Online and downloadable will become the most popular way to get video games, starting next year according to the head of Electronic Arts.
Chief executive John Riccitiello told Reuters that traditional consoles like the Xbox 360 and Playstation 3 will become smaller markets than casual games played on computers and mobile phones, and through social networks such as Facebook.
"If you add all that stuff up, it's almost half of the industry now," he said. "It's about 40 to 45 percent. Next year it's likely to be a larger share of the total industry and it'll be bigger than the console games all put together."
EA's making big investments in digital and social gaming, having recently acquired Playfish, a company whose games appear on Facebook, Bebo, the iPhone and Android phones. Meanwhile, the company as a whole is stumbling, posting a loss in the most recent quarter. The publisher of The Sims, Spore, the Madden football series, Mass Effect and Mirror's Edge has been overshadowed in recent years by Activision, whose recent blockbuster Call of Duty: Modern Warfare 2 has dominated the holiday season.
After last quarter's financial results were published, Riccitiello said that EA will be eliminating game franchises that don't generate 2 million unit sales or more. The strategy seems pretty clear: Keep the biggest games around, and instead of investing in new franchises for consoles, put the money into digital, social and casual games.
It's sounds like a solid strategy, but it also foreshadows the end of console gaming as we know it. Big budget game development is an expensive, and therefore risky, business. In a CNBC interview from June, Ubisoft chief executive Yves Guillemot said it costs between $20 million and $30 million to develop a game for the Xbox 360 and Playstation 3. Guillemot predicted that those costs will rise to $60 million in the next console generation.
If EA's plan proves successful, look for other publishers to follow suit. That means fewer big-budget games (and more familiar titles) in favor of snack-size gaming for mobile devices and casual computer players. I hope console gaming doesn't wane like Riccitiello predicts, otherwise we're looking at Call of Duty 10: Modern Warfare 5 and little else.
