The in-game goods market in EA’s Star Wars: The Old Republic.

FEB. 27, 2013 • During a guest presentation at the Morgan Stanley Technology, Media & Telecom Conference, Electronic Arts chief financial officer Blake J. Jorgensen said the publisher is now building microtransactions capability into all of its games. “The ability to pay for things along the way, either to get to a higher level to buy a new character, to buy a truck, a gun, whatever it might be, and consumers are enjoying and embracing that way of the business,” Jorgensen said. Using The Simpsons F2P game as an example of why EA is so enamored with virtual sales, Jorgensen said the title had generated $25 million in revenue during the last quarter. Where EA had previously outsourced most of its transactions back-end, the firm has spent the last year bringing that process in-house where it can be managed much more profitably. EA chief technology officer Rajat Taneja added that a large part of this process was better understanding who was playing EA games online and what they were doing. To better analyze the 275 million registered users and the 2.5 billion game sessions that EA services each month, Taneja said the publisher has recently added code to its titles that now tracks single player identities in every EA online title. “We generate somewhere in the neighborhood of 50 terabytes of gameplay and gamer data every single day. And so the way we ingest, process and make sense of the data – and do both predictive and adoptive analytics in the game and around the game – required us to rethink our entire back-end infrastructure,” Taneja explained EA’s progress at merging its separate data islands.

Impact: DFC Intelligence has published numerous reports on the microtransaction model over the years.  In 2012 DFC estimated that in North America and Europe revenue from PC online usage models like microtransactions would reach $4.5 billion in 2013, but will still only account for about a third of worldwide PC microtransaction revenue.  As reported in our report on browser and social network games, in the U.S., Facebook helped introduce the masses to microtransactions.  In 2012 mobile showed a great deal of growth on F2P models and The Simpsons: Tapped Out was a great example. In March, DFC will be releasing the 2012 mobile numbers which will show that in key markets like the U.S. free games generate significantly more revenue than paid games on the iPhone, iPad and Android platforms.

Source: The Global Market for Games and Entertainment Applications on Smartphones and Tablets, published by DFC Intelligence and Priori Data.

The issue is whether or not companies like Electronic Arts may be coming to the party a little too late.  A major issue DFC will be discussing in its new research findings is that in many markets the F2P model on smartphones and tablets seems to be stagnating and in some cases declining.  This trend has also occurred in numerous other established F2P markets over in Asia and Europe.  So while the market is expected to grow, companies need to be very cautious in their expectations.  This is especially true in mobile where the drop-off curve seems to be steeper than it has been in the PC market.