Games industry needs new business model, says Riccitiello

The games industry needs to reevaluate its current business model according to EA CEO John Riccitiello.

Speaking to a Berkeley Haas School of Business gathering, as reported in a Fortune blog, the head of EA predicted that the current model will become obsolete during the next decade.

"In the next five years, we're all going to have to deal with this," he said. "In China, they're giving games away for free.

"People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt."

Riccitiello said he expected EA to experiment with different pricing models as publishers make the transition to online distribution.

He compared the industry's resistance to change with the 'big three' television networks, whose share of the market declined from 90 per cent thirty years ago to less than half today.

"They were extremely arrogant. They viewed the rise of cable as being insignificant."

Riccitiello took issue with the media's characterisation of videogames as more violent than movies and television, saying that the game industry is exceptionally well-controlled. "The desire by the media to censor games amazes me," he said.

Finally, Riccitiello suggested that companies need to admit their mistakes and put their trust in visionary people, referring to Will Wright (The Sims, Spore) and Alex Ward (Burnout Paradise) as two innovators that EA will be relying upon.