Electronic Arts (EA) plans to emulate Netflix and Spotify by shifting from one-off sales to subscriptions and a cloud platform in the next three-to-five years. The maker of FIFA, Madden and The Sims suggests the move will benefit both gamers and itself, but it could also lead to gamers being milked for cash and offered little in return.
EA’s decision is understandable given the success of media platforms and the strong growth in ‘live services’ – selling extra content such as expansions and digital packs containing random items – it has experienced. Finance chief Blake Jorgensen described live services as “the bedrock of our business” after they grew 30% to $2.2 billion last financial year, or about 40% of EA’s total turnover. The transition has already made EA’s business more predictable and smoothed its cash generation, compared with its previous reliance on upfront purchases of games which meant it earned the bulk of its revenue in the weeks after releasing titles and around Christmas.
During this week’s earnings call, EA bosses likened the subscriptions model to ‘software as a service’ (SaaS), when software companies charge monthly fees for fixes, updates and customer support rather than selling their software outright. They predict subscriptions, along with ‘cloud gaming’ or playing via an online platform rather than downloading to a PC or console, “to fundamentally disrupt the way people access and enjoy games like nothing before, much in the same way as it's disrupted enjoyment and engagement in movies and music”. In other words, gamers will be able to play FIFA and Madden on their smart TVs, consoles, smartphones or tablets as convenient.
EA’s bosses hope a subscription model will boost engagement and in-game spending and further improve retention, which has already risen from below 50% between versions of FIFA and Madden to north of 70% since EA introduced Ultimate Team, a ‘live’ mode where gamers build their dream teams by playing others online, purchasing or winning packs and participating in holiday events. In fact, EA’s decision to release a World Cup mode this summer as a free update to FIFA 18 rather than a separate game, thus avoiding a split in the player base, is an example of the model in action. Recognising the need for a rich selection of content to attract and maintain a large subscriber base, EA has also recruited independent studios and enlisted third-party developers, publishers and content-creators.
EA’s shift to a subscription model and cloud platform could allow gamers to play a variety of games each month at a fraction of the cost of buying them all, enjoy regular content releases and automatically update their games to the latest version, spread their costs over several months, and access them on whatever device they have to hand. However, EA could be tempted to cut back on content once gamers are hooked and squeeze more in-game purchases out of players in order to lower its costs and boost its profits. Players should complain, cut back on lootboxes and cancel their accounts if EA doesn’t deliver on its promises.