Riccitiello: Digital “bigger” than retail by the end of 2011

While the act of heading to our favorite retail store and picking up a copy of whatever game it may be that we’re after is still a thing of the present, it might be a thing of the past soon enough as digital downloads and purchases of games have become more popular, and at a wild pace too. Xbox Live, PlayStation Store, App Store and the just recently launched Mac Store, Android Marketplace, Steam and even Facebook all offer a solution to the lazy gamer, and in most cases, at a cheaper price. According to EA CEO John Riccitiello, this business model will continue to grow throughout the year, stating that by the end of it, “the digital business is bigger than the packaged goods business.”

“At the end of [2011], the digital business is bigger than the packaged goods business, full stop,” said Riccitiello in a recent interview. “I think that we’ll find ways to even sell our packaged goods content in chunks and in pieces and subscriptions and micro-transactions.” And there’s another big winner for EA, micro-transactions. The free-to-play model have quickly become some of the highest grossing games, with players paying up to a whooping $5,000 (USD) in micro-transactions.

“Our highest ARPU (average revenue per user) are free-to-play games among paying users. You think about that and say, ‘how can a free game be the game they pay the most for?’ We have people who are giving us $5,000 in a month to play FIFA Ultimate Team. And it’s free. Dirty little secret,” shared Riccitiello. A matter of reversed psychology, as it were, and it seems to be working, but only as long as publishers don’t restrain themselves to a specific model.

“They may want to buy it on an iPad, they may want to get it through the social network, they may want to pay for it through micro-transactions and monetizing, or they may want to pay for it all at once,” he said, adding that EA is “in all of those businesses and I think the way this is going to work is that the models that the consumers like the most are going to grow the most.”