Wed 31 Oct 2007
EA CEO Predicts Demise of $60 Retail Game Due to Rise of Free To Play
Posted by Adrian Crook under Uncategorized
From a Fortune article, EA CEO John Riccitiello had this to say about the free to play business model and how it will affect traditional retail games.
Riccitiello says the $31 billion gaming industry will suffer if it doesn’t start to reevaluate its business model. Game executives at Sony (SNE), Microsoft (MSFT) and Activision (ATVI) must answer some tough questions in the coming years, like how long they can expect consumers to pay $59 for a video game. Riccitiello predicts the model will be obsolete in the next decade. [Ed: emphasis mine]
“In the next five years, we’re all going to have to deal with this. In China, they’re giving games away for free,” he says. “People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.” As more publishers transition to making games for online distribution, Riccitiello says he expects EA will experiment with different pricing models.
As a colleague just said to me in an email, “It’s encouraging to see they (EA and big publishers as a whole) recognize the issue”.
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November 8th, 2007 at 3:48 pm
It’s definitely interesting to see what pricing models EA will be coming up with. Hopefully they settle on one that is both good for the consumer and developers/publishers.
November 8th, 2007 at 8:04 pm
>In China, they’re giving games away for free
If you’ve played them you’d know why - design-wise they’re awful, particularly the MMOs: very shallow, simplistic, repetitive gameplay (mostly “action-combat” grinding). There’s no comparison to the 5-star triple A products released in the west.
November 9th, 2007 at 5:10 pm
TheBob:
I definitely agree with you about the games coming out of China. But the industry there is growing, and eventually, quality games will be coming out from there. This is why we need to look at alternative business models. If you remember, western games were crude compared to Japanese games 10-20 years ago. They had Mario, Sonic, and Street Fighter; we had… Mortal Kombat… uhm… what else? I can’t even remember off the top of my head. I see the same trend with Korean games as well. I used to despise the games coming out of Korea, but they’re improving each and every year.