Electronic Arts (Nasdaq: ERTS) is finally looking like it has figured out this digital distribution thing.

The video game giant's third quarter saw a 47% increase in GAAP digital sales, while packaged goods declined by 9% and EA nearly eradicated its distribution deals for other people's games.

Distribution titles in fiscal year 2011 consist of two Rock Band titles from Viacom (NYSE: VIA), another Viacom title in the upcoming movie tie-in Rango, and All Points Bulletin from the now-defunct indie studio Realtime Worlds. The Rock Band development team is now privately operated and Realtime Worlds entirely liquidated, giving EA all the less obligation to keep distributing third-party games.

The future is clearly digital, and based almost entirely on projects controlled by the studio from mop-top to snakeskin boots.

Since a lot of the digital sales are structured as subscriptions and accounted for on a six-month schedule, GAAP results look weak. Add those deferred revenues back in, and discount one-time restructuring charges, and EA made a tidy $0.59 net profit per share in the holiday quarter.

Most of the deferred sales come from the Microsoft (Nasdaq: MSFT) Xbox 360 and Sony (NYSE: SNE) PlayStation 3 consoles, both of which pack hard drives and generally encourage downloading games, rather than hauling disks home from your local game store. The Nintendo (OTCBB: NTDOY.PK) Wii, on the other hand, doesn't have the same storage advantages, and thus represents a much smaller piece of EA's digital pie.

It's about time that somebody hit EA with a digital cluebat. Widespread broadband access combined with the attractive distribution costs (read: nearly none) in a digital distribution model make this the obvious -- and maybe only -- way forward.

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