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EA CFO:Digital margins over x2 physical; DD is 20% on PS4\XB1,expects 40% in 4 years

Saty

Member
Sep 4, 2009
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EA's CFO, Blake Jorgensen, had a chat at yesterday's Global Technology Conference. You can hear it here: https://cc.talkpoint.com/ubsx001/111615a_ae/?entity=40_UQQX1EY

Aside from the news about EA making an open-world action game, the highlights are:
- PS4\XB1 user-base on track to 50-51M at the end of 2015.
- Attach-rate is about the same as the previous gen. However, extra content sales have gone up significantly.
- Digital copy margins are over x2 the margins of a physical copy.
- Last quarter for EA full-game downloads represented 20% of all XB1\PS4 copies. Expect the share to grow to 40% over the next 3-4 years.
 

Y2Kev

TLG Fan Caretaker Est. 2009
Jul 6, 2005
91,409
3
0
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20% right from a horse's mouth. But wow at the margin expansion. Extra content sales show how publishers are really monetizing core users. Pretty smart and maybe cynical. I'm not sure.
 

leatherhat

Member
Feb 7, 2011
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20 percent digital? That's much higher than I would have thought, very good sign for software sales.
 
Apr 12, 2013
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If you could "resell" or "trade in" digital sales would probably reach 40% next year. It's usually the only thing that really holds me back from going 100% digital.
 

nubbe

Member
Jun 7, 2004
17,746
3
0
well, duh
DD has no overhead compared to all the things that must be executed to get a physical copy out the door

Good to know prices are 2x too high
 

Kosma

Banned
Feb 22, 2007
10,841
0
1,085
Margin makes sense since the 15 bucks for the shop is now 15 bucks for the pub.

If you could "resell" or "trade in" digital sales would probably reach 40% next year. It's usually the only thing that really holds me back from going 100% digital.

Yeah if I knew I could "sell" my copy after a month with 10 bucks loss I'd be game.
 

Dirtyshubb

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Aug 20, 2008
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Its times like this that show how full of shit publishers are, when asked why digital games are priced so high they come out with excuses like - physical stock levels, regional prices etc. But it's clear they just want a bigger margin.

EA are especially bad as they are one of the worse on the UK psn, hell the ultimate Battlefront edition is £105!!!
 

Quonny

Member
Aug 15, 2015
10,412
127
490
If you'd sell your $60 games for $50 (hell, even $54), and throw in a stupid theme or something else that costs you next to nothing I bet that number would be a lot higher.
 

Xater

Member
Jul 28, 2007
48,001
4
0
How about you give your savings forward to the consumer so the digital prices are not shit? Oh you won't? Of course not!
 
Nov 23, 2011
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With high margins like this, they really should make digital copies just a little bit cheaper than the retail RRP. Sony has done this in EU regions for a few years now, all Playstation exclusives are €60 on PSN and €70 RRP on retail (although retailers tend to mark them down to €55-60 anyway)
 

Coxy100

Banned
Sep 28, 2015
2,604
0
0
UK
If you could "resell" or "trade in" digital sales would probably reach 40% next year. It's usually the only thing that really holds me back from going 100% digital.

Not for me - nothing beats seeing that lovely game box in my cupboard. I'm a collector, and always will be.
 

Xater

Member
Jul 28, 2007
48,001
4
0
With high margins like this, they really should make digital copies just a little bit cheaper than the retail RRP. Sony has done this in EU regions for a few years now, all Playstation exclusives are €60 on PSN and €70 RRP on retail (although retailers tend to mark them down to €55-60 anyway)

Digital copies for 49,99€ would be a super fair price. Not gonna happen though because profits.
 

kiguel182

Member
Sep 9, 2013
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That percentage could be bigger if they had better digital printing for sure.

I wish I could buy everything digital but it's hard to justify at 70 euros a game and even worse when physical games are cheaper.
 

nico1982

Member
Jan 17, 2007
682
0
0
Last quarter for EA full-game downloads represented 20% of all XB1\PS4 copies. Expect the share to grow to 40% over the next 3-4 years.
Next gen confirmed to be disc based.
 

nib95

Banned
Feb 26, 2007
34,612
2
0
Double the margins just further illustrates how much of a rip off digital is. Higher margins, no resale or trade in, no physical art of case etc. The least they could do is price digital copies competitively, or on par with retail, instead they're generally always higher priced, sometimes by appreciable margins.
 

Diablohead

Member
Jun 4, 2006
43,511
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0
Unless europe suddenly get matched digital prices to retail store prices I can't see 40% being the norm.

ALso amazing that EA of all people say this because they charge £15 extra for their digital goods in the UK.
 

