EA focusing on 'hits,' releasing fewer games
by Alice O'Connor, shacknews.com, May 25, 2011 3:10PM PDT
Electronic Arts yesterday filed its annual 'Form 10-K' financial mega-report with the US Securities and Exchange Commission. As well as the usual sums of income and expenditure, the 119-page report offers a handful of little fact nuggets giving a wider view of what's going on at EA, including its future plans.
As we reported earlier this month, EA ended its 2011 fiscal year on March 31 with a loss of $267 million. This was a big improvement over the 2010 fiscal year, however, when the company lost $677 million. With things somewhat on the mend, what's EA's next step?
The developer and publisher reveals it plans to yet again cut the number of titles it releases. During the 2012 fiscal year, EA expects to only release "approximately" 22 "primary" titles. This is down from 36 in the last fiscal year, which itself was down from 54 in FY2010.
"In our industry, though many new products and services are regularly introduced, only a relatively small number of 'hit' titles accounts for a significant portion of total revenue for the industry," EA explained. "Publishing fewer titles means that we concentrate more of our development spending on each title, and driving 'hit' titles often requires large marketing budgets and media spend."
It's a double-edged sword, though, as EA notes that "The underperformance of a title may have a large adverse impact on our financial results. Also, hit products or services offered by our competitors may take a larger share of consumer spending."
EA also revealed which titles were the biggest across the world over the last fiscal year, saying North American revenue was "driven by" Madden NFL 11, Battlefield: Bad Company 2, and Medal of Honor. In Europe, however, FIFA Soccer 11, Medal of Honor and Need for Speed Hot Pursuit were in the driver's seat. Over in Asia, the top games were FIFA 11, Medal of Honor, and the free-to-play EA Sports FIFA Online 2.
Two last fun little fact nuggets for you--direct sales to GameStop accounted for 16% of EA's net revenue, while Walmart was 10%. That'll be why GameStop has so much bargaining power and gets so much special treatment.