In A Strange Turn Of Affairs, EA Decides to Recognize Reality Of Game Pricing

from the not-what-you-said-before dept

This is a strange one. A few months back, we highlighted some comments from EA in which it postulated that deeply discounted games were bad for business. This comment from the head of EA's Origin digital distribution service was in response to Steam's sales that it holds regularly. In this comment, DeMartini claimed that such sales devalue the games and trains people to only buy cheap games. Perhaps this comment was a prophetic statement of sorts, because EA is now recognizing the reality of cheap games.

In a recent interview with the folks at MCV, another EA exec, Nick Earl, stated that people are making the switch to free games and there is no stopping it.

The future is not about one-time payments, the future is about freemium. A decent number of people convert to paying and they may not pay a lot but most of them actually pay more than you’d think.

I don’t know if freemium gets to console but I do know that humans like free stuff. I also know humans who will pay for something if they’ve tried it out and they like it.

I’ve wondered if freemium expands beyond the tablet, Facebook and smartphones, and out into consoles? I don’t think it’s impossible for that to happen.

It is actually quite refreshing to see someone in a large game studio willing to accept this fact, something that his counter parts in publishing are incapable of doing. But this is the reality. We have seen it happen in rapid fashion, particularly in the mobile space. Because of the nature of the market, game prices quickly dropped to $1 and then to freemium or free to play. These options allow for potential customers to limit the risk of acquiring a new game. This is also forcing the games industry as a whole to reconsider how it prices its software, which some still seem unwilling to do.

Another interesting thing about this comment is that Nick realizes that it is only a matter of time before free games come to consoles. This is something else we have observed with the recent announcement of the Ouya console. One of the Ouya's biggest selling points is that all games available for it must offer some form of free option, something not currently available on any current console. This idea and the low cost of the console itself led to a huge positive reaction from the gaming community, shooting the Ouya into record breaking pledges on the first day. So yes, people are shifting to free games.

As the market for games shift toward cheap and free options, it will be interesting to see what the current console leaders do in response. Will they all follow Nintendo's lead and continue on the course of “premium” prices for console games, or will they recognize that there are more ways to make money from gaming than retail sales? If they do continue down the premium path, they are quite liable to be left far behind when the market shifts. Something that EA seems to be preparing itself for.

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Comments on “In A Strange Turn Of Affairs, EA Decides to Recognize Reality Of Game Pricing”

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53 Comments
Berenerd (profile) says:

Re: Re: Re:

WoT (World of Tanks) Money gets you gold, gold gets you magical oneshot ammo. You just need to be close to hitting the target, the target can be 5 tiers above you and you can one shot them. You can even shoot through buildings. Luckily most of the people who play hate golden ammo and feel its a waste of money as it costs a good deal. A full reload of ammo for my SPG would run me $10 and that would be every match. For that same money I can buy better things that do more and adds to my game play and enjoyment than I could with just a few not so free kills.

Reality Check says:

Re: Re: Re: Re:

Ummmm. Berenerd;

Check the stats on the ‘magical oneshot ammo’.

Tanks gold ammo gives you slightly more penetration.
Artillery gold ammo gives you slightly more explosive (splash) damage.

It simply makes it more forgiving if you don’t target accurately, or if the random factor works against you.

Yes, Gold ammo can be expensive, but it just buys you a little forgiveness… There is no ‘magical oneshot ammo’. You’ve been deceived.

I usually load a few rounds of gold in all my tanks.. I switch to it when I’m up against a higher tier target or there is a lot riding on the next few shots. It’s strategic, but not magical.

That is one of the things I like about WoT. You can support the developers and get a slight edge, but it’s slight. Someone who doesn’t develop skills and strategies, but buys a premium tank and ammo, will invariably lose to someone who develops skills and strategies (premium or not).

Anonymous Coward says:

like many others, i am waiting for the OUYA project to come to fruition. if it is as successful as the intention, and i have no reason to doubt that it will be, there will be a lot of arseholes twitching at SONY, MICROSOFT and NINTENDO over games consoles and a lot more twitching at the games makers. from what i understand atm the only ones saying this project will fail are the paid trolls from the ‘big three’. i cant wait to see them have to eat their words. like the movie and music industries, things are changing and customer wise, for the better. unless they want to get left behind, there needs to be a lot of adapting done. follow the other entertainment industries models and failure is a definite!

