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The EA online strategy debate thread


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51 replies to this topic

#1 of 52 Keith Frederick

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Posted July 23 2003 - 02:37 PM

I just love debating this. Yes, I have XBlive, I do not have a PS2, and I am pissed EA does not support live (I want SSX online damn it). And some people say EA has a legitimate argument for not supporting live. They are only slightly correct. Here is my fair analysis of the situation. Let me know if you have anything more to offer:

For games with viable subscription business models (e.g. Everquest), I understand how the XBlive service fee would be seen as detrimental. That makes sense. I personally have no interest in that model, because although I am willing to pay $50 to play dozens of XBlive games a year, I will never be willing to pay $100+ a year per online game (and that doesn't include the retail cost of the games). But that reflects my personal interest and pocketbook, and I know that other people feel differently.

Where I strongly disagree with EA is their blindness for a business model where online capability actually increases sales. Would RTCW, Outlaw Volleyball, or Midtown Madness 3 have sold nearly as well if it weren't for the online capability? No way. This business model is mutually beneficial to Microsoft and software developers like EA. EA's stance hurts them (I won't be buying SSX or Madden, I'll buy Amped2 and NFL2K3), it hurts gamers, and it hurts Microsoft. I think it is a mistake.

What do you think?

#2 of 52 Camp

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Posted July 23 2003 - 03:56 PM

I can't agree more.

I don't know how Microsoft works the Live financials. I would imagine the developers make some money from Live but I'm not going to pretend to know for sure. I'm quite sure, however, EA can make more charging their own monthly fee per game but realistically how many titles can the average consumer afford to support?

Microsoft has done it right with Live and EA should get on board. It's a great opportunity for Microsoft's XSN sports line and Sega's sports line to knock EA from their far too comfortable perch.

#3 of 52 Michael St. Clair

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Posted July 23 2003 - 04:03 PM

Yep, I've said it before, and I've said it again. The online Ultima/Everquest/Galaxies kinds of games are 'lifestyle' (often total addiction) games with expensive-to-maintain persistent universes. I would never expect those to be included in a 'flat rate' or 'free' model.

Outside of that, I still believe that all the other hundreds of games need to be free or flat-rate cheap to survive. $50 a year for dozens of games across multiple publishers is reasonable, anything where you pay-per-title or pay-per-publisher is going to create a model that scares away 90% of your prospective audience.

That's my opinion, and I'm sticking to it until somebody can prove me wrong.

#4 of 52 Allen_Appel

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Posted July 24 2003 - 01:48 AM

Hasn't EA invested tens (if not hundreds) of millions of dollars into their own online network of servers, etc.? Why should they throw this money down the drain because (a generic) YOU wants to play Madden on your Xbox? MS and EA negotiated for EA games to have Live support and could not come to an agreement. Sony obviously offered them far better terms than Microsoft did. I'm not aware of what the EA pricing model will be or even when/if it will happen, but I would think it's more likely to be a flat fee encompassing all their online titles (a la Live) than a per game per month fee. Sales figures *might* increase over what they sell on PS2 if they supported Live, but, objectively, doesn't that seem unlikely, considering the larger PS2 user base (many of whom must also own Xbox and buy Madden anyway)?

#5 of 52 Paul_Fisher

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Posted July 24 2003 - 01:50 AM

I agree with both of you. I would never pay a monthly fee outside of xbox live to play a game online. In fact the only reason I have xbox live in the first place is because its only $50/year. I don't think I would have it if it was more money.

#6 of 52 Rob_Pierce

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Posted July 24 2003 - 04:02 AM

Let's look at this from EA's perspective. This morning, EA released their quarterly earnings to Wall Street. Here are some excerpts from the financial press:

Quote:
Revenue totaled $353 million to top Wall Street analysts' estimates of $337 million. During the same period a year ago, EA reported sales of $332 million.


Quote:
Larry Probst, EA's CEO, cited sales of NBA Street Vol. 2 and Def Jam Vendetta for helping to spur revenue and profits in what is typically the company's weakest quarter. In addition to video-game sales, EA also highlighted a new agreement with America Online (AOL: news, chart, profile) under which AOL will pay a programming fee for access to EA's Club Pogo subscription games and other integrated video game content.


