuesday, February 25, 2014 @ 7:07:53 AM
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Should be a part of the digital revolution of gaming by week's end. Still not going to be buying things digitally. Although I may get the TLoU DLC and leave it on the hard drive 'til I go back home so I can put the disc in to play it :D

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Amnesiac
Tuesday, February 25, 2014 @ 11:49:11 AM
Reply

I heard the same thing about newspapers.
Analysts want there to be a shift from physical to digital because that is where they've begun to invest their money. I notice this stuff all the time-- Insiders feel that if they all agree with eachother, publish articles and make bold statements that alone will cause some dynamic shift in status quo.
but guess what?
Its the consumer who decides if we go from physical or to digital not these a**holes
Digital only relies on a solid internet connection with at least a marginal streaming speed. Lose the internet lose your library.
-yeah great idea
where do I sign up?

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Bio
Tuesday, February 25, 2014 @ 12:16:24 PM

Unless a game requires a constant internet connection, an internet outage doesn't affect your digital library.

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Geobaldi
Tuesday, February 25, 2014 @ 6:43:15 PM

Yep. Steam is able to run in offline mode when you lose internet, so you can still play your installed library as long as they don't require internet connections to play them.

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Amnesiac
Wednesday, February 26, 2014 @ 12:12:30 AM

Thanks I didn't know that.
My reservations are still there however, If I'm streaming a movie and I lose the connection I can restart the movie in the exact spot. no big deal
If I'm playing a game while streaming and lose internet Do I have to start over from a previously saved spot?
lets just say I'm still fairly skeptical how the whole thing would work.
btw I was in a bad mood when I posted my comment above. I get tired of hearing "experts" who spout off false claims about how every piece of new technology is going to simplify our lives.
Newspapers may be the best example --
Sure the numbers are dwindling but I can still go and buy a newspaper at the corner store.

Ten years ago you'd thought you'd be living in a unrecognizable world in 2014 (by these so called experts)a world where the newspaper business didn't exist anymore because people get their news from the internet for free.
Well guess what? People still to this day like to read the daily news off paper just as in the same way people two years from now will choose to own the actual game and not settle for a digital permission slip of that game.

I strongly disagree with the COO of EA on this one.


Last edited by Amnesiac on 2/26/2014 12:24:36 AM

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Akuma07
Wednesday, February 26, 2014 @ 11:55:37 PM
Reply

Nooooooooo it won't.

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