EA CFO Blake Jorgensen, speaking during an investment briefing, is saying that with downloads increasing an all-digital future is closer than it may seem.
According to Electronic Arts CFO Blake Jorgensen, an all-digital future is quickly approaching. Speaking during a NASDAQ investor briefing, Jorgensen was candid regarding Electronic Arts' increasing success in the digital marketplace. So much so that Jorgensen was comfortable saying that full-game downloads of Electronic Arts titles will overtake retail sales within the next five years. For one of retail's strongest publishing partners, the statements come off as a profound revelation.
To be clear, Jorgensen wasn't trying to push an agenda or make a profound statement; he's just the company's financial officer making clear the state of the company and industry. It's video game purchasers who are changing the industry on their own, but Jorgensen does have a theory as to why consumers are shifting away from retail:
"Like everything else, the consumer is ultimately going to default to convenience. If it's a choice of getting in the car and driving to the store and the weather is bad outside, if you want to download it, I think you'll see more people do that."
Jorgensen goes on to equate the shift to the book, television, and film industries, where digital consumption is higher than ever. While Jorgensen sees digital overtaking retail within the next five years, he makes clear that retail is still king for now.
Last fiscal year saw digital sales grow to 25% of sales overall, and Jorgensen estimates that this year's digital slice of the pie will be closer to 30%. Going by his estimates, that means EA's digital sales are likely to continue to increase by around 5% each year.
In the mean time, Jorgensen makes clear that Electronic Arts is dedicated to retail no matter the state of digital sales:
"We're careful to continue to work with our retail partners; they are very important in the mix, but we're also ultimately trying to be where the consumer ultimately wants to consume the product."
Jorgensen did note that some of Electronic Arts' games skewed more towards digital sales and others more towards retail. While Jorgensen didn't specify which games were which, it's interesting to think about what they may be. For instance, Battlefield 1 and Titanfall 2 are likely retail kings, as they were released in a window to maximize holiday and Black Friday sales. Alternatively, Plants vs. Zombies 2 targeted digital sales through free weekends and DLC offerings.
Microsoft's original plans for the Xbox One were to release a digital only console, but ultimately Microsoft canceled those plans, perhaps because digital sales remain much smaller than retail sales. If there's evidence to show that that might be changing, it will be huge publishers like EA saying that it's changing. In 5 years, maybe consumers will be more open to the idea of a digital only console.