To armchair quarterbacks and those with a trigger finger, Electronic Arts (EA) is their Picasso. EA is a top-three global video game publisher with popular titles such as Madden NFL, The Sims, and Need for Speed. The company also distributes third-party titles such as MTV Games' Rock Band franchise and Valve Software's Left 4 Dead. It also publishes games based on other media franchises such as Harry Potter. EA develops its games for home and portable console systems from Sony, Nintendo, and Microsoft, as well as for PCs. Its EA Interactive sells online social games via websites Pogo and Playfish, as well as mobile and Hasbro-licensed games such as Monopoly. Its products are available in more than 30 countries.
Long the #2 video game software company behind industry-emperor Nintendo, EA was overtaken in sales by Activision Blizzard in 2009 (the year after Activision and Blizzard merged). Home video game console systems make up about 60% of sales, split mostly between Microsoft's Xbox 360 and Sony's PlayStation 3. EA'a largest single customers are retailers, the two biggest being GameStop (16% of sales) and Wal-Mart (10%). Packaged goods resold by these customers has historically been EA's main format and channel strategy, but the company's future is expressly digital. It wants not only to deliver content digitally but also to become a "games-as-a-service" platform. Games such as Tiger Woods PGA Tour and Need for Speed have free-to-play online versions. Its online gaming network, Nucleus, saw a more than 80% increase in registered users over 2010, now at more than 110 million; monthly active users number more than 20 million.
On its way to transforming itself into a fully integrated digital entertainment company, digital sales for the year were up 46% to more than $830 million, exceeding both the company's expectations and beating the overall sector's growth. EA's total 2011 revenues fell, however, for the second consecutive year, but at a less alarming 2%. It also incurred another year of losses, but that metric has been on the opposite trajectory, improving over the past two years. That positive note is primarily due to restructuring efforts started in 2009 continued through 2011. Actions have included some studio closures and personnel cuts designed to take advantage of the trend toward most of its sales coming from a select group of its most popular franchises. EA released 54 primary titles in 2010; that was trimmed to 36 in 2011, and will drop to 22 in 2012. Restructuring work in 2011 centered on licensing and developer agreements to find yet more gains in future profitability. In general the restructure has been a move toward consolidation of much of its operations into three operating labels: EA Games, EA SPORTS, and EA Play.
EA Games entails the biggest cross-section of the company's studios and development teams, fostering games such as Need for Speed, Dragon Age, Mass Effect, Dead Space, and Battlefield. This business also sees the fruits of EA's development partnerships with outside studios such as Crytek, creator of the landmark first-person shooter Far Cry for Ubisoft; it now produces the Crysis franchise for EA.
Although not as large as EA Games, EA SPORTS titles are among its most popular franchises, many of which receive sequels on a yearly basis, more often than most of the company's other titles. These games are based on intellectual property that it licenses (FIFA Soccer, Tiger Woods PGA Tour, NHL Hockey). EA Play game content attempts to appeal to a wider audience, and includes games such as The Sims, Spore, and licensed movie properties such as Harry Potter.
Remaining operations are divided into the EA Interactive segment and its publishing business, the latter of which handles such functions as distribution, sales, and marketing. EA Interactive's free-to-play social games are produced for sites such as Facebook, Google, Bebo, MySpace, as well as for Google's Android smartphone operating system and Apple's iPhone. Its Hasbro-related content includes iconic titles such as Scrabble, Yahtzee, and Nerf.
In pursuing the burgeoning social and casual games market, EA continues to put its money in acquiring these game developers. In 2010, it bought UK-based mobile games publisher Chillingo, distributor of the popular iPhone game Angry Birds, and in 2011 it acquired mobile game specialists Mobile Post Production and Firemint to supplement its wireless gaming development efforts. In its largest acquisition of the year, EA paid $750 million to acquire PopCap Games, the Seattle company behind Plants vs. Zombies, Bejeweled, and Zuma.
That purchase, along with its Sims Social game becoming the fastest-growing game on Facebook, has moved it closer to catching Zynga, putting its user total to more than 70 million, though Zynga boasts more than 270 million users. EA continued building its family of social game developers that year with the purchase of freemium RPG (role playing game) maker KlickNation, rebranding it with one of its most successful labels, BioWare (Mass Effect, Star Wars: The Old Republic, Dragon Age), as BioWare Sacramento. It joins the social game creation team in San Francisco to form BioWare Social, which will focus on social RPG games.
Looking to cash in on the massively multiplayer online role-playing games (MMORPG) market, the company has developed its Warhammer Online and Star Wars: the Old Republic franchises to compete with Sony Online Entertainment's EverQuest and genre-overlord World of Warcraft from Blizzard.