Disappearing Blocks: EA Embodies Future of Game Sales with Free Tetris

Twenty-two years ago, Nintendo (PINK: NTDOY ) cemented its place as the global
leader of the video game market. It didnt do it by making games about a portly
Italian plumber with an Olympic high jump ability and it didnt do it by
convincing people to buy a gray box that plugged into their television.
Nintendos key to victory was putting a little gray box in peoples hands. The
Game Boy wasnt the first portable video game machine in history, but it did have
one thing that others didnt; a trump card that helped make Nintendo what it is
today: Alexey Pajitnovs Tetris . The industry has changed since then, and the
Game Boy is a squeaking abacus compared to Apple s (NASDAQ: AAPL ) iPhone and
other common pocket devices running Google s (NASDAQ: GOOG ) Android operating
system. One thing hasnt changed, though: People still like Tetris . The puzzle
game of making perfect rows out of seven differently shaped blocks that fall at
increasing speeds from the top of the screen remains as popular now as it was in
1989. It has sold hundreds of millions of copies (132 million paid copies on
mobile phones alone) across a wide variety of platforms and through a swath of
publishing partners working with the games management company, Blue Planet
Software. Electronic Arts (NASDAQ: ERTS ) released a brand-new version of Tetris
on Android devices that is totally free on Tuesday. Chances are good EA will
make more money through its free version of Tetris than it has with
single-purchase copies in the past. It uses the same advertising-supported model
as other free mobile EA games like Scrabble , with ad support running in the
game with partners like AOL (NYSE: AOL ). EA understands all too well that how
video games are monetized now is very different from the way they were in 1989,
and its aggressive digital strategy has been successful. Nintendo made its money
on Tetris by selling a $30 cartridge containing the game at stores and by
packing it in with the Game Boy. Now, for a game to be a massive financial
success, it has to be more than good. It has to connect players to Facebook and
Twitter accounts; let them rack up high scores seen by a broad swath of friends
through gaming networks like Microsoft s (NASDAQ: MSFT ) Xbox Live; and charge
for every last bit of content, whether its a new level for the game or a fancy
shirt for your custom character. It also must sometimes forgo an initial fee at
all. Some businesses are clinging to the old ways. Nintendo is releasing Tetris:
Axis for the Nintendo 3DS on Oct. 2. Its a retail version of the game purchased
at stores like GameStop (NYSE: GME ) for $34.99. Its precisely these sorts of
choices that have hurt the company so badly this year . Why would anyone pay
$34.99 for a game that isnt dramatically different from something they can get
for free on their phone? The lesson for investors: Follow whos doing something
new with Tetris to get a better sense of where the industry is headed. As of
this writing, Anthony John Agnello did not own a position in any of the stocks
named here. Follow him on Twitter at