Electronic Arts Hints at a New Business Model With Live Gamer Announcement

Live Gamer, an in-game monetization company that has mostly worked in the social gaming space to date, is making its third partner announcement for July today: Electronic Arts has signed on the company as its partner to introduce virtual goods into its online games.

Unlike a similar partnership that Live Gamer announced last week with THQ, in which a popular strategy title called Company of Heroes will become free-to-play and supported by virtual good microtransactions, there are no specific titles to talk about for EA.

But other companies will surely be watching EA closely. As the most visible Western game publisher, EA has also led its peers toward online gaming, acquiring Playfish last November for up to $400 million and working connect with online gamers in its traditional titles.

During EA’s most recent earnings call in May, top executives said they’d seen significant upside from adding downloadable content to its most popular game franchises, like Madden, FIFA and Battlefield.

For the most part, that content isn’t free — players pay several dollars for each addition. If the amount EA makes from these add-ons begins to rival the up-front income from game sales, the company could begin switching over its biggest titles to a free-to-play model, which can bring in many more potential customers.

The broad trends suggest that this online tipping point may be approaching. Last week the NPD Group released a study showing that PC game downloads now rival box gamed purchases, while Microsoft and Sony are both reporting good results from their online stores for the Xbox and Playstation; players are evidently becoming comfortable with all their games including an online component.

The game industry itself might also prefer the virtual goods model, since it would provide a lasting connection to customers (and their wallets). “We believe the ship-it-and-forget-it mentality is giving way to much deeper relationships between the consumer, the game and the publisher,” said chief operating officer John Schappert on EA’s earnings call.

The other recent Live Gamer relationship, announced in the middle of last week, was with RealNetworks’ GameHouse.