EA CEO: Industry Must Re-evalute Business Models
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Embrace change even if it costs a lot. A half century ago the three major networks ABC, CBS, and NBC were so dominant that they resisted change. Thirty years ago the three networks had more than 90 percent of the television market. Today, the big three account for less than half. (They were extremely arrogant,) Riccitiello says. (They viewed the rise of cable as being insignificant.
Riccitiello says the $31 billion gaming industry will suffer if it doesn't start to reevaluate its business model. Game executives at Sony (SNE), Microsoft (MSFT) and Activision (ATVI) must answer some tough questions in the coming years, like how long they can expect consumers to pay $59 for a video game. Riccitiello predicts the model will be obsolete in the next decade.
(In the next five years, we're all going to have to deal with this. In China, they're giving games away for free,) he says. (People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.) As more publishers transition to making games for online distribution, Riccitiello says he expects EA will experiment with different pricing models.
