OK, so maybe that isn’t an exact quote … but it is more or less what they said at GamesIndustry.biz. Basically it comes down to this: while publishers like EA might still be concerned about used game sales, for sports games they are seeing a 60% conversion based on Project $10 license sales, and the high-profit DLC business is just continuing to pour money onto the bottom line!
On DLC sales as a major revenue source:
“FIFA 10 generated just over $30m in gross DLC sales – so that’d be above and beyond the revenue that we made just selling the physical disc.
“Now that stills represents a single digit uptake on revenue, but if we can take it from single digit to 20 per cent or so of the full franchise in the mid-term, that revenue on the margin is very profitable to us.
“70 or 80 per cent fully loaded net margin digital revenue stream, and so if we bring that well north of $30 million to 60/70 let’s say, a lot of that’s going to drop to the bottom line.”
Did you catch that? 70 – 80% *NET* margin on DLC! NET! That means after taking everything else into account! Considering they are making about 10% margin on new games on average, raking in the sort of margins DLC offers is just stunning. And – mark my words – it will elevate their greed to push the limits of what they can get away with.
On Project $10:
“The price is $10, which seems to be gaining user acceptance – the acquisitions, the take rates are quite high, well north of 60 per cent on the titles we’ve seen so far.
“There hasn’t been any significant push-back from the consumer, because I think people realise that if you’re buying a physical disc and it requires an attachment to someone else’s network and servers, people know bandwidth isn’t free.
“So the fact that we’re diffusing or covering online costs is not viewed to be unreasonable. We’re well into this program and there is no consumer backlash.”
So, for all of the seeming backlash and articles and so on … people who want to play these games online are simply paying up. I can understand that – while there is a philosophical argument about whether or not there is added costs when a game moves from person to person, the gamers don’t mind supporting online play.
My bigger concern is the DLC comments. We already know it is highly profitable, and that it is becoming more and more a part of every publisher’s revenue stream. But with these numbers – and EA saying they are looking to double DLC revenue and possibly even bump the margin up, the easy way to do that is by double-dipping on resources and assets from the core game. So in the case of a RPG, add a new hybrid player class, add a new dungeon directly derived from existing materials, add new armor and weapons which are just recolored versions of existing ones with fancy new names and so on.
This isn’t anything new – companies try to make as much money per customer as they can get away with, and we as consumers have to decide where to place that line between what we will and will not accept in terms of feeling like someone has their hand in our wallet.
Where is your line? Have you paid a $10 online fee yet? What about DLC for games … or even buying games digital at all (since you can’t trade / resell)?