A senior figure at gaming giant Electronic Arts has said that more and more of the firm’s revenue is coming from mobile and online gaming.
In an interview with Bloomberg, Peter Moore, EA’s chief operating officer said: “There will come a point, whether it is two or three years from now, when we say ‘We are doing more in digital media now than we are in physical media’, and it’s clearly … not far away”.
In the last twelve months the games company has seen a rise in the money it makes from digital sales of games, with revenue now standing at $1.3bn. However, for the second quarter of 2012 EA made an overall loss of $130m, with a decline in income from its subscription-based game Star Wars: The Old Republic being partly blamed for the loss.
In a move that aims to further capitalise on the growth in digital sales of games, EA is working closely with Microsoft ahead of the launch of the software giant’s new mobile operating system, Windows Phone 8. Microsoft has recently announced that the upcoming software will enable in-app purchases, something that hasn’t been seen in previous versions of the platform and will not be introduced with the upcoming Windows Phone 7.8 upgrade for existing handsets.
In-app purchasing is something that has been standard on other mobile platforms for several years, with Apple having introduced it as far back as 2009. Using in-app purchases, a method known as ‘freemium’ sees games being supplied for free whilst revenue is generated by charging users for various elements as they progress, such as upgrades to a character’s abilities or access to extra levels.
By forming links with Microsoft and its mobile platform, EA is moving away from the traditional method of delivering games to customers, with a CD being sold in a box. Speaking to tech news site AllThingsD in June, Nick Earl, head of EA’s Mobile and Social World Studios, said: “We started to see that freemium was coming in, and it took us a long time to move over. In all candor, we are behind.
“There will be a few one-time download games in the future, but they are such the exception, and the norm will be freemium games”.
This shift from making a one-time purchase to smaller, incremental payments through a game could lead to other effects on the gaming industry, such as forcing developers to increase the quality of their products.
Robert Nashak, executive vice president of digital entertainment for the BBC’s commercial services and a former EA employee, told gaming industry website MCVUK last month: “It turns out free is the price point people want to pay for games.
“What’s beautiful about it is the freemium model really favours quality games because everyone gets to try before they buy and I think it’s going to lead overall to better quality, because if you’re not hooking people in you can’t monetise.
“I think freemium changes the landscape and raises the quality bar in a good way”.
While it would be spurious to suggest that Peter Moore’s comments about EA’s future signal anything like the beginning of the end for consoles it is interesting to see that the rapid developments in mobile gaming have led to things like in app purchases, previously a niche service limited to smartphones, becoming a more common feature of the industry as a whole.
Many console games are now shifting to a subscription-based model, with EA’s aforementioned Star Wars: The Old Republic soon to see the introduction of a new service that allows user to play for free up to level fifty, before paying for the rest of the game.
In-app purchases do have their pitfalls however and some consumers have expressed concerns about the way in which the model can result in large bills. Apple is currently facing legal action in the US from a group which claims that in-app purchases make it too easy for children to spend money without approval from their parents, although the tech giant has pointed out that the option to make payments can be turned off on the iOS devices.
However, with several of the gaming industry’s leading figures suggesting that a move towards a freemium model is already happening, it seems inevitable that in-app purchases are set to become more and more common in the future.