Citing how 45 percent of the PS2's unit sales occurred at the $149 price point and below, Brown said at this week's Wedbush Morgan Management Access Conference in New York, "We've seen one major price drop thus far in this console cycle. We feel we have a long ways to go and a lot more unit sales will occur at the lower price points."
That "major price drop" Brown refers to is the September price reduction for Xbox 360, which brought the baseline Arcade model to $199. In 2008 prior to that drop, Sony's PS3 and Microsoft's Xbox 360 maintained relative parity in unit sales in the U.S. month after month, but after the price cut, Microsoft gained a 40 percent sales advantage of its closest rival.
Microsoft kicked off the current console cycle in late 2005 with the Xbox 360.
The Nintendo Wii, priced at $249, has been able to outsell both PS3 and Xbox 360 combined in the U.S. month after month.
Combined with continuing price reductions, Brown said DLC and online services will also play a role in extending the life of consoles. Such content and services extend the viability of console hardware and software. "This is a positive catalyst for the industry overall."
For the first three quarters of fiscal 2009, EA's digital direct sales business (downloadable content, subscriptions, mobile) was worth $300 million, with expectations of an additional $100 million in Q4. "We expect that to grow by 20-25 percent in fiscal 2010. ... These are very high growth portions of our business."
Touting quality
EA had previously set quality goals for itself, targeting an 80 percent Metacritic average for its games. Brown said EA had 14 games rated over 80 percent on the review aggregating site during fiscal 2009, versus just seven the prior year. He confirmed that a lot a of the highly-rated titles will have sequels, which "bodes well for future performance."
But the higher quality wasn't enough to keep EA from recording disappointing holiday results, and shedding 1,100 jobs. Part of this, Brown believes, can be fixed by improved distribution of marketing dollars.
"What we concluded is that we were spending too much marketing dollars right around the point of launch." Going forward, EA will spread out that marketing spend to create buzz well before the launch of a title, via viral and online marketing, and sustained post-launch marketing backed by paid downloadable content.
"We need to change the way we spend," he said. "It's more of a distribution change as opposed to a dollar change. We're actually looking forward to more CPMs for the dollar in the next fiscal year."
Still focused on the Wii
In fiscal 2010, EA expects to release around 20 Wii games. Since the launch of the Wii, EA has shifted from a strategy of simply porting Xbox 360 and PS3 games to Wii to one where games are specifically developed for the market-leading console.
Games such as Boom Blox, Wii-specific EA Sports games and the upcoming Wii-exclusive Dead Space: Extraction are indicative of EA's current Wii strategy.
"We think the [Wii] portfolio continues to improve," he said.
Brown says EA intends to ride alongside the success of the Wii as closely as possible, saying he wants people to equate EA and Wii as purveyors of "fun, high-quality entertainment."