Boxed video games get a new life

Turnaround in slack sales on back of new consoles

VIDEO games publisher Electronic Arts is banking on a boost from Sony’s and Microsoft’s new consoles to bring the digital and physical media sides of its portfolio into balance.

Like other makers of traditional boxed video games, Electronic Arts has struggled to keep up with a massive switch to online and mobile gaming. The segment is expected to grow to $14.4-billion (about R148-billion) in 2017, from $8.8-billion last year.

“We actually see growth this year in our plan for physical boxed games . . . The concept that physical media is dead is completely erroneous at this point,” Electronic Arts’s chief operating officer, Peter Moore, said before the start of Gamescom, Europe’s biggest gaming fair, this week. “It is actually going to grow a little bit — certainly in our world.”

Sony and Microsoft will start selling their new consoles next month, intensifying competition ahead of the key pre-Christmas period in the US. Sony has priced its PlayStation 4 console $100 lower than rival Microsoft’s new Xbox One, which is priced at $499.

The arrival of the new consoles comes not a moment too soon for the video-games industry as it tries to arrest a decline in revenues. Industry tracker NPD said sales of video-game hardware and software had fallen every month, on a year-on-year basis, since January 2012.

Research from consultant PwC suggests that the global market for video games will recover to $86.9-billion in 2017, up from $63.4-billion in 2012, with consumer spending on console games increasing to $31.2-billion in 2017 from $24.9-billion in 2012.

Mobile games, online offerings and new digital sales streams accounted for more than 76% of revenue at Electronic Arts in the first quarter of this year, but the Xbox One and PlayStation 4 consoles should provide more balance.

“We are almost at a 50-50 split between digital and physical media,” Moore said.

Electronic Arts has a long lineup of games, including shooter Battlefield 4 and new science-fiction game Titanfall for the Xbox One and PlayStation 4.

“We see overall digital industry business on a global basis in this fiscal year growing 20%. The packaged business on an industry basis is declining radically. We are in a position where we see growth year on year in both businesses,” said Moore.

That optimism is reflected in Electronic Arts shares, which have almost doubled in value to about $26, from $14 at the end of last year. —