The gaming industry’s move to digital goods

Mitch Lasky wrote a very interesting analysis of the gaming industry’s move from packaged goods to digital goods. From EA and the Future:

In my experience, the incumbent packaged goods companies clearly see mobile, digital distribution and free-to-play models as inevitable. They know what’s coming and have known for some time. But within the senior management ranks of these companies there is still a lingering perception that digital doesn’t, in their words, “move the needle” sufficiently — meaning that the revenue generated from existing console franchises still far exceeds the revenue that can be generated, even in aggregate, on new platforms and through new business models.

Mitch goes on to show how this thinking is wrong, and then explains how being caught between the promise of new consoles and the possibilities of digital revenue puts game manufacturers in a situation where they’ll have to make some very tough strategic decisions.

(link via @hunterwalk)