EA: Digital revenues to overtake physical in two years

In a keynote conversation with Entertainment Software Association boss Mike Gallagher at the Digital Entertainment World conference, Electronic Arts COO Peter Moore talked about industry lessons learned as the business transitions more to digital games.

For now, games remain a hybrid of physical and digital, and the quick sales of the new consoles are enabling the industry to coalesce around two great platforms that offer a tremendous competitive environment, which ultimately benefits the market. While he believes the console sector's in great shape, Moore does see mobile gaming thriving, and digital revenues should surpass that of physical game sales in just two years, he said.

Looking back at the music industry's transition to digital (which it still hasn't recovered from), Moore said that the games industry must embrace "creative destruction" - there's nothing an industry can do to stop a shift in consumer tastes and habits. The most important thing for EA - and much of the industry is headed this way with the digital transition - is that games are becoming live operations. That means they require a massive infrastructure with customer service and global billing. Moore noted that it's a completely different industry now, with a global network running live ops, and gamers deserve their games to be always up and available, and it's EA's job to provide this access. Moore acknowledged that EA is still learning a lot about what that takes.

The online environment has been incredibly valuable to EA in building a direct customer relationship. Moore said that EA's customers used to be the retailers, but now they're the gamers. In fact, EA has tripled its customer facing support staff resources in the last five years. It's changing how the publisher interacts with, and markets to, gamers. He eschews "marketing" and prefers "engaging". Social media has become crucial to success, and Moore noted that on Twitter a gamer will get a response from EA within 30 minutes to resolve a problem.

On the marketing end, Moore said that EA's TV spend is down 20 percent while the company has actually doubled its digital spend and engagement. Social media and community management are changing the rules. Don't spend tens of millions on TV to see if it lifts sales, Moore said; instead game companies can more effectively use digital channels and focus on performance-based marketing.

"TV ads today are chum in the water. It attracts customers, then reel them in with digital media so you can engage instead of pushing a message out," he remarked.

Thanks to Mark Friedler for reporting on this from Los Angeles