Croal: Average revenue per user, or ARPU, has long been a key metric among mobile carriers and other industries. How much of EA's recent practices--$60 next-generation titles, higher-priced special editions, in-game advertising, microtransactions and charging for cheat codes in the 360 version of The Godfather--have been aimed at raising EA's ARPU?
Probst: That's the goal, obviously: on top of the packaged goods transaction, to generate incremental revenues, whether it's through microtransactions, dynamic in-game advertising or whatever. We think that's something important to the future. It obviously contributes to higher margins overall for the company, and it's something we're focused on for multiple franchises. Need for Speed Carbon is a perfect example. We're generating a lot of microtransactions on the Xbox 360. We've got both static and dynamic in-game advertising going on. It's pretty significant. Those are margin drivers for that product.
Croal: There's been a good deal of controversy in the enthusiast press and on message boards about the microtransaction practices of EA and other publishers. There's even a blog called GamerFeast, that has an Xbox 360 Microtransaction Tracker. As of early November, EA's fully loaded games--calculated by taking the price of the game at retail and adding to it all of the various microtransaction costs--held 3 of the top 5 spots, with Need for Speed Carbon topping the list at $94.97. Isn't there a concern that EA may be strip-mining its most avid consumers with these strategies, even if it does extend the life of the game additional content?
Probst: We're working our way through that. With some of the initial titles, we did hear complaints from consumers, but I think we learned. We did a better job on Need for Speed Carbon, and we're not hearing those same kinds of complaints or negative feedback about that product. It's generating a lot of money through microtransactions. So it's a learning process, it's iterative and we'll get better about it as we go. Need for Speed is the first example of getting smarter about it.
Comment