To armchair quarterbacks and couch-potato commandos, Electronic Arts (EA) is their Picasso. EA is a leading global interactive entertainment software publisher with popular titles such as Battlefield, FIFA Soccer, Madden NFL, The Sims, and Need for Speed. The company also distributes third-party titles such as Rock Band and Valve Software's Left 4 Dead, and it publishes games based on other media franchises such as Harry Potter. EA develops its games for consoles from Sony, Nintendo, and Microsoft, as well as for PCs. EA also serves mobile devices and provides online social games, including Hasbro-licensed games such as Monopoly, via websites Pogo and Playfish. Electronic Arts was founded in 1982.
Europe is EA's largest market, accounting for nearly half of its sales. North America represents about 45%, with Asia contributing about 5% annually.
Sales and Marketing
As EA's business becomes increasingly digital, more of its products and services are being purchased over the Internet through Origin, the company's direct-to-consumer platform, or through digital downloads from third-party retailers or via mobile application storefronts. The company also sells packaged games to retailers, including mass merchants ( Wal-Mart), and consumer electronics stores ( Best Buy), and specialty game shops ( GameStop). In fiscal 2013 (ended March) direct sales to GameStop stores accounted for about 13% of EA's total sales.
In fiscal 2013 EA's sales slid 8% compared with the prior year to $3.8 billion. Net income increased 29% over the same period. The decline in sales -- the third in four years -- was blamed on weakness of the Battlefield, Crysis, Dragon Age, Portal, and Need for Speed franchises, partially offset by increased sales of FIFA, FIFA Street, and Mass Effect titles. Continuing its upward trend, Service and other revenue increased 45% in fiscal 2013 versus the prior year, primarily driven by Star Wars: The Old Republic and FIFA 13 Ultimate Team, as well as Battlefield 3 Premium subscriptions. Sales in North America declined 15%, while Asia posted a 10% decline, and sales in Europe fell 2%.
As EA pursues a digital approach, its structure morphs along with it. The company now divides operations into various labels: EA Games (Battlefield, Dead Space, Medal of Honor, Need for Speed), EA SPORTS (Tiger Woods, Fight Night, FIFA), BioWare (Mass Effect, Star Wars, Dragon Age), Maxis (Sims, Spore), recently-acquired PopCap Games (Bejeweled, Plants vs. Zombies, Zuma), and social and mobile studios (EA Mobile, Playfish, Pogo). The company's social and mobile efforts entail free-to-play social games produced for sites such as Facebook, Google, Bebo, MySpace, as well as for Google's Android operating system and Apple's iPhone.
Whether digital or physical, product revenues still drive the business, but EA's digital focus also means growing service revenue (25% of sales). Service revenue includes games and content that require hosting support for the essential game experience, as well as recurring subscriptions.
Although it's pressing hard to be predominantly a digital publisher, EA'a largest single customers are still retailers, the two biggest being GameStop (13% of sales) and Wal-Mart (now less than 10%). The company, however, increasingly looks to mobile and third-party e-commerce marketplaces, and more so its own e-commerce platform, Origin, which also offers titles from other publishers such as SEGA.
Like most of its competitors, EA has responded to industry struggles by culling its catalog to focus on titles that generate the most revenue. In line with its digital transformation, those games are now designed to include additional online features, where they used to have few or none.
EA and Disney recently signed an agreement to create a number of games on the Star Wars franchise for consoles, PCs, tablets, mobile
The investment firm FMR LLC owns about 13% of the shares of Electronic Arts.