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Electronic Arts CEO: Digital Market Will Take Over Next Year

by Annette Gonzalez on Dec 02, 2009 at 07:10 AM

Electronic Arts CEO John Riccitiello says digital distribution will take over the traditional console and retail business next year. After EA’s recent acquisition of social networking games developer Playfish for $300 million as part of the company’s growth strategy, it’s pretty clear he stands behind his statement.

"It's new to compete in that sector, so when people think of games they traditionally think of the Xbox, the PlayStation and the Wii, and they forget about all these online services that are out there -- subscription, micro-transactions, games they find on Facebook or if they go to Pogo," Riccitiello said in an interview with Reuters. "If you add all that stuff up, it's almost half of the industry now. It's about 40 to 45 percent. Next year it's likely to be a larger share of the total industry and it'll be bigger than the console games all put together.”

Riccitiello went on to say that the plan to build a name in the digital space began a couple years ago and has seen success.

“In the last quarter alone we did $138 million in revenue, and if EA's digital business were a standalone company it would be the darling of Wall Street," he said. "It's in a larger company right now, but we're building it very quickly and our goal at Electronic Arts is to have a very profitable packaged goods business, but also to have a digital business of a similar scale over time."

In terms of the Playfish acquisition, Riccitiello said it will allow EA to bring popular franchises such as FIFA and The Sims to Facebook and other social platforms, and any possible future acquisitions would likely be in the digital space as well.

“We're constantly trying to conquer new territory in particular on the digital side, so when you ask about deals, we're mostly looking at the digital side, we're mostly looking at compatible organizations from a culture perspective and of course you need to agree on price. And those are three hurdles that are often difficult to reach," Riccitiello admitted.

Do you agree with Riccitiello? Will the digital market be bigger than traditional console games next year?