EA predicts the death of in-store game buying

EA Sports Vice President Andrew Wilson says gamers will increasingly turn to digital stores to buy their games in the coming years.

Don Reisinger
CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
2 min read
EA's Origin digital-game marketplace.
EA's Origin digital-game marketplace. Screenshot by Don Reisinger/CNET

Electronic Arts believes the end is near for in-store game buying.

Speaking to Eurogamer in an interview published yesterday, EA Sports Vice President Andrew Wilson said there will be a time when gamers decide against heading to a local game retailer, and get all their titles digitally instead.

"There will come a day where I think that people will stop going into [U.K. game retailer] Game and GameStop," Wilson told Eurogamer. "And I use those purely as examples of retail. It's important for retailers and us to understand what the consumer wants in the future."

Wilson didn't say when he believes brick-and-mortar stores will fall to digital marketplaces.

Of course, EA has a vested interest in seeing that happen. Last month, the company announced the launch of Origin, a direct-to-consumer digital-download service. The offering allows users to buy digital games and download them directly to their computers. At launch, Origin offered 150 games.

Origin is one part of EA's long-term strategy to transition away from the traditional packaged-goods model. EA CEO John Riccitiello said recently that he plans to make EA an entirely digital company in the future.

"Over the coming years, we will transform EA from a packaged goods company to a fully integrated digital entertainment company," Riccitiello told investors during an earnings call in May. "We're transforming EA to a games-as-a-service model."

Most recently, EA bolstered its digital portfolio by announcing its intention to buy PopCap Games for $650 million in cash and $100 million in stock.

EA is already seeing its digital revenue jump. During its last fiscal year, ended March 31, EA's digital-games revenue grew by 46 percent year over year to more than $800 million. The company is currently forecasting that revenue to grow to over $1 billion this fiscal year.

As EA benefits from the digital push, it would seem that game retailers, such as GameStop, would not. But so far, that hasn't been the case.

According to Wedbush analyst Michael Pachter, GameStop revealed during Investor Day earlier this year that the company expects to "grow its [digital] sales at a 50 percent compound annual growth rate" over the next several years. During the fiscal year ended January 31, GameStop generated $300 million in digital games revenue, and expects that to grow to $1.5 billion in four years.

Digital content is taking the gaming industry by storm. In March, the NPD Group, which releases official monthly sales data for the industry, announced that its digital-sales reports would go monthly owing to the growth of that market segment. According to NPD's Anita Frazier, digital content now represents 40 percent of all industry sales each month.