The future is digital, and EA shows this in black and white in the international annual report. Now the hints for the abolition of the physical edition in Germany increased.
Electronic Arts is selling fewer and fewer data carriers. The company’s annual report speaks a clear language in this regard. In the case of the game manufacturer, data carriers are games pressed on DVD and Blu-ray that are available for purchase in shops. Since 2020, EA’s revenues from physical media have declined by $365 million, while those from digital game downloads have increased by $471 million. The report indicates that.
“While this trend, […] is not linear, we expect gamers to purchase an increasing share of our games digitally over time,” EA writes. It is additionally expected that sales of “‘packaged goods'” will continue to decline. A trend that runs through various industries, including the music or film industry, see Spotify and Netflix.
Sales pass German subsidiaries by
The business magazine “Games Wirtschaft” (GW) had already pointed out that digital revenues from games do not always go to the local, for example German, subsidiaries, but directly to the parent company. In the course of this, the magazine reported, Activision Blizzard had closed its German location. Take-Two, the company behind GTA and NBA 2K, also saw sales at its Munich office shrink from 24 to 14 million euros.
Could a fate like Blizzard also threaten Electronic Arts Germany? Probably not, “Games Wirtschaft” has learned: The headquarters in Cologne are to be retained, also because many games are translated and dubbed there.
EA Germany apparently wants to “no longer generate sales with packaged goods “
The magazine seems to have taken a look at the non-public annual report of EA Germany and found clues there. Because although the digital business is growing strongly, according to EA, the revenues in Germany do not seem to be there. GW quotes the annual report thus:
“The ongoing shift from physical goods to digital downloads continues to negatively impact revenue development. Revenues from digital downloads are not processed through EA, but through an affiliated company.”
The affiliated company probably means Electronic Arts international or comparable.
Games Wirtschaft further writes: “After the restructuring, Electronic Arts will ‘no longer generate revenues from packaged goods’ in the German-speaking region. Accordingly, EA already expects a ‘significant decline in sales revenues’ in the current financial year 2022/23.”
The meaning of this, however, offers room for interpretation. Is EA giving up the physical media business completely? Will there be no more FIFA in shops?
“We have not ceased physical distribution of our games in Germany, Austria and Switzerland, and gamers will still be able to buy our games at retail stores across the region. Recent reports stating otherwise inaccurately reflect disclosures from EA Germany’s financial statements. “
With EA’s denial it is now clear: There will still be physical editions of the games for the time being, however, distribution has probably already been handed over, because:
EA Germany has had the business purpose of the GmbH changed in the commercial register for October. There it is summarised what the purpose of a company is. According to GW, this was previously: “Import, export, distribution, sale and manufacture of products of any kind relating to videos, video games, computer software.”
Now it says: “Provision of services related to videos, video games, computer software and interactive entertainment.” So distribution and sales have been dropped. EA also confirms this when asked. They have restructured the distribution channels. However, nothing will change for the market or the player.
No more physical editions?
The outsourcing seems logical from the company’s point of view. Distribution costs money. But if sales from data carriers decline as players increasingly turn to downloads, restructuring is necessary. Outsourcing to external service providers usually saves costs.
EA Germany will have to optionally attribute digital revenues to the location, otherwise it could face a fate similar to that of the Blizzard agency. According to GW, EA is said to have turned over more than 90 million euros in the 21/22 financial year with the sale of physical data carriers to retailers.
EA Germany employs about 100 people in Cologne. If only game localisation (15 million euros turnover) remains, the company will probably be forced to take further cost-cutting measures. But it is a foregone conclusion that the age of physical media is coming to an end. FIFA will still be available on disc for a while, as long as money can still be earned with it.
