EA is a major publisher and development company; it is a global leader in digital interactive entertainment and owns critically acclaimed franchises such as Battlefield, The Sims and Mass Effect. The company has suffered some serious setbacks recently amidst layoffs and launch disasters, Simcity’s dreadful launch showed the consumers position regarding DRM practices and seriously affected the company’s PR. John Riccitiello’s departure left the company without a leader and in the wake of his resignation EA laid off approximately 10% of its staff, the Montreal offices were severely downsized and the decision to remove EA’s investments in facebook games (such as Simcity Social and Pet society) left some investors worried.
All this news coupled with the fact that EA “won” the title of worst company in America increased the interest in the company’s financial report and the expectations for the 2014 fiscal year.
But not everything is bad news for the video game giant, other news are very positive and could indicate the future of the company and lay the groundwork to support future earnings. The EA-Disney agreement could spur revenue figures to new heights if EA plays the cards correctly. After shutting down Lucasarts Disney approached EA with a business plan and the idea that was too alluring to be rejected. EA and Disney signed a multi-year exclusive agreement to develop and publish games based on the Star Wars IP, the agreement included the authorization to create new Star Wars titles for the “core gaming audience”. Apparently these new titles are already in development at studios owned by EA such as DICE, Visceral games and Bioware.
Some of the past Star Wars games have been very successful; Battlefront by Pandemic and Knights of the Old Republic developed by Bioware had very good sales, KotOR has sold 2.19 million units as of 20th Apr 2013. The Star Wars games would be developed with the Frostbite 3 engine which is currently being used in Battelfield 4 so that is good news for us gamers. It remains to be seen whether or not the demand for this games is still as strong as it once was, I think most of us want to see Star Wars: 1313 and Star Wars: First assault grow up to become fully-fledged games, if the approach is correct EA could make a lot of money after paying the licensing fee to Disney.
Also on a positive note EA announced a batch of games coming in the near future, The Sims 4 and two Plants vs Zombies titles which are games that could affect positively the net revenue for the next year.
The Report Highlights
- FY 2013 Non-GAAP Digital Net Revenue Up 36% to $1.7 Billion.
- FIFA 13 Sells Over 14.5 Million Units in FY 2013.
- Battlefield 3 Premium Has Over 3.5 Million Subscribers To Date.
- SimCity Sells Over 1.6 Million Units To Date.
- EA and The Walt Disney Company Announce Multi-Year Star Wars Franchise Agreement.
- EA posted total net revenue as of March 31 (twelve months ended) of $3.7 billion, which represents a 8.3% decrease from the same period in 2012, Most of the net revenue came from operations in Europe (53% of revenue) although the North America figures went up 21% year over year.
- Xbox 360 activities represent an average (from Q4/2012 to Q4/2013) of 30.8% of total GAAP revenue; Playstation 3 represents an average(from Q4/2012 to Q4/2013) of 29.4% of total GAAP revenue, Wii represents 1.5% and PC represents an average of 25% of total GAAP revenue.
- As of Q4 of 2013 total console operations represent 65% of total revenue, total mobile and handheld operations represent 12 % of total revenue, PC represents 21% of revenue and 2% of revenue comes from other operations.
- As regards to the Simcity launch EA’s Label president Frank Gibeau said that
“…The key takeaway here: SimCity is a highly resilient, global franchise with a long service life in front of it. But we learned our lesson and are now building better processes to anticipate and service demand. This won’t happen again.”
Regarding the Disney-EA agreement Frank Gibeau said that
“Our agreement unlocks a whole new future of Star Wars games that will span consoles, PCs, tablets, mobile, and more.”
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