Electronic Arts is stepping up its competition against Valve Softwareâs Steam in digital video game distribution, with the publisher announcing Oct. 27 that its direct-to-consumer Origin platform would soon offer PC game titles from other publishers including Capcom Entertainment, THQ, and Warner Bros. Interactive Entertainment.
Beginning in November, Origin will add new releases including Warnerâs âBatman: Arkham Cityâ and THQâs âSaints Row: The Thirdâ to the platformâs current library of more than 100 EA PC games. Since its launch in June, Origin has garnered more than six million registered users; eight-year-old Steam claims a user base of 35 million.
More on Originâs competition with Steam at Forbes.
With EAâs planned acquisition of PopCap Games, the publisher gains casual titles such as Bejeweled, whose various versions sell a copy online every 4.3 seconds (according to a recent Wall Street Journal profile of the company).
âHere you have one of the last great acquirable franchises in casual gaming and with it, it puts EA back where they belong: front and center in the digital gaming conversation,â remarked PopCap board member Rob Ward, whose venture capital firm Meritech Capital Partners was a late-stage investor in the company (via GeekWire).
Analysts are relatively positive about the deal (via GameSpot), under which EA will pay between $750 million and $1.3 billion, depending on PopCapâs achievement of earnings milestones through 2013.
In an interview with GamesIndustry.biz (registration required), EAâs Frank Gibeau says that the publisherâs online free-to-play games group serves a user base of 17 million worldwide â including markets that the company has never been able to penetrate with packaged media.
When free-to-play services âget to scale,â Gibeau says, they âhave huge audiences [and] are very profitableâ â as profitable as packaged console titles. Moreover, free-to-play services âare not cannibalizing the main games and they actually reach markets that weâre not currently serving,â Gibeau says. âWith âNeed for Speed World,â Russia and Brazil are number one and two…I canât sell packaged goods in those territories. But Iâm reaching an audience with âNeed for Speedâ content.â
The acquisition, TechCrunch writes, would serve to bolster EAâs position in the casual games genre. PopCap, whose titles include âBejeweledâ and âPlants vs. Zombies,â has found particular success in marketing its titles as mobile device and social network apps. âPlants vs. Zombiesâ is the tenth-highest-grossing game app on Appleâs App Store; on Facebook, PopCap titles collectively average more than 18 million monthly active users (via AppData).
Research firm NPD says it plans to publish monthly sales reports on the digital videogame businesses â from downloadable content to online subscriptions and social games â following complaints from publishers that the firmâs data was underinclusive of such increasingly important segments.
On Friday, NPD reported that videogame software sales had fallen by 8% in February. That data only takes account of physical software sales, which by NPDâs own estimate comprises 60% of the current overall games market. But even with the stipulation, publishers were quick to criticize the report.
âUsing NPD data for video game sales is like measuring music sales and ignoring something called iTunes,â EA corporate communications executive Tiffany Steckler told CNN on Monday.
NPD analyst Anita Frazier tells GamesIndustry.biz (registration required) that the company âis expanding the number of digital retailers we have relationships with in order to develop a digital POS [point of sale] service.â In reiterating why the industry needs an âobjective third-party sourceâ for sales data, Frazier says that retailersâ sharing of such information, Frazier says, remains crucial as digital channels account for more of the overall market: âIt will be harder for companies to manage their businesses and resources without visibility into all forms of distribution.â
Electronic Arts is on track to sell $750 million worth of full-game downloads and other digital content this year, accounting for 20% of the companyâs annual revenue, CFO Eric Brown said at a UBS investor conference in New York yesterday.
The publisherâs digital business, which spans games for social networks, smartphones, and console systems, is largely based on âorganicâ franchises such as Madden NFL and FIFA soccer. âWe think weâre growing most rapidly in DLC for the console; the majority of our growth â 85% â is organic versus acquired,â Brown said (via Gamasutra). But the executive also noted that growth opportunities remain for packaged media as well: âWe think digital starts with the disc and the high-definition platforms.â
Electronic Arts says that a five-year virtual currency agreement with Facebook âwill create a simplified, more accessible experience for people who play games and purchase virtual goodsâ on the social network. Under the terms of the agreement, Facebook Credits will become the exclusive payment method in EA games on Facebook.
âPet Societyâ and âRestaurant City,â both marketed by EAâs Playfish division, continue to be two of the top 10 games on Facebook measured by daily active users. Upcoming EA games for Facebook include one based on Hasbroâs family game property, Monopoly.
As part of the Facebook agreement, EA receives a standard 70% revenue share for Facebook Credit purchases, with the social network retaining the balance.