Zaph

Member
Jun 19, 2010
15,995
1
710
EA said:
Digital margins over x2 physical

Keep using those Authorised Retailers guys, no need to motivate publishers into pricing competitively. I'm sure those £50 digital copies will normalise with retail eventually...
 

Xando

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May 2, 2014
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Aside from the news about EA making an open-world action game, the highlights are:
- PS4\XB1 user-base on track to 50-51M at the end of 2015.

This seems a little low with sony already being at 27-27.5 million PS4s in the last quarter (29 million shipped) and the holiday season coming now, doesn't it?

How about you give your savings forward to the consumer so the digital prices are not shit? Oh you won't? Of course not!
Why would they when people are willing to buy games for 10-20€ more than retail
40% is extremly optimistic when they scam europeans for so much money compared to retail
 
May 4, 2014
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I wonder if extra digital content means traditional DLC or microtransactions. I mean, it's probably both.

But I like traditional DLC when it's good and I've always been one to buy all the story DLC for a game before I play it. I have no qualms with paying extra if it was made extra.

But if microtransactions are becoming a successful business model on consoles, we're in trouble. Because that's not just extra content, that's a design philosophy. It directly impacts the design of the game and I don't think many/any games ever benefit from that.

I remember Dead Space 3's crafting system was beyond insulting. And look at MGSV.
 

Jumeira

Member
Aug 11, 2015
4,028
0
265
So, can we have cheaper digital prices please.

Not sure if thats possible, wouldn't this undermine brick and mortar stores? Feels like its against competitive regulations...but this is my gut feeling, would be nice to find out.
 

jroc74

Phone reception is more important to me than human rights
Jun 1, 2013
9,089
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850
But me and all my friends buy digital, numbers must be wrong


/s



Did they release any numbers for EA access?

Yes they are wrong because I bought alot of digital games over the last 2 years. Me and 9 of my friends.
/s

If that 40% does happen it really will be hard to say what the actual sales are. Unless it starts getting tracked better. Or the mathematicians will need to step up.
 

Kyougar

Member
Jan 14, 2014
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20% right from a horse's mouth. But wow at the margin expansion. Extra content sales show how publishers are really monetizing core users. Pretty smart and maybe cynical. I'm not sure.

But how long does the Core user want something like that? We have a great "Real-Life-Study" where this will all lead to.

Look at the Japanese Otaku Culture. This is a Core spending Group that gets heavily pandered to with Games, Music, Manga and Anime. This group is shrinking because the content providers are doubling down on the pandering and "normal" spenders are driven away or dont want to be associated with the current market.

So if the big Publishers want to milk their customer more (or in PR speak, wants the user to spend more on extra content), they will shrink their customerbase.
 

Brohan

Member
Oct 26, 2013
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400
Digital is even more expensive here...

Yeah over here it's the same..

Mediamarkt always sells new games for a very nice price on the first week after a game releases.

Example: Black Ops 3 was €53 at mediamarkt and a whopping €70 on PSN.
 

Kill3r7

Member
Jun 19, 2014
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Not sure if thats possible, wouldn't this undermine brick and mortar stores? Feels like its against competitive regulations...but this is my gut feeling, would be nice to find out.

Yes it would undermine B&M stores but it is not against any competitive regulations. PC games have been doing this for a while now.
 

LiquidMetal14

hide your water-based mammals
Jan 18, 2007
47,377
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A Political refuge from the Jewnited State
And when do we get discounts for digital now?

Every major console or PC vendor who sells digital needs to parity price. I'm tired of paying 60 for digital and physical being the same price. Especially when you get download codes and can't even use discs to install on some of these games these days.

Digital needs to be $10 cheaper.
 

BokehKing

Banned
Feb 10, 2014
10,842
1
0
Long Island, NY
This seems a little low with sony already being at 27-27.5 million PS4s in the last quarter (29 million shipped) and the holiday season coming now, doesn't it?
Xbox is not exactly taking off outside the US, and Sony could only carry so much on its back

Number seems reasonable
 

Diprosalic

Banned
May 27, 2010
22,994
0
780
This seems a little low with sony already being at 27-27.5 million PS4s in the last quarter (29 million shipped) and the holiday season coming now, doesn't it?

seems about right with XB1 at 13, wouldn't that mean 10 million more for the rest of the year?
which mostly would come from PS4.
 

pa22word

Member
Oct 24, 2010
11,057
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So, can we have cheaper digital prices please.
As soon as you guys stop buying physical games it will happen.

