EA CEO: Digital Game Sales To Outpace Retail In 2011

Electronic Arts CEO John Riccitiello says he sees purely digital video game sales outpacing retail game sales by the end of the year, with new business models for digital releases leading the charge.
Electronic Arts CEO John Riccitiello says he sees purely digital video game sales -- including paid downloads, monthly subscriptions, DLC and in-app purchases -- outpacing retail game sales by the end of the year. "At the end of [2011], the digital business is bigger than the packaged goods business, full stop," he predicted in an interview with IndustryGamers. "No questions in my mind. Then, you know, I think that we’ll find ways to even sell our packaged goods content in chunks and in pieces and subscriptions and micro-transactions." Riccitiello pointed specifically to Warner Bros. Lord of the Rings Online -- which has seen revenues triple after switching to a free-to-play model -- as an example of how the digital side of the industry is finding new flexibility in how it charges for content. "I think these business models are going to find their own feet," he said. "We’re very careful about making sure we price appropriately for platform and also for the intellectual property." This isn't the first time Riccitiello has been bullish on the digital sector. In September, he reminded the industry that depressing 2010 NPD numbers hid what he saw as "burgeoning digital growth." Electronic Arts CFO Scott Brown was also excited about digital growth in a November presentation, where he predicted 30 percent annual growth for the company's digital sales in the coming fiscal years. In December, NPD estimated that 29 percent of industry revenues in the previous three months had come from digital sales. And an October NPD report found that game revenues outside of the "new retail channel" -- including digital sales as well as used and rental revenue from retail releases -- made up 40 percent of the total industry in the first half of 2010.

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