ECA (profile) says:

Interesting

EA, acknowledges something??REALLY.

There is something to this, but EA wont get the WHOLE idea/concept for awhile.

There are TONS of free games, RPG style games running out there.

The 1 concept that is starting and happening..
FREE TO PLAY with options to ADD items that make CERTAIN things easier.
like getting Travel/horse/car/something to get from place to place..
PETS, that can be for SHOW or to help in battle..

A few are looking into TRADES..a TRUE market based system..
You sell to the system and the MORE sold of certain items FORCES prices in trading DOWN. you cant JUST make 1 item.

BUT, EA wont look around and figure this out for years.
EA likes to MESS up games. esp simulations. Go look at battlefield heroes..ITS FREE. but over time they started FORCING you to NEED to buy items to be able to fight.

Keii (profile) says:

I’ll just cut and paste a recent conversation I had with a friend of mine.

Keii: I’m sitting here thinking about the devaluating comment.
Keii: It’s simple math
Keii: Mow much money did Warner Brothers make from Arkham City in the Steam sale?
Keii: Because just about everybody I know bought it.
Friend: Approx five bajillion
Keii: Now how much money would they have made from not having the Steam sale over the same amount of time?
Friend: $100
Keii: Genius.
Keii: Maths is hard, EA.

Bob V (profile) says:

Re: Re: Re:

I’m broke most of the time.

I play a f2p game that I enjoy.

I get some disposable income.

I throw some cash the games way to purchase some doodad or other that I have been wanting since the last time I had disposable income.

The cycle repeats. I didnt just throw $40-60 at the game one time, I throw $5-10 a month for years. It’s not the big numbers you can point to and say we did good as a publisher but its a steady stream of revenue that gets repeated over and over by many more people than you would have had just selling the game one time (twice if you make gamestop pay you for resale).

Gwiz (profile) says:

Re: Re:

Everything needs to be free. I want a sandwich right now. Go make me a sandwich and bring it to me right now.

Not a “digital sandwich” or “a copy”. A real sandwich. I’ve decided that is what I deserve.

Oh, and did I mention right now?

Get to work.

Ok. I’ve got your Freemium Sandwich all ready for you.

I know it’s only two pieces of bread and mayonnaise right now, but you can visit my exclusive store and purchase a full selection of delectable meats and vegetables as add-ons.

Gimme gimme never gets (it). says:

Re: Re:

I’d be more than happy to make a sandwich for you. The only problem is the “right now” part, at least until matter/energy conversion becomes a reality. Hell I’d even throw in a drink if you want. So what’s the point your trying to make again? Something having to do with free being a made up term that doesn’t actually exist in real life or some such, right?

Mitch Featherston (profile) says:

Yes, the world is changing...

EA finally states something that’s not stupid about the future of SOME games. Freemium is a model, not the only model, just one model. There’s nothing wrong with larger companies like EA trying new ways to generate revenue, so I hope they pursue this type of system. Who knows, maybe the next “BIG” franchise for EA is a Freemium-based game. It could happen.

Mesonoxian Eve (profile) says:

“I don?t think it?s impossible for that to happen.”
I do, Nick Earl, because I’m one of those people you’re trying to get to buy EA content. However, the reputation EA has garnered over the past ten years has left me with a very sour taste in my mouth.

EA couldn’t give its games away to me. From the NFL monopolization, to the activation codes on used games, EA has pushed itself from me faster than any other gaming company out there.

I won’t even buy them used from GameStop, no matter how many CoD titles sell.

If EA wants my money, it had best get busy with many apologies and business models that puts gamers first, profits second.

The former has always guaranteed the latter.

Perhaps make it a motto, rather than the oft-used “EArth”, which should be taken as a problem, not an inside joke for EA.

Josef Anvil (profile) says:

Simple case study

Facebook is an amazing testbed for this type of research. Personally I am aware of a game called Superhero City which is free to play, but charges for buffs.

After playing the game for a while, I was more than shocked to find there were multiple players that had spent in excess of $5000 on the game. There are even more players that spend $1000 per year or more and ever more that spend several hundred dollars per year on a freemium model.

Besides players spending money on the game itself there are many advertisers that subsidize the buffs that players acquire. So if a play buys a product or service from those advertisers they receive game bonuses.

