EA CEO: Publishers “Have to Deal with” $60 Price Point

It’s interesting to hear this coming from Electronic Arts, a company often viewed as a sequel factory whose only goal is to make as much money as possible. John Riccitello, the CEO of EA, spoke to Forbes about the current pricing of games, and how the industry is going to suffer unless changes are made. He cites how games in Asia are given away for free and rely upon microtransaction-based services to generate revenue.

From the Forbes story:

Embrace change even if it costs a lot. A half century ago the three major networks — ABC, CBS, and NBC — were so dominant that they resisted change. Thirty years ago the three networks had more than 90 percent of the television market. Today, the big three account for less than half. “They were extremely arrogant,” Riccitiello says. “They viewed the rise of cable as being insignificant.

Riccitiello says the $31 billion gaming industry will suffer if it doesn’t start to reevaluate its business model. Game executives at Sony (SNE), Microsoft (MSFT) and Activision (ATVI) must answer some tough questions in the coming years, like how long they can expect consumers to pay $59 for a video game. Riccitiello predicts the model will be obsolete in the next decade.

“In the next five years, we’re all going to have to deal with this. In China, they’re giving games away for free,” he says. “People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.” As more publishers transition to making games for online distribution, Riccitiello says he expects EA will experiment with different pricing models.

While fun to ponder, I can’t imagine there being any drastic changes in the western gaming market any time soon. Perhaps when retailers begin to be phased out more and digital distribution becomes more viable, then publishers will have more freedom to explore other avenues. But as things stand and as game development begins to cost more and more, don’t expect any huge revelations.