EA recently exposed a bit of ridiculous data: Argentinian players contributed to 40% of the sales of a certain game, but EA said that this part of the revenue made almost no contribution to their financial statements. What is the reason behind this phenomenon? The answer is simple: Argentina’s pricing strategy and exchange rate issues have turned sales in this market into a state of “digital prosperity but empty revenue.”
Why do 40% of sales generate no real revenue?
EA has long maintained very low pricing for its games in Argentina. For a piece that sells for $60 elsewhere, the price in Argentina may be just a few bucks. This strategy attracts a large number of players on the surface, but in fact such a price point simply cannot cover the development and distribution costs. In the end, EA exchanged sales figures for a good market share, but did not get corresponding financial returns.
Sales data is actually very important to the company!
For a public company, market share and sales figures are often seen as indicators of success. But when these data cannot be converted into actual income, their reference value is greatly reduced. The question now facing EA is: will their Argentina strategy actually benefit the company in the long run?
For ordinary players, this news tells us that the so-called “sales volume” and “market share” do not necessarily represent the actual health of game companies. Especially when exchange rates fluctuate violently and emerging markets have limited purchasing power, these data may mislead investors and management decisions.