On a related note, Marvel tried to compete with Superhero City, but was crushed because their copy attempt resembled Mafia Wars and really wasn’t all that interesting. Interestingly they went back to the drawing board and COPIED some of the best elements of their competitor and then INNOVATED new features for their game and amazingly were able to regain many of their competitor’s fans.

Note how that worked? They didn’t sue a successful business that was making money off their market. They learned from their mistake and innovated back into their market.

PaulT (profile) says:

This isn’t really surprising given that EA have had some success in freemium models via Facebook, etc. I’d actually suggest that this isn’t a change in stance, just that the previous comments being criticised were solely made with the retail market in mind, while the above are made by someone with a wider view of the industry that includes mobile & social games.

Whatever their reputation, they can’t be completely blind to the fact that this is where at least part of the industry is headed. The question is whether they approach it in the right way, or if they squeeze the potential away from themselves by being greedy.

Anonymous Coward says:

“Another interesting thing about this comment is that Nick realizes that it is only a matter of time before free games come to consoles.”

Not even a matter of time any more, it’s already happening. Guardian Hearts was just released on the Vita as free-to-play. Ok, so the game is actually kinda crap but still, it’s pretty much the first foray I’ve seen into free-to-play on a console (not including PSO2 which while officially announced for Vita won’t be available until 2013).

Anonymous Coward says:

Well, how refreshing to find out that EA now feels like they have to do something the customer wants rather than all these stupid ideas it usually comes up with that are always a burden on those that buy their games. So how is Ubisoft fairing, since they run hand in hand about the same way.

I long, long, long, ago gave up in EA and have refused to buy any of their products mainly because of their obnoxious DRM and their stance on used games. EA in particular, seems to make these franchise games that last 2 or 3 hours and thats the end of it. I don’t see that as value for my money, when there are other games that aren’t as restrictive with high replay value, that will last you years.

Cheating the customer is never a good long term business strategy. Something the other businesses in entertainment haven’t seemed to learn yet.

Which is why trolls come visit here.

mikey4001 (profile) says:

It's EA...

Since we’re talking about EA, I can only assume that they will find a way to make it suck horribly. I can see it now:

Battlefield 4: free to play, but:
$0.10 per bullet
$1.00 per gallon of gas for a jeep/tank/plane,etc.
$2.00 per grenade
$3.00 per health pack
$5.00 per body armor upgrade (destructible)
$50.00/month for Premium account = all prices cut in half, and cut to the front of the queue.

Anonymous Coward says:

What is interesting here is that this sort of crash lands into all of the various database hacks and card releases that he weenies from Anonymous like to do. They work hard to shake the public’s confidence in the system. As a result, EA may find themselves moving into a space where customers are actually already leaving, because the risk of the online connection / always on / need your data / whats your credit card number universe.

It should also be said that usually when the big players find the “cool” market, that market usually dies. It’s why smart people know Facebook is doomed, because the commodity companies have set up shop on there. Think MySpace, and you will understand.

Anonymous Coward says:

Sigh.

It’s funny how these companies always seem to think about maximizing profits. Their first questions are always “What’s the best payment model for us? What’s the best way to reduce piracy? What budget should we give that game’s development?”

The developers of Terraria didn’t ask themselves how to squish every last penny out of our pockets. They made a great game and became millionaires almost over night. Then they still kept updating their game A LOT and for free.

Fast forward to today. I’m boycotting EA games, I tell people to do the same and explain why, and most do. On the other hand I’ll buy games from the Terraria guys again, I’ll have a look at every game they release and if I’m not sure whether one of their games will suit me, I’m more likely to give them the benefit of the doubt and buy it anyway.

ECA (profile) says:

Another point to make

For those games that have become POPULAR and F2P..

There is a REQUIREMENT..
Keep ADDING to it..
KEEP building it..

There are players that will RUN threw the game on any new content and end up with nothing to do..

There are those that LOVE to wonder around and DO NOTHING..

There are those that will buy EVERY PET..
There are those that will only buy a FOR SALE PET

And for all those games that have STUPID requirements..
SHADER 2-3-4 ARE NOT REQUIRED to make a GOOD GAME and only restricts those STILL playing with AGP cards. The world DONT need to be SUPER rendered.

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