EA has revealed that it achieves a gross margin of between 70 per cent and 95 per cent on its digital business.
Speaking during a post earnings call Q&A, EA CEO John Riccitiello said: “Most of our digital businesses have gross margins between 70 per cent and 95 per cent. And our packaged goods business is, depending on the property, in the 60s.”
He added: “It depends on exactly what channel that distribution – that digital product is in. A PC product on Origin has extremely high margin, lower on Facebook. But in general, we get a significant pickup as we move to digital.
“We’ve seen our gross margin rise over the last 4 years from approximately 49 per cent into the low to mid-60s.”
The good news for EA is that its business is shifting towards digital.
COO Peter Moore explained: “Well packaged goods … we’re seeing continued declines. I mean from our perspective, digital is where it’s at, 20 per cent increase in digital, single-digit declines in packaged goods.”
Regarding where this digital revenue is coming from, president of EA Labels Frank Gibeau revealed that “on a trailing 12-month basis, we’re generating at about $1.3 billion in digital revenues, a little over $400 million of that is associated with consoles.”