EA to release paid DLC before boxed games

Electronic Arts intends to release premium downloadable content for games prior to the release of boxed titles in an effort to gauge consumer reaction and the market viability of new games.

That's according to Wedbush Morgan's Michael Pachter, who was told the details of a new online initiative by Visceral boss Nick Earl last week.

"Mr. Earl revealed a strategy to release premium downloadable content (PDLC) as a product for sale prior to the release of a packaged product," Pachter wrote in a note to investors.

"The PDLC would be sold for $10 or $15 through Xbox Live and PlayStation Network, and would essentially be a very long game demo, along the lines of 2009’s Battlefield 1943. A full-blown packaged game would follow shortly after the release of the PDLC, bearing a full retail price.

"Mr. Earl believes that the release of the PDLC first limits the risk of completing and marketing the full packaged version, and serves as a low-cost marketing tool," he added.

Speaking to GamesIndustry.biz, Pachter added the PDLC would essentially act as a shorter game, although he was unclear on whether the PDLC would then be included in the High Street product.

"Think about Battlefield 1943 as the prototype, so a full (but short) game experience for a reasonable price. At the same time, an expanded version of the game will be under development for release as a packaged product," he said.

"I’m not sure if the packaged product will include the PDLC or not, so can’t answer that question. However, the idea is that if the PDLC gets favourable reviews, it will build word of mouth for the boxed product. If the PDLC has issues, they can tweak the packaged product to address those issues, improving the final product before release.

"It actually sounds like a great strategy," he said. "Again, I don’t know if they intend to include the PDLC in the packaged product, but my guess is that they won’t. I think that the PDLC will be a 'prequel' to the full game, so that they can keep selling it after release of the full game."

Electronic Arts hopes that its digital business will account for a third of all revenues at the publisher within two years, as CEO John Riccitiello continues efforts to turn around the company best known for market-leading franchises such as FIFA and Madden.

The publisher is also expecting to save over $100 million on its previously announced staff reductions, as well as moving work from high cost locations such as California to cheaper regions including Montreal and China.

Digital initiatives by the company include a move to social gaming through the PlayFish acquisition, the release of titles such as Visceral's The Ripper for XBLA and PSN, and preparing premium downloadable content for games at the release of a boxed product – the project $10 initiative already under way with titles such as Mass Effect 2 and Battlefield: Bad Company 2.

EA spent a day last week wooing analyst firm Wedbush Morgan, which has been cautioning investors on the company for years, but has now admitted that it was wrong to not see significant changes in the business.

Wedbush said that EA has managed to reduce console development costs by around 20 per cent by reusing its Visceral and Frostbite engines, and the company's recent purchase of social games company PlayFish was with the intention of entering and leading the space immediately, rather than building a social business over a number of years.

"We’ve been wrong about this stock for almost five years," wrote Pachter. "Either we’re stupid, stubborn, or unlucky, but we’ve been wrong. The definition of insanity is doing the same thing over and over again, each time hoping for a different result.

"This time, while we are again hoping for a different result, we see evidence that the company is not doing the same things over and over again: lower headcount, fewer facilities, fewer games, a greater use of outsourcing, innovative combinations of digital and packaged goods content, a better greenlight process and a growing digital business. This time, we think that EA is on the right path," he concluded.