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Analyst: EA To Release Paid DLC Prior To Packaged Game Launches
by Kris Graft [PC, Console/PC]
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March 22, 2010
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After an investor visit with Electronic Arts, analyst Michael Pachter said that the publisher is planning a strategy that will involve selling "premium downloadable content" before a packaged game's release.
According to a Monday investor note from Wedbush Morgan's Pachter, Nick Earl, general manager of EA-owned Dead Space studio Visceral Games, revealed the new strategy.
Pachter wrote, "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."
He added, "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."
Pachter separately told Gamasutra in an email, "I think that the plan is to release PDLC at $15 that has 3-4 hours of gameplay, so [it has] a very high perceived value, then [EA will] take the feedback from the community (press and players) to tweak the follow-on full game that will be released at a normal packaged price point."
"If DICE were able to follow Battlefield 1943 with a full-blown European WWII campaign game a few months later, it would have been a wild success," Pachter said.
He continued, "EA’s view is that the PDLC costs a lot less to develop (essentially, it’s the first few levels of the full-blown game), and they have the opportunity to fix whatever needs to be fixed in the packaged product that is released a few months later, whether that entails doing more of what people like or doing less of what they don’t like. It sounds like a brilliant strategy to me." Gamasutra has contacted EA for further clarification about the new strategy.
EA is becoming increasingly active in digital distribution and other online-focused revenue streams. Aside from a $300 million acquisition of social gaming company Playfish last year, COO John Schappert recently said at both the DICE Summit and Game Developers Conference this year that the publisher would be using physical discs as the basis for digital strategies.
Pachter stated in his investor note that EA CEO John Riccitiello "said that the line between packaged product sales and digital revenues would soon begin to blur, as EA intends to exploit all of its packaged games with ancillary digital revenue streams."
CFO Eric Brown also reportedly said that Visceral Games' formally unannounced Jack the Ripper game will be a "new PSN, Xbox Live game." Last year, word emerged that EA trademarked "The Ripper," leading to speculation about Visceral's next project. The studio just released Dante's Inferno earlier this year, and is also working on Dead Space 2.
Pachter said that EA has "missed expectations badly for two years running." But he also said he was "impressed" by Riccitiello's candidness about the company's current state and future prospects.
"We’ve been wrong about this stock for almost five years. 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," Pachter wrote.
"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," the analyst said. "This time, we think that EA is on the right path."
[UPDATE: EA VP of corporate communications Jeff Brown told Gamasutra in an email that the publisher will continue to offer an array of pricing strategies to consumers. He wrote in full:
"- EA is working on a number of projects for delivering premium content to consumers before, during, and after the launch of a packaged-goods version of the game.
- EA SPORTS, EA Games and EA Play are each experimenting with download strategies that deliver fresh game content in formats players want to experience.
- To date, there is no set pricing strategy for the entire EA portfolio. And many of the proposals include free-to-play content on models similar to Madden Ultimate Team, Battlefield Heroes and Battlefield 1943.
- None of the proposals call for charging consumers for traditionally free game demos."]
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Right. But that is for BF 1943 and DICE. It is hard to force lightening in a bottle when you talking about other IP's that don't have the same level of content and team behind it as BF 1943 and DICE.
From a consumer point of view I really don't like this idea. I suppose it will be a $15 demo and a $60 full product that follows. Is the demo content part of the the full product? I think that EA will simply skimp on the full product. Just sounds like a no win situation for the consumer.
Also sounds like they are trying to over-insure risk, by basically only fully publishing what amounts to a sequel of a commercially successful franchise (except that this time we are starting at number zero or -1)
*NOTE my intentional use of "aaa" instead of "AAA". aaa shares all of the DNA of AAA except that it is the infant brother.
Option A.) - Traditional: You ask for $60 for the whole thing.
Option B.) - This New Way: You ask for $15 now and then $45 later.
Even though the revenue is the same in both options, I think that the customer will perceive Option B as twice as painful. Because they have to go through the purchase decision twice.
I remember a money guy saying it's better to ask for investors for extra the first time around than to trim your ask first but then risk having to go back later and ask for more.
Also, a customer may perceive the first purchase as the buy of the entire game, and may feel cheated.
I think this sounds a lot like episodic content. Why not just redo that experiment, just make sure your episodes (unlike a certain series with the initials "HL2") are all in the pipeline and ready to release quickly.
