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FIFA DLC Sales Responsible For “Above And Beyond” Revenue For EA

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At the Deutsche Bank Securities Inc. Technology Conference in San Francisco yesterday, EA’s Chief Financial Officer Eric Brown asserted that despite the controversy surrounding their $10 online system charge for secondhand games, digital content is vital to the future success of EA.

Brown claims that used games in America represent around 20 per cent of overall business and despite recent NPD reports of an ongoing decline in game sales, when you add back that 20 per cent you get a very different look on packaged goods. EA’s $10 Online Pass requires second-hand users to pay an additional cost for access to certain EA titles online, and although it created a great deal discussion and complaints from fans online when it was announced, Brown said there has been no negative response from users thus far.

“There hasn’t been any significant push-back from the consumer, because I think people realize that if you’re buying a physical disc and it requires an attachment to someone else’s network and servers, people know bandwidth isn’t free.”

“So the fact that we’re diffusing or covering online costs is not viewed to be unreasonable. We’re well into this program and there is no consumer backlash.”

Recent DLC for FIFA has been an enormous moneymaker for EA.

“FIFA 10 generated just over $30m in gross DLC sales – so that’d be above and beyond the revenue that we made just selling the physical disc.” (Clarification – that’s $30 mil including DLC, not $30 mil above what the disc sales made)

“Now that still represents a single digit uptake on revenue, but if we can take it from single digit to 20 per cent or so of the full franchise in the mid-term, that revenue on the margin is very profitable to us.” “70 or 80 per cent fully loaded net margin digital revenue stream, and so if we bring that well north of $30 million to 60/70 let’s say, a lot of that’s going to drop to the bottom line.”

Brown goes on to address that despite a decline in units sold, online functionality for triple-A titles are leading to enormous revenues.

“Instead of selling one product with a unified $60 price point we see people buying a $60 disc and then bolting on hundreds of dollars of DLC. We’re happy to have $500 worth of extra content to sell.”

Hopefully this doesn’t come at the expense and quality of the content in the original title, as publishers discover that it’s beneficial to leave or take parts out of games knowing they can bring them back later on and make a profit from DLC (Mafia II, Dragon Age???) Brown concluded his statements by saying that retailers – specifically GameStop in the US – will play instrumental roles in assisting publishers in securing further income from DLC and that he felt the PlayStation 3 was becoming a more important platform for publishers than the Xbox 360.

“They’re actually up about 34 per cent calendar year to date, so PS3 is much stronger than the 360 which is in turn stronger than the Wii.”

It appears that EA along with most other publishers are discovering the longevity and most importantly, the revenue DLC can add to their titles. As DLC becomes more of an integral part of the planning and design process of video games, it will be exciting to see what developers and publishers can create with games that are uniquely created around DLC concepts.

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