Driving to a Store to Buy Games May Soon Be a Thing of the Past, EA Exec Says
"Like everything else, the consumer is ultimately going to default to convenience."
Speaking today at a Nasdaq investor briefing in Europe, EA CFO Blake Jorgensen pointed out that the company already makes more than half of its total revenue from digital sources. This is spread between full-game downloads, add-on content, subscriptions, and mobile. The other half is physical, which is a significant chunk of the pie, but digital may overtake it in the coming years.
EA's latest numbers showed that 25 percent of its full games were downloaded last fiscal year, spanning Origin, Xbox Live, and PlayStation Network; that figure will rise to "closer to 30 percent" for the current fiscal year. Some games skew higher toward digital than others, Jorgensen said, without naming any names.
While impediments like bandwidth speed and the need for a credit card still exist, Jorgensen said consumers are driving the trend towards an all-digital future because ultimately it's convenient.
"Like in books, music, film, and TV, we see that the consumer will ultimately consume [games] digitally," Jorgensen said.
Over the next five years, Jorgensen predicted that full-game download figures for EA games could reach 50 percent. This benefits EA, as the margins are higher for digital products that aren't sold at a physical retailer. Brick and mortar stores remain important, Jorgensen said--for now at least.
"Like everything else, the consumer is ultimately going to default to convenience" -- Blake Jorgensen
"We're careful to continue to work with our retail partners; they are very important in the mix, but we're also ultimately trying to be where the consumer ultimately wants to consume the product," he said.
For its part, GameStop--one of the biggest video game retailers in the world--is preparing for a more digital world. The retailer announced earlier this year that 50 percent of its total revenue will come from non-physical sources by 2019. Just this month, GameStop's revenue took a hit in part because Call of Duty: Infinite Warfare and other major games failed to sell up to expectation.
For Jorgensen, he believes getting in a car and driving to a store might be a thing of the past.
"Like everything else, the consumer is ultimately going to default to convenience," he said. "If it's a choice of getting in the car and driving to the store and the weather is bad outside, if you want to download it, I think you'll see more people do that."
Helping drive digital adoption, Jorgensen said, are consoles that come with larger hard drives. He said 1 TB is considered the "standard" today, though the most heavily advertised consoles--the $300 Xbox One S and PS4 Slim--come with 500 GB hard drives. Both console families have 1 TB options, too.
Also during the event today, Jorgensen talked about the future of the Battlefield and Star Wars Battlefront franchises. Check out the story linked below to learn more.
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