Their assumption that everything will download as well as the BattleField 1943 game discounts some major issues: #1) BattleField was an established franchise. #2) BattleField is primarily a multiplayer experience where the perceived value is the many hours of online play, not the 3-4 hours of single player campaign they promise for the Paid DLC. #3) Early adopters of online purchases are primarily online FPS players.
That said, I'm a big fan of digital download, and I hope it succeeds because more revenue will go to publishers and developers instead of GameStop, GameFly and Blockbuster.
Examples
-An exclusive add-on from the download (characters, weapons,ect.)
-a discount of some sort (paying full retail on top of 15 for the download is insulting, 15 dollars will get you a used triple a game instead)
-Hell, an additional demo or extra missions WHEN you complete the full version from a saved DLC copy
The list goes on, you gotta reward players for their initiative into your game. Gamestop does that when you pre-order from them, EA should take note. Again though, I think this could turn into something great if done right.
For instance, I was completely engulfed in the hype for God of War III for the last year. If Sony Santa Monica wanted to release a quarter of the game to me months before the final game was to come out, like an extended demo, I would have paid any price for it. Case in point, I bought District 9 on BluRay mostly for the GoW3 E3 demo (I had just gotten my PS3, and don't have that fast of an Internet connection at home do download gigabytes of data).
I can also see this model work for music/rhythm games. Get your fix of music coming in a new product, which is more than what you'd get in a demo, but not enough to count as a full game.
But as Tim Carter points out above, I also hope that a part of the packaged 'extended demo' deal is a discount on the final game. Or a bunch of benefits that go beyond 'try more before you decide to buy.' Microsoft made a demo for a game Starlancer back in 2001 (I think that's what it was called), and the demo itself wasn't a level in the game. It was a standalone 2-mission prequel explaining the events that lead up to the game's opening cinematic in the retail version. THAT was an awesome example of doing demo's right. It shows the engine, the gameplay, and gets you accommodated to the controls, but it doesn't force you to play those two missions over again when you get the final version. You just take off from there.
Yet there are disadvantages outside of the extra price. For instance, a shorter 'buy me!' demonstration can be more effective. Going back to God of War 3, I was blown away by their E3 demo. But if they extended it even further with more of the rehashed platforming, monotonous navigating through dark narrow hallways with few enemies, and spaced out the action sequences further, it would have actually inhibited by incentive to purchase the game. There were about 20 minutes of puzzles and slow cave crawling in the retail version of God of War 3 that was skipped in the E3 demo. Often, a shorter demo is a more effective demo, because it gets straight to the best features the game has to offer. Stretching it out in an extended demo risks me getting bored of the game well before I've even made the full purchase.
So really, it all depends on the product being presented.
On the other hand this won't be a problem if the games are good enough. I just don't think most games out there right now could thrive on this model.
Totally going to flop, not sure who does the DLC strategy at EA but you would think they would either get fired or figure it out by now.
5-6 hours, low dev cost, included for free in orange box or sold standalone for 10-15$
Portal 2:
Big-budget full retail game that is sure to be a success because they tested the water.
So, how can any one publisher or studio justify that their games will have 'extra' content that was not provided in the original title? I ask them, Why was this content not provided in the first place? Why should I have to pay more money to play your game?
One title that I have been disgusted in, in this regard is Modern Warfare 2. Not only do they reap the biggest sales in the history of video games, then they release a map pack (which is DLC in my book) which are just rehashed maps from COD2 mostly... and I am expected to purchase these maps... why?
Call me crazy, but wouldn't it make good business sense to GIVE these rehashed maps to the community (that have just made Activision uber rich) as a gesture of good will?? Considering the wide spread negative press that this game received over dedicated servers etc...
For mine, DLC is purely a money grab and one that is poorly designed and ill conceived. I refuse to participate in it as at the end of the day I will be paying $100 for a $60 game. There has been one successful video game model that regularly squeezes money from people... ONE! And it is called a monthly subscription to that little itty bitty game called WoW. (I do not wish to open a can of worms with WoW players, just making the point that this is the most successful business model in the games industry.)
In other words, people don't really want to buy demos.
But what happens when the demo flops? That would mean the full game planned would be cancelled or gimped in order to recoup costs.
This is just ridiculous.
How many of you get excited about a game, buy it, play the first few hours, and shelve it for a while?
Many gamers I know do this, and it seems to be common based on posts on this site regarding how many games readers actually finish. Something like this will prompt people to buy the prerelease, but that will for sure cut into the retail sales numbers if the "beta" satisfies the urge/curiosity of wanting to check out a new title. PLUS if the versions offered are buggy or need tweaking, that will have an even worse impact on the final sales. What ever happened to play testers?