Electronic Arts CFO Blake Jorgensen had some interesting comments regarding his company’s policy on microtransactions, namely the fact that they’re going to be impossible to avoid in his company’s games going forward:
The next and much bigger piece [of the business] is microtransactions within games… We’re building into all of our games the ability to pay for things along the way, either to get to a higher level to buy a new character, to buy a truck, a gun, whatever it might be, and consumers are enjoying and embracing that way of the business.
It should be noted, right off the bat, that this speech occurred at the Morgan Stanley Technology, Media, and Telecom Conference (warning: link goes to the relevant section of the transcribed speech, but everything else is behind a paywall). Instantly, we know that the speech is not for gamers, it’s for financial types, which is understandable considering Mr. Jorgensen’s position as the Chief Financial Officer. But gamers tend to glaze over – understandably – when they see a beancounter’s jargon. That’s why it’s handy to have Gaming Bus’s Handy Spin Translator to guide people through the malaise of softened financial speak and get to the gist of what these statements1 mean to gamers. And boy, do they mean a lot.
* “The next and much bigger piece [of the business] is microtransactions within games” – EA is constantly trying to find ways to wring more money out of players. In addition to their $60 games and their $10 online passes – remember, they were the ones who turned “Project Ten Dollar” into an industry to mitigate the used market – they have been doing microtransactions for some time. The NHL series has, for years, had ways to purchase better equipment for Be A Pro – and therefore, the online EASHL – with real world currency. This is just the next step up for the company.
* “We’re building into all of our games the ability to pay for things along the way, either to get to a higher level to buy a new character, to buy a truck, a gun, whatever it might be” – This just makes it official that if you spend $60 for an EA game going forward, don’t expect that to be the last of it. Even I’ve made the argument that a $60 game in 2013 is less expensive than the $50 NES cartridges of old due to inflation, but when that $60 starts to multiply due to the increasing need for microtransactions, things start to look more bleak. It’s even more insidious when you realize that you won’t know how much money you spend until after the game’s been bought, but then again, that’s part of the point.
* (…)”Consumers are enjoying and embracing that way of the business” – This reads like a huge crock of shit, but unfortunately, it’s the truth: Electronic Arts would not be ramping this up if it wasn’t hugely successful. For every one person bitching on an industry centric website that this is a terrible policy and they’re never going to buy the games, there’s three more people who don’t even read these websites, couldn’t care less about EA’s policies, don’t know who Blake Jorgensen is, and just want to win. To these people, a $5 item that helps them blow more people up is just one less mocha latte at Starbucks, and there are enough of them to make EA’s policy a winning one for them. Dan Pearson notes in the article that gamers criticized the policy for Dead Space 3, but investors loved hearing this. He’s right; investors love it because there’s virtually no overhead that doesn’t already exist, and gamers are eating it up, whether they want to admit it or not.
It should be noted at this point that at no point did Mr. Jorgensen bring up impact on the consumer, outside of how much money they would make the company. This is why going to consumer-centric events like E3, and dealing with anything that comes from a PR department, is overrated at best and worthless at worst. If you really want to know what a company is doing or thinking, don’t listen to what they tell gamers or the games press. Listen to their financial people at business meetings, talking to investors and analysts.That’s where the truth lies.
* “We’ve got to have a very strong back-end to make sure that we can operate a business like that. If you’re doing microtransactions and you’re processing credit cards for every one of those microtransactions, you’ll get eaten alive. And so Rajat’s [Taneja, EA Global CTO] team has built an amazing back-end to be able to manage that and manage it much more profitably. We’ve outsourced a lot of that stuff, historically. We’re bringing that all in-house now.” – This is inside baseball as far as gamers are concerned, but it shows where EA believes the future lies. It’s important, because what should be noted is that EA lost $45m in its third quarter, ending in January.
* “But without a doubt, you’re going to see more digital business and particularly more digital components of the gameplay allowed because the ease of it will be much better and the storage capability better.” – “Storage capacity” is an obscure thing to say because we still don’t know how any system that isn’t out yet is going to do storage. Will the PS4 use an off the shelf hard disk the way the PS3 does, or will they go with a proprietary setup like what the 360 has, which would piss off gamers, but the margins are unbeatable? Regardless, EA and other companies don’t care about your storage issues; they want people to be compelled to buy a hard drive for their games if necessary, just like they don’t care about your data caps when it comes to downloading massive, 12GB games.
At the end of the day, gamers do hold the ultimate vote, and they’ve so far voted for practices like this. We can whine and complain all we want about being forced to look at sales pitches every second we play a game, taking the roles of carnival barkers that we pay $60 for the privilege of having in our homes, but the only thing that anyone cares about is hard numbers. If you hate it, don’t fall for it. Otherwise, this is the future of gaming. At least Blake Jorgensen is being honest, which is all that much more appalling if you dislike where the industry is going; EA’s doing something they know is unpopular, they are outright telling us they’re going to do it, and it will succeed anyway.
1 – Thanks to the paywall, I’ll be sticking to the quotes listed in the GI.biz write-up.