Yesterday EA held its Q4 2011 financial earnings call with investors and the press, discussing a number of issues from the financial health of the company to their upcoming wave of games.
Financially, EA had a strong Q4 and was especially productive in the digital distribution space. “We’re happy to report another strong quarter, top and bottom line. We’re particularly proud of the scale and growth rate of our digital business,” said John Riccitiello, EA CEO.
Eric Brown, EA Chief Financial Officer, added that “digital revenue exceeded our US$750 million full year non-GAAP target, driving higher profitability.” During the conference call, Brown discussed the current PSN issues and its impact on EA’s business: “We think there’s a modest impact that we’ve already factored into the upcoming quarter. Our hope is that it comes back online as quickly as possible.”
Despite this positive Q4 2011, EA still posted an annual loss for financial year 2011 – a loss of US$276 million. This is however a marked improvement over fiscal year 2010 in which they reported a loss of US$677 million.
Mass Effect 3 delays
Moving on to the conference call, EA CEO John Riccitiello discussed Mass Effect 3, saying that “This franchise is a personal favourite of mine.” We recently learned that Mass Effect 3 has been delayed until 2012.
Riccitiello said that “One of the things that Ray Muzyuka and the team up at Edmonton has done is essentially…adjust some of the gameplay mechanics and some of the features, which you’ll see at E3 to put this in a genre equivalent to shooter-meets-RPG, and essentially address a far larger market opportunity than Mass Effect 1 and Mass Effect 2 began to approach. We’re huge believers in the IP and are purposefully shifting it to address a larger market opportunity.”
According to EA Games label president Frank Gibeau, at E3 they will reveal “some feature innovation and some new ways to play” for Mass Effect 3.
Mass Effect 3 concept art
Battlefield 3 – the CoD killer
EA’s earnings report indicates that Battlefield 3 has thus far secured 700 percent more pre-orders than did Bad Company 2. Riccitiello didn’t pull his punches, boasting that Battlefield 3 is superior in every way to anything that will come from Activision’s Call of Duty franchise.
“We know we have a big competitor, but head-to-head with Call of Duty in Q3, we have the superior game engine, a superior development studio, and a flat out superior game. Our goal is to significantly gain share in the huge FPS category and to put the other team on defence,” said Riccitiello, adding that “a lot of people are telling us they want to play this game on day one.”
“With Battlefield 3 we are mounting the biggest launch campaign for a game in EA’s history. We think the franchise is worth it. We know the opportunity is worth it. Still, this is a big commitment of resources,” said Riccitiello. “[Battlefield 3] is designed to take [Call of Duty] down. If you’re looking for a battle of the titans – Red Sox vs Yankees, Microsoft or Google – and what the tip-off point is for this holiday season, this is it.”
Battlefield 3
Star Wars: The Old Republic
Frank Gibeau discussed the upcoming Stars Wars MMO currently in development by BioWare – Star Wars: The Old Republic. A release date has yet to be pegged for the title, but EA expects it to launch by the end of 2011, with a chance it could be pushed into January 2012.
“Everyone is waiting for us to announce the ship date… Sorry, but that’s not going to happen today. We’re holding the date for two reasons – first, we don’t want to tip off the competition; second, we want more data from the beta test to guarantee a spectacular experience at launch,” said Gibeau.
Star Wars: The Old Republic
The digital future – EA as a software platform
Riccitiello discussed the company’s shift from a defensive business stance to offensive. “When we established objectives around reducing title count, cutting costs and starting a digital business, we did so recognizing that we needed to execute a turn-around and the major part of what needed to change was to reduce titles and cost. Our strategies could be defined as fundamentally ‘defensive’.”
“Today, we are announcing a big shift to ‘offense’. Over the coming years, we will transform EA from a packaged goods company to a fully integrated digital entertainment company,” said Riccitiello. He went on to outline three new strategies to transform EA to a games-as-a-service (GAAS) model:
1. Intellectual Property – “We believe we are driving the strongest portfolio of IP in the industry with EA SPORTS, FIFA, Hasbro, Madden, Pogo, Battlefield, Need For Speed, The Sims, Tetris, Dragon Age, Mass Effect – and more. We fully intend to make these properties into year-round businesses that lead their sectors across a range of platforms,” said Riccitiello.
2. Platform – “Increasingly, we see ourselves as a software platform every bit as much as we see ourselves as a content maker for other companies’ platforms. We have a great start with 112 million consumers in our Nucleus registration system, up from 61 million a year ago. And, while we will continue to be a great partner to our best retail customers and first party partners, you will see the beginnings of a consumer game platform emerge at EA that complements and extends the console ecosystem and addresses the wider opportunity on other devices,” said Riccitiello.
3. Talent – “To deliver on the two strategies above – IP and Platform – we will expand on a model that is already working at EA – and only at EA. We are the only company with world-class teams working cross-platform on social, mobile and console development. We are integrating these teams and augmenting them with product monetization and marketing. It’s a big change. As an investor, you can see this as a way to better manage our IP, and drive up the ARPU for our core properties. As a developer, you can see this as the reason EA will be the most interesting and satisfying place to work in the game industry,” Riccitiello concluded.
Mass Effect 3 delay, Battlefield 3 superiority, and digital future << Comments and views
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