Quote:
"We demonstrated the power of our diverse (game) lineup," said Warren Jenson, EA's chief financial and administrative officer. "We're exactly where we want to be."


This adds up the stock increasing 8% as of 11:00 Eastern time today. The stock is up 68.7% year to date. We can debate their strategy all day long, but EA is simply a monster in the industry and their strategy, either way we look at it, has rewarded investors handsomely--and that's the bottom line.

#7 of 52 Michael St. Clair

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Posted July 24 2003 - 04:13 AM

Quote:
Hasn't EA invested tens (if not hundreds) of millions of dollars into their own online network of servers, etc.? Why should they throw this money down the drain because (a generic) YOU wants to play Madden on your Xbox?

I have nothing against EA or their business practices, or their games for that matter. I simply don't believe that their model will work. That's just my opinion, and is based simply on my own thoughts about the market and the consumers.

EA can give it their best shot. Maybe I'm wrong, but I don't think so. In the meantime I'll not be playing any pay-to-play PS2 games unless somebody comes up with a flat rate plan that spans multiple publishers.

Quote:
We can debate their strategy all day long, but EA is simply a monster in the industry and their strategy, either way we look at it, has rewarded investors handsomely--and that's the bottom line.


Their online strategy is only about to begin deployment in the console business. They've stated their games will be free for 2003.

Any effect on the bottom line probably won't be felt for at least three years, when the console gaming market has grown much, much larger...and EA is charging money to play their games.

There's a long road ahead, it's going to be interesting to see what happens.

#8 of 52 Allen_Appel

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Posted July 24 2003 - 05:42 AM

Don't forget that Microsoft is also going to a more expensive Live service in November, for new and occasional subscribers anyway ($70 per year, including headset, for new subscribers, or $5.99 per month if you don't want to commit for a year). While XSN seems to be free now, I could see that turning into a paid service at some point.

#9 of 52 Christopher_S

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Posted July 24 2003 - 06:20 AM

After reading this thread, I've done some searching and can't find more than a few hints that EA "might" start charging for online play, specifically a few short news articles from May. Now, I'm sure that if EA thinks there's money to be made, they'll do it in a heartbeat, but this thread confuses me. Is there some new statement I'm missing where EA has started talking expicitly about instituting charges for online players?

A flat fee ($50-60) for a year of the service, including multiple games that I'd be purchasing anyway? OK, there's a decent chance I'd go for it. Anything more than that? No way.
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#10 of 52 Michael St. Clair

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Posted July 24 2003 - 06:20 AM

And if Microsoft does that, I'll think it's a mistake too. Posted Image

#11 of 52 Keith Frederick

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Posted July 25 2003 - 02:44 PM

EA has stated publicly that they won't play ball with XBlive because it inherently squashes online content revenue stream. They have been very clear. My argument is that they shouldn't focus on their online content revenue stream, they should continue to focus on their retail content revenue stream, and seek to enhance that with online components.

EA's success with offline content says nothing about their online strategy. In fact, their online strategy has thus far been a relative failure (purely PC-based). Their console strategy is pending... and as it stands, I think they will do relatively poorly.

Look, the MS model is good for companies that don't want to invest in an online infrastructure, and bad for companies that already have invested. There is give and take... and to be honest, it is definitely working in Microsoft's favor. Sony might have a larger library of games, but Xbox will have a larger library of online games because of the very policies that EA doesn't like.

#12 of 52 Brandon_H

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Posted July 25 2003 - 03:14 PM

I'll bet anyone a steak dinner right now that EA won't be the only publisher charging for online play within the next three years -- especially by the time PS3/Xbox2 roll around. Particularly if people line up to pay for EA's service -- and I frankly suspect they will.

EA is the publisher that has the most clout and can afford to disagree with Microoft right now. But as other publishers see the money to be made in online console gaming, they're not going to sit back and let Microsoft rake in the dough from titles they create. The Big M is going to fight this battle many times over, and not just with EA.

And it isn't as if EA is the only company that isn't fully supporting Xbox Live. NFL Blitz, NHL Hitz, etc. -- PS2 online only this year. Ditto "Tony Hawk's Underground."

