EA CFO Brown Defends 'Online Pass' System, Talks 3D, Facebook

New Electronic Arts CFO Eric Brown today defended the company's relatively new practice of charging for online gameplay and additional content for EA Sports titles purchased on the secondary market. Speaking at a Deutsche Bank 2010 Technology Conference presentation listened in on by Gamasutra, Brown said their Online Pass system hasn't led to any massive revolts from the company's customer base. "There’s been no significant pushback from the user," Brown said. "People know bandwidth isn't free, so the fact that we’re diffusing online costs isn’t seen as unreasonable." Brown said he saw charging used purchasers for online access partially as a way to combat used game sales and partially as a way to recoup costs associated with operating gameplay servers. "At least we know we’re being paid for the access to those servers," Brown said. "To the extent people purchase [the Online Pass], it is found revenue in the secondary market that we and other publishers have not traditionally participated in." While saying it was too early to tell whether the Online Pass system had helped buoy new retail sales of EA Sports titles, he did note that comparable sales of NCAA Football 2011 and Madden 11 were up eight percent and six percent, respectively, from last year's versions. In addition to the Online Pass, Brown said the company would be pursuing additional opportunities in the downloadable content market to help recoup the higher development costs associated with developing games in the high-definition era. Brown said he saw DLC and the Online Pass as consumer-customizable price discriminators, allowing some players to get in on the ground floor for $60, while others could add on hundreds of dollars in DLC. "We don’t expect to attach $10 to every used purchaser," he said. Even as DLC becomes an increasing part of the business, Brown sees a role for stores like GameStop, which can educate gamers on what the online options are. "A consumer walking into a store wants to know what's available," he said. "There could be half a dozen DLC packs. GameStop is in a good position to tell you what DLC is out there, what [the packs] provide. They have a service and staffing model geared towards games, so we see them as an important partner going forward." (Although not specifically cited by Brown, GameStop is apparently still planning in-store terminals which will allow customers to buy Xbox Live and PSN DLC in-store alongside the retail game copy.) Elsewhere, for the console industry as a whole, Brown sees an obvious divergence between the Sony and Microsoft's HD-capable systems, which are up 18 percent for the calendar year so far, and Nintendo's Wii, which is down by the same amount. Brown was especially impressed with Sony's recent performance, with hardware sales gains in the wake of the reduction to $299 being followed more recently by increased software sales. Even on the HD consoles, though, Brown didn't see much upside potential in 3D gaming in the near term, when the feature is "likely to be limited by the adoption curve of 3D-capable flat panel TVs." That said, he sees this changing once the cost premium for those 3D-capable TVs comes down, which should happen rather quickly. "If [the premium] it started at was $500, it’ll be $50 in a couple of seasons," he said. While Brown said it's too early to offer an opinion on the effect of the Playfish acquisition on EA's bottom line, he said the investment has already been worthwhile in getting EA's FIFA and Madden brands up on Facebook and "available for monetization." Brown sees the Facebook's recent changes in the way notifications work to be a big challenge in the space. "We're working to make sure games get prominence without spamming the user base," he said.