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EA CFO Points To Digital Market As Growth Driver

Electronic Arts CFO Scott Brown said the quickly growing digital market is set to become a larger part of the company's overall portfolio, which is currently dominated by sales of new retail products.
Electronic Arts CFO Scott Brown announced that the quickly growing digital market is set to become a larger part of the company's overall portfolio, which is currently dominated by sales of new retail products. "One of our prime objectives is to grow the digital segment of our business," Brown said today during a presentation at the Credit Suisse 2010 Annual Technology Conference, which Gamasutra listened in on. Brown said he expects the company's digital revenues -- which include downloadable content, digital game purchases, in-game item sales and revenue from portals like pogo.com -- to grow more than 30 percent annually between the 2009 and 2011 fiscal years, with further 20 percent annual growth expected long term. For EA, that growth is largely being driven by downloadable content, which Brown said has grown an estimated 55 percent annually since fiscal 2009. The vast majority of that growth has come from EA's internal franchises rather than acquisitions like Playfish, Brown said. For example, the $31 million in digital revenues for 2009's FIFA 10 were more than double those for 2008's FIFA 09, a phenomenon Brown attributes largely to the expanded use of the franchise's "Ultimate Team" feature, which lets players purchase digital cards to increase player abilities. "We've seen some very interesting price inelastic behavior [with Ultimate Team]," Brown said. "We've seen people paying $500, $800, $1,000 to get the best team possible... and that's what's driven overall digital revenues." In the retail realm, Brown said revenues from software on HD systems like the Xbox 360, PlayStation 3 and PC are expected to grow 17 percent for the 2010 calendar year to $13.3 billion. EA's new retail sales on non-HD systems like the Wii, DS and PSP, on the other hand, are expected to fall 23 percent to $10.6 billion for the same period. "A lot of us see the NPD numbers, but... it's really important to dig down one or two more layers to see what's happening in high definition platforms versus standard definition platforms," Brown said. Brown also said he thought Sony and Microsoft's new motion controllers Move and Kinect were "off to a great start" and "reaffirm the thesis that the high-definition consoles will see an extended life cycle."

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