Valve could get away with shoving their middle finger at retailers because when it came to deals because they didn't need them anymore. Right now, console publishers are too attached at the hip to retailers to dare pissing them off by pricing digital versions at less than msrp less their product be pulled from the shelves and loose 80% of their revenue stream.

It's the main reason digital deluxe editions happen instead of mark offs like you see in the pc space. Once the revenue tips into the 50s you'll start to see better deals on digital console games. Until then you're all at the mercy of GameStop and co.

And please don't bring up the tired competition argument. As long as there's two console manufacturers there will remain competitive prices. Not to the extent you see on pc of course, but it's not going to be the $100 game hollocaust like some manual sniffers like to make it out.

Those of you that don't like it or "won't support it" will be in for a rough ride though, as it is the future of games production 100%.
 

BokehKing

Banned
Feb 10, 2014
10,842
1
0
Long Island, NY
And when do we get discounts for digital now?

Every major console or PC vendor who sells digital needs to parity price. I'm tired of paying 60 for digital and physical being the same price. Especially when you get download codes and can't even use discs to install on some of these games these days.

Digital needs to be $10 cheaper.
Why would they when they know they don't have to?

Seriously, from a business perspective, why?
Because it's the "nice thing to do?"
Come on
People will still go to Best Buy and purchase physical games
I'm 100% digital on Xbox and Ps4, I'm apparently in the minority, so why cater to me
 

jroc74

Phone reception is more important to me than human rights
Jun 1, 2013
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20% right from a horse's mouth. But wow at the margin expansion. Extra content sales show how publishers are really monetizing core users. Pretty smart and maybe cynical. I'm not sure.

Its business....and seems like a good move for those that do it. If there ever is a chance any gen there will be contraction it makes even more sense to do it.

EA's CFO, Blake Jorgensen, had a chat at yesterday's Global Technology Conference. You can hear it here: https://cc.talkpoint.com/ubsx001/111615a_ae/?entity=40_UQQX1EY

Aside from the news about EA making an open-world action game, the highlights are:
- PS4\XB1 user-base on track to 50-51M at the end of 2015.
- Attach-rate is about the same as the previous gen. However, extra content sales have gone up significantly.
- Digital copy margins are over x2 the margins of a physical copy.
- Last quarter for EA full-game downloads represented 20% of all XB1\PS4 copies. Expect the share to grow to 40% over the next 3-4 years.

I think this is why its hard now to look at hardware sales and talk about contraction. Ppl have mentioned it over the last few months that revenue is up despite the hardware sales not looking likely to match last gen for home consoles.

And I'm curios about this vs last gen:

Aside from the news about EA making an open-world action game, the highlights are:
- PS4\XB1 user-base on track to 50-51M at the end of 2015.
 

jelly

Member
Oct 14, 2013
16,619
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0
Not sure if thats possible, wouldn't this undermine brick and mortar stores? Feels like its against competitive regulations...but this is my gut feeling, would be nice to find out.

I've always wondered, does it really matter. In the UK, retail is basically supermarkets, Game 'lol' and online retailers like Amazon who are already below digital pricing. I don't think it would change things whatsoever if digital pricing was cheaper. It's basically an excuse to rip off consumers. If retail died tomorrow, digital prices would still be extortionate. The only reason they aren't cheaper is because Sony and MS are the store and do not sell keys to 3rd party retail like Steam, Origin, Uplay etc. much beyond a few code cards for some content so there is no competitive digital market for consoles so high prices stay that way.
 

mangochutney

Member
May 20, 2013
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Unless europe suddenly get matched digital prices to retail store prices I can't see 40% being the norm.

ALso amazing that EA of all people say this because they charge £15 extra for their digital goods in the UK.
New digital only console in 4 years time. Believe.
 

Cleve

Member
May 2, 2014
3,779
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0
If you could "resell" or "trade in" digital sales would probably reach 40% next year. It's usually the only thing that really holds me back from going 100% digital.

If there was a secondary market for digital games that would impact sales to publisher, unless they were getting a cut.

-edit- What I want is a lower price or a good discount/loyalty program to bring digital console prices in line with what I would pay for a new game at Best Buy. I'm willing to give up resale for convenience at that point.
 

Dirtyshubb

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Aug 20, 2008
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The argument that pricing digital games at retail prices would cause the games shops to revolt against the company seems really silly these days

Unless your Nintendo, I really can't see any of the games shops reducing the already reduced sales (from digital Re pricing) by not stocking or focusing on one of the only 2 consoles you sell.

They aren't going to solve their issue or reduced profits by reducing them even more. Yeah they could focus on the other console instead but if the new digital sales are having such a huge effect that it's hurting their business surely the other console will have adapted their own prices also since they prices are set by the publisher and not console owner?