Summit News

EA says console prices key to FY

PARIS (Reuters) - Electronic Arts ERTS.O said it was happy with its performance this year in a volatile video games market, although it was reluctant to update its outlook without knowing if console makers will cut prices below 100 euros.

“For January to April we are actually reasonably happy with how we saw the market,” Jens Uwe Intat, managing director for Europe, said on Monday.

“An unknown factor is what is the hardware industry doing?,” he told the Reuters Global Technology Summit.

"How will the competitive landscape look this Christmas? Will Sony 6758.T go down further (on the PS3) and the biggest question for now, what is Nintendo 7974.OS going to do with the Wii?"

He said Sony doubled lifetime sales of its Playstation 2 console when it cut its price below 100 euros.

“The 100-euro threshold is still a huge one, which opens a completely new customer base. They (console makers) potentially have some way to go on their pricing.”

Video games companies make almost half of their sales in the October-December Christmas quarter.

The impact of growing fiscal problems in Europe on the video games industry was harder to discern.

“Last year we were so wrong, that I am very hesitant to make a forecast this year. We did expect a market that would be growing by a couple of percentage points but we experienced a market that was shrinking by 10 percent for packaged,” he said.

“For this year, we are actually expecting a few percentage points decrease (in Europe and North America).”

EA, which has a history of slashing its outlook and missing financial targets, has focused its portfolio on a smaller number of major franchises for platforms, with it biggest sales to Microsoft MSFT.O Xbox gamers.

Five of the company’s titles sold more than 4 million units in the year to end-March: FIFA 10, Madden NFL 10, The Sims 3, Battlefield: Bad Company 2, and Need for Speed Shift.

The group is taking its blockbuster franchises, starting with FIFA, on to Facebook and mobile platforms, with the aim of growing the total audience, using the skills acquired with the purchase of Facebook games maker Playfish in November 2009.

“We will try to get more and more people into gaming,” he said. “We will get the entry level down, and when they like to play the game we will sell them more content.”

FIFA Superstars will be launched as a beta product on Facebook in June, he said. Facebook games are typically free to users, and are funded by advertising and the sale of virtual goods.

Uwe Intat said pricing and features had not been announced, but he “would be surprised” if it were not free.

EA will develop more of its titles for mobile, online and iPhone, he said, and had five games available for Apple's AAPL.O iPad at launch.

“In an ideal world, the games you play on mobile phones are an extension of the games you play on console,” he said.

Asked whether he was worried if free games on Facebook would lead to fewer consumers paying for games, he said they would drive new gamers to the full packaged games experience.

“Putting FIFA in front of more people will raise awareness of playing FIFA,” he said. “The key challenge is that we develop games that are so interesting that people will say ‘for that game I will invest the money and the time’.”