EA's Segerstrale: Developers might need to switch focus from retailers to players

Digital goods have become and increasingly prominent part of the game business over the past several years, and during a keynote presentation at the 2012 Game Marketing Summit, EA's EVP of digital Kristian Segerstrale predicted that this transition will fundamentally change the way developers create and manage their games. Segerstrale, who founded the EA-owned social company Playfish in 2007, has experienced much of the industry's digital growth firsthand, and he believes the business is following a path very much like the music and film industries -- meaning games will strip away their retail dependence in favor of directly giving games to the player online. "The games industry isn’t alone in this transformation we're seeing -- music and movies have also made the digital switch. Sure, the business models have changed, but the consumer experience is vastly superior," he said. Unlike these other media, however, Segerstrale said the game industry still has a ways to go, though he said the increasingly popular free to play model is the first step of much larger changes to come. "We're clearly going from boxed products to digital services. We're going from up-front business models to games where the up-front cost is smaller and smaller, where there are free to play games out there," Segerstrale said. "With this shift, our relationship with our consumer sometimes becomes more important than our relationship with the [retail] channels." And with the games business transitioning into the digital space, Segerstrale said the games themselves will need to change as a result. As they rely more and more on the free to play model, developers will need to ensure that players don't just play a game, but stick with it for the long term. "No longer is the event of picking up a game tied to monetization. We're going to see a decoupling of those things. You need to think of it like a consumer internet business, where acquisition is just the beginning," he said. "And rather than having one side of the company making games and other getting them to consumers, now the whole company needs to take part in those processes." He suggested that online game developers create in-game channels to communicate with players and hopefully increase monetization. In EA and Playfish's own Facebook title The Sims Social for instance, Segerstrale pointed to the numerous in-game notifications and UI elements that inform players about new content, and specifically new purchasing opportunities. "The game is built for us to be able to add content all the time, so consumers know there's something new there," he said. More than anything, players like to learn about a game while they're playing it, so adding clear channels for in-game communication is crucial for boosting player engagement and eventually, monetization. "The [promotion] outside the game is important, but what really matters is the real-estate in the games themselves," Segerstrale said. These channels also allow developers to connect all of their existing online games via a network of cross-promotions and other interconnected social services. If all of a company's games link to each other in some way, digital publishers will be able to ensure that all of their titles get the exposure they need. "It about brands across ecosystems -- not isolated islands, but experiences across ecosystems," Segerstrale said.