M+E Daily

Electronic Arts CEO John Riccitiello underscored the game publisher’s focus on digital goods and services during the company’s quarterly earnings call this week, laying out several facets of the company’s strategic shift for analysts (transcript via Seeking Alpha).

On digital’s contribution to console and PC franchises: Riccitiello disagreed with an analyst that physical unit sales for recent releases such as “Dead Space 2” had fallen short of expectations. “I think if you try to evaluate any of [EA’s properties] just on packaged goods [sales], you’re missing the larger picture,” Riccitiello said. “The core thesis that we’re able to do…is taking a property like ‘Dead Space’ and then driving it across iPads, across iPhones, across Androids [and] ultimately in social, DLC, ongoing micro transactions associated with the franchise. And what we’re finding from our telemetry, and we have details on this that we’re quite convinced were right — we’re not trading dollars for pennies. We’re, in fact, adding new revenue streams and increasing the interest in our existing business model while adding new business.”

On investing in digital services: Riccitiello reiterated that EA has been “stepping down investment against our core packaged goods business, and stepping up investment against digital opportunity. In fact, this year, we’re getting reasonably close to 50-50. Obviously, 3 years ago, we were closer to 90-10. So sort of under the surface of this business is a dramatic transformation of our resource allocation — which is why we described ourselves looking forward to a fully integrated digital business, because virtually everything we’re doing now is against the digital opportunity. It’s where we see our growth. It’s where we see our margin expansion. It gets us that less cyclical, less seasonable, more ratable, and more profitable business.”

On managing a consolidated IP portfolio: “Just a few years ago,” Riccitiello noted, “we had north of 75 packaged goods titles, and in fiscal ’12, we have 22….We are still investing in new intellectual properties. At any given time, we have two or three in development. [But] If you want to think about where EA is trying to go, it’s around this concept of about a dozen great [properties] that we can program, if you will, 12 months of the year with 12 months of revenue across multiple platforms and multiple business models on a global opportunity. The second thing is, to that, trying to add one meaningful new property a year — recognizing that some genres, some sectors don’t perform forever. Take the music genre, for example: it was all the rage on ours and a competitor’s call, a couple of years ago, and it’s essentially not the subject today.”

Background on the game industry’s overall transition to digital services at CNET.