Major videogame publishers including EA and THQ have sought to mitigate the impact of previously-owned videogames on new release sales this year by making some titlesâ online multiplayer modes accessible only with a one-time download code. Gamers receive the code with factory-sealed copies of the game; presuming previous owners used the codes, purchasers of used copies must purchase a new code directly from the publisher.
Thatâs not how Activitionâs forthcoming âCall of Duty: Black Opsâ (in stores November 9) will work, according to Mark Lamia, head of the gameâs developer Treyarch. From the development studioâs perspective, encouraging consumer retention of games comes down to offering continually compelling content.
âI want to take [the strategy] in the other direction and bring consumers really great reasons to keep their games, rather than trade them in,â Lamia told gamer site MCV at a recent promotional event for âCall of Duty.â
âWeâre going to support the hell out of âBlack Ops,ââ Lamia continued. âThat will be our focus post-release: making sure we keep our fans engaged, and hopefully as a result, theyâll want to keep playing our game and wonât want to trade it in.â
EAâs âMadden NFL 11â looks to be the top-selling game in North America for the month of August, with the publisher estimating sales to be up by approximately 5% year-over-year across all platforms for the month.
Digital revenues for the game are up by more than 200% year-over-year, EA said, on the strength of a virtual-trading-card mode called Madden Ultimate Team.
“Madden NFL 11″ gamers have averaged more than two million online connected game sessions each day, according to the publisher. Nearly 20% of all online play has been logged on a new 3-on-3 multiplayer feature, Online Team Play.
EA also is taking the franchise into the social gaming arena with âMadden NFL Superstars,â which launched on Facebook Aug. 31.
Reporting better-than-expected quarterly earnings yesterday afternoon,Â Electronic Arts reaffirmed its full-year outlook, saying that revenue from digital content will drive overall industry growth.
Reuters reports that while EA expects industry-wide sales of physical videogames to decline this year by 3%, the company looks for 7% overall growth off of revenues from downloadable and mobile content.
EAâs own digital business (including wireless, Internet, and advertising) increased 52% year over year in its first quarter, with net revenue of $188 million.
Beginning with the release of âTiger Woods PGA Tour 11â next month, EA Sports games for PS3 and Xbox 360 will include a single-use âonline passâ for downloadable content and online services such as multiplayer modes. Purchasers of pre-owned copies will receive a seven-day free trial of the online access, but thereafter must pay $10 for the downloadable content.
Used game purveyor GameStop endorses the move. âGameStop is excited to partner with such a forward-thinking publisher as Electronic Arts,â GameStop CEO Dan DeMatteo, says in EAâs release. âThis relationship allows us to capitalize on our investments to market and sell downloadable content online, as well as through our network of stores worldwide.â Via Joystiq
Videogame developers have long been averse to working âunder any regime,â notes Spencer Mott, Chief Information Security Officer of Electronic Arts. But with game publishers now reliant on a global network of developers, and gamers themselves increasingly adopting online subscriptions and other digital models, Mott says the industry needs a new framework: âwe need quite mature ways to assess and address risk when working in a secure environment.â
Mott oversees global security and risk management (SRM) at the worldâs largest games developer, leading a team of consists of 27 security specialists and employee âsentinelsâ who formally advocate SRM goals and objectives. EAâs SRM team focuses on three operational pillars: risk management services, data compliance, and security operations.
The year 2010 is seeing the publisher push further into direct-to-consumer models for downloadable game content. Subsequently, Mott points out, EA is increasingly involved in e-commerce customer details. The regulatory compliance aspects of âhow we manage that relationshipâ encompass âa great amount of workâ for the software publisherâs SRM unit.
Flowing from closer customer relationships is the need for EA to maintain an âinstant responseâ plan for recovering from online game server outages or hacker attacks.
âWe have to expect things are going to happen,â says Mott, who looks for publishers in general to promote security management âas more of a business-type functionâ than a back-end operation.
Continued development of open, industry-wide standards for baseline security and risk management help EA and other publishers âset an expectation level with our partners,â Mott says. But amid ever-shifting markets and consumer preferences, Mott advocates a flexible approach to implementing risk management practices industry-wide. âWhen the business is changing — and over the past couple of months, all of the projections were wrong on how the game business was changing — if you introduce too much policy into the process, you can stifle innovation and creativity.â
Mott will join BayTSP’s Matt Sprague in a presentation on content security at the GameSupply conference Feb. 10 in San Jose, CA. For more information, visit www.GameSupplyAcademy.com.
The videogame franchise has generated more than $2.7 billion in sales over its 15-year history, says Electronic Arts. Via Reuters