EA: A Market Trend?
Electronic Arts is shaking things up and leading by example. The video game company seems to be evolving a new approach to game publishing, one that promises a cross-platform distribution model fortified against piracy.
The game worth looking at closely for following this trend is "The Sims 3." The title launched but a few months ago, and has now seen over 3.7 million copies sold, outstripping the previous bestseller "The Sims 2." What's interesting about these sales is that they follow a torrent (pun intended) of pirated downloads from a leaked version of the game prior to release. Rather than lamenting the piracy, EA execs suggested that internally, they shifted the viewpoint to seeing the leaked version as an "extended demo." The reason behind this was the sheer volume of additional content exclusive to registered users that didn't ship on the retail disk.
EA has instead approached the Sims franchise as a content portal to additional downloads, some of which were free, and others for pay. They are now adding this same model to the iPhone version of "The Sims 3," making use of in-app commerce enabled by the iPhone 3.0 software release. This brings up the other facet of EA's burgeoning model that's extremely compelling: cross distribution.
Of the mainstream gaming companies, EA has the strongest presence in the iPhone AppStore. Their higher profile casual games in the past year ("Spore" and "The Sims 3" respectively) have both seen iPhone versions released. EA's mobile division has seen a 14% increase in Q1 revenue, despite the down economy, and a 20 percent decrease year over year for the company as a whole.
Is this a one-off success story, or indicative of a larger trend? My guess is the latter. Micro-transactions have been seeing many successes, from Sony's PlayStation Home to "The Sims." Cross-platform distribution had been driving the success of some of the social, casual game publishers like Zynga and Playfish, many of whom link the various game versions into a singular experience using Facebook Connect.
What will be really interesting will be the marketing opportunities this new model will create. If games are increasingly becoming content portals in and of themselves, this opens up the potential for contextual advertising, sponsored content, or branded content within the space. By the very nature of an integrated content marketplace, "house ads" will exist in droves, announcing new items or discounts. So the user experience baseline will already be open to ads, based on the marketplace framework.