People still buy CDs, don’t they?
Though all the excitement’s in the digital world, Electronic Arts still thinks physical releases will be part of the business for a long while yet. After all, it said in an investor question and answer session, people still buy music CDs, even though downloads have been the norm in the music business for some time. Besides, when people buy a game, they want to play it right away, and download times just get in the way of the fun.
OK, picture this: you’ve bought your next generation console, which can download full AAA games. But the problem is bandwidth; even though things are getting faster all the time, files are getting bigger all the time too, negating any advantage from swifter download speeds. People want to play as soon as they buy, says EA, and waiting’s no fun. Besides, there’s the used game issue to consider. “People think about the price of a game based on the fact that they can still return that game and they need a physical disk to do that,” says EA’s CFO Blake Jorgensen.
But there’s great things coming, says Jorgensen. Profit margins will go up dramatically as soon as publishers can start doing without physical distribution costs. “And what’s more exciting though is really the extension of life of the game,” says he, where a game that retails for $40 or $50 has its life extended for months, even years, while the profit goes up and up with each digital DLC purchased.
You have to wonder about statements like this. Yes, people still buy CDs, but they also buy vinyl records, and nobody’s pretending that phonographs are the way most consumers get their music content. Digital’s coming, but as Microsoft found out to its cost, it’s easy to get digital policies wrong. Perhaps it’s not so surprising that EA’s willing to adopt a laissez-faire attitude when it considers the potential lifespan of the physical market. Better to stick with physical than opt for an always online future, right?
Source: Seeking Alpha