It's going to get a lot more interesting...

#13 of 52 Damien

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Posted July 25 2003 - 03:40 PM

I don't think anybody will know the defenite answer. Midway and Sega both said they had difficulty setting up tournament settings for xbox, maybe because Microsoft wants all the attention on XSN. So Midway won't take Blitz Pro Online on the xbox since they want the tournaments online, and Sega is doing online leagues etc... on PS2 only. EA on the other hand is always trying to figure out how to make more money. Xbox Live won't get them a red penny. They also can't shut off the games when the newest version of one of there games comes out. Although unlikely, Sony could be helping EA out as well in exchange for online exclusitivity, because you'd be lying to yourself if you thought PS2 online wasn't getting killed software wise by xbox live. Actually from what I see with this new "EA sports talk" for NCAA, EA and Sony may be trying to catch up with xbox live. So next year we may be seeing some XSN like stuff in EA's 2005 games. Sony and EA will do whatever they can to help eachother as long as the sales keep coming.

#14 of 52 JamesH

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Posted July 25 2003 - 05:58 PM

Quote:
Hasn't EA invested tens (if not hundreds) of millions of dollars into their own online network of servers, etc.? Why should they throw this money down the drain because (a generic) YOU wants to play Madden on your Xbox?


Correction, why should I throw money down the drain to subsidize an already profitable corporation that made a bad investment?

This EA online garbage will crash and burn just like the joke that is PS2 everquest. For further example, see the mass exodus of people from Xbox PSO after the monthly fee kicked in.

The only games that really stand a chance at success with a single game fee are MMORPGs, and they have to be GOOD. Most of this comes from the fact that you can really only play one MMORPG at a time, so a single fee isn't that steep. I can see a reasonable amount of people paying for Final Fantasy Online or True Fantasy Online, but I doubt anyone will shell out cash to play the next tired and unimpressive update to the Madden series.

#15 of 52 Jeff Kleist

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Posted July 25 2003 - 06:37 PM

Exactly, they shouldn't be looking at how much money MS is making on Live, they SHOULD be looking at how many more copies they're selling because they put a title on Live

How many copies would MechAssault have sold w/o Live?

How many copies would Wolfenstein sold w/o Live?

I can tell you right now "At least 1 less each, and probably thousands if not tens of thousands"

#16 of 52 Brandon_H

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Posted July 26 2003 - 02:07 AM

But while Xbox Live certainly boosts sales of some titles, I doubt it would provide much of a boost to Madden.

Sure, there are lots of Xbox owners -- including several here -- who won't buy Madden because it doesn't support Live. But that number pales in comparison to the number of Xbox owners who will buy Madden regardless, because it is an established brand and is far and away the most popular football game out there. And remember, the number of Xbox Live users is still a very small percentage of Xbox owners as a whole, so it isn't as if EA is sacrificing much to make its point.

Believe me, EA has done the market studies. If it thought there were that many additional sales to be made with Live support, it would have caved and included it by now.

#17 of 52 Keith Frederick

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Posted July 26 2003 - 04:17 PM

1 in every 10 XBOX owners have XBlive. And since hardcore games both buy the most games and are the most likely to have XBlive, you can see how XBlive support will significantly affect sales. I haven't heard any specific numbers yet, but rest assured that Microsoft has the numbers and are using them to their advantage in courting developer support.

#18 of 52 Morgan Jolley

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Posted July 26 2003 - 04:47 PM

Not 1 in 10, closer to 1 in 18 or so.

#19 of 52 BrianB

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Posted July 26 2003 - 04:58 PM

Quote:
1 in every 10 XBOX owners have XBlive.

There's close to a million XBL participants? Microsoft announced just a week or two ago that the Xbox has sold 9.4 million systems.
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#20 of 52 Jeff Kleist

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Posted July 27 2003 - 04:04 AM

Quote:
Sure, there are lots of Xbox owners -- including several here -- who won't buy Madden because it doesn't support Live. But that number pales in comparison to the number of Xbox owners who will buy Madden regardless, because it is an established brand and is far and away the most popular football game out there


Frankly, I think anyone who does that is blind. Football is football, and any differences are mostly cosmetic. Why not play the one with online?


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