EA laying off the boxes, focusing on the digital

EA CEO John Riccitiello recently commented at the Reuters Global Media Summit that the Redwood City, CA based gaming giant would cut its slate of titles by as much as 40 percent in 2011. EA is now looking at putting out 35 traditional boxed games this fiscal year, down from 50 last year. And according to Riccitiello, that number will continue to drop year after year to, “some number probably between the low 20s and the high 20s that’s right.”

EA’s traditional bread and butter, boxed, in-store retail games, which account for 75 percent of EA’s revenues has continued it’s downward spiral, and clearly Riccitiello has seen the writing on the wall. Or at least, heard what investors have had to say. As Reuters reports, EA’s shares, as well as those of other video game publishers have seen some tough times over the past year, mostly incited by pessimism about the overall direction of the video game industry.

“I think we’re at the classic hump where we’ve told people where we’re going. There’s evidence we’re going to get there, but Vegas isn’t putting money on it because we’re only in the fourth inning,” Riccitiello said.

With that said, it may look like EA’s long-running turnaround is starting to pay off. In addition to cutting costs across the board, reducing the number of employees, and issuing more conservative financial forecasts, investor excitement is starting to build around the upcoming BioWare developed Star Wars: The Old Republic, which EA hopes will give Activision’s World of Warcraft a run for it’s money. However, a new report issued by Gamasutra, places SWTOR’s release date “sometime” in EA’s 2012 fiscal year, which starts in April 2011. Read:Christmas 2011.

When it comes down to the 1’s and 0’s, EA has seen a healthy 30 percent increase in revenues derived from digital, downloadable, and mobile content over the course of this past year, totaling $570 million, or, roughly 15 percent of EA’s total revenue stream. Riccitiello and company are projecting a modest 30 percent increase on these numbers this year.

EA is currently the highest ranked games publisher on Apple’s App Store, thanks in part to their Playfish acquisition. Likewise, EA’s clearly serious about keeping this top slot, as earlier last month, they snatched up iPhone games developer Chillingo.

If the Playfish and Chillingo acquisitions weren’t enough, Reuters also reports that EA is currently spending around $1 billion per year on research and development, with half of this budget dedicated solely to non-traditional games and gaming.

At the end of the day, it seems as though the giant that is EA has caught on to what smaller, more agile gaming companies have known for a while – boxes are dinosaurs, and mobile and online is where it’s at. And now that that sleeping giant has been awoken … let’s see what kind of havoc (in the best possible ways) it can wreak.

via Reuters


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