Electronic Arts Inc Stock

Electronic Arts Inc. (Electronic Arts) is a global leader in digital interactive entertainment. The company develops, markets, publishes and delivers games, content and services that can be experienced on game consoles, PCs, mobile phones and tablets.

At the company’s core is a portfolio of intellectual property from which the company creates innovative games and experiences that deliver high-quality entertainment and drive engagement across the company’s network of hundreds of millions of unique active accounts. The company’s portfolio includes brands that the company either wholly owns (such as Apex Legends, Battlefield, and The Sims) or licenses from others (such as Madden NFL, Star Wars, and the 300+ licenses within the company’s global football ecosystem).

The company is focusing on building games and experiences that grow the global online communities around the company’s key franchises; reaching more players through connecting interactive storytelling to key intellectual property; and building re-occurring revenue from the company’s annualized sports franchises, the company’s console, PC and mobile catalog titles, and the company’s live services. The company develops and publishes games and services across diverse genres, such as sports, racing, first-person shooter, action, role-playing and simulation. The company’s portfolio, talent, live services offerings, use of multiple business models and distribution channels, and network of hundreds of millions of unique active accounts provide the company with strategic advantages.

Revenue from the company’s global football franchise, which is consistently one of the top franchises in the marketplace and includes the annualized console, PC and mobile games, as well as FIFA Ultimate Team, is material to the company’s business and will continue to be so. Starting in fiscal year 2024, the company’s global football franchise will transition to a new EA SPORTS FC brand.

Live services net revenue, particularly extra content net revenue, has been material to the company’s business, and the company expects it to continue to be so. Through the company’s live services offerings, the company offers its players high-quality experiences designed to provide value to players and extend and enhance gameplay. These live services include extra content, subscription offerings and other revenue generated outside of the sale of the company’s base games. The company’s most popular live services are the extra content purchased for the Ultimate Team mode associated with the company’s sports franchises and extra content purchased for the company’s Apex Legends franchise. Ultimate Team allows players to collect current and former professional players in order to build and compete as a personalized team. Live services net revenue generated from extra content purchased within Ultimate Team, a substantial portion of which was derived from FIFA Ultimate Team, and for the company’s Apex Legends franchise, is material to the company’s business.

The company can add value to its network by making it easier for players to connect by offering choices of business model, distribution channel and device. The company’s games and services can be experienced on consoles, PCs, mobile phones, tablets, and reach the company’s players through both digital distribution channels and retail channels. Players can access the company’s games and services through traditional single-game purchase or through subscription offerings; and certain of the company’s games and services are available through a ‘free-to-play’ model whereby players download the game for free and engage with services provided on an ongoing basis. For example, the company develops products and services within the company’s global football franchise that allow players to engage through multiple business models, distribution channels and devices, including the company’s annualized console and PC games and associated services, which can be purchased through both digital distribution and retail channels and also is available through subscription services; a mobile free-to-play offering; and a PC free-to-play game available in certain countries.

Digitally, the company’s console games and live services can be purchased through third-party storefronts, such as the digital stores of the company’s console partners. The company’s direct sales to Sony and Microsoft represented approximately 32 percent and 16 percent of total net revenue, respectively, in fiscal year 2023. The company’s mobile and tablet games and services are available through third-party application storefronts, such as the Apple App Store and Google Play. The company’s PC games and services can be downloaded directly through the EA app, EA’s digital storefront, as well as through third-party online download stores, such as Steam. The company also partners with third parties to publish the company’s mobile and PC games and services in certain Asian territories, such as the company’s partnerships with Tencent Holdings Limited for FIFA Online in China and Nexon Co. Ltd. for FIFA Online in Korea. From time to time, third parties will publish games and services under a license to certain of the company’s intellectual property assets.

The company also offers its EA Play subscription service on consoles and PC. EA Play allows players access to a selection of the company’s console and PC games and services for a monthly or annual fee. The company’s packaged goods games are sold directly to mass market retailers, specialty stores and through distribution arrangements. New distribution methods and business models are expected to continue to emerge in the future, and the company intends to evaluate these opportunities on a case-by-case basis.

The company is investing towards a future of accelerated content generation and increased player engagement - with players across the company’s network using games to stay connected to friends, and to express themselves. While the company continues to anchor its business on delivering amazing content and services to more players, the company’s intention is to build from its core and invest in new areas of opportunity.

Significant Relationships

Sony and Microsoft: Under the terms of publishing agreements, the company has entered into with Sony Interactive Entertainment LLC and its affiliates and with Microsoft Corporation and its affiliates, the company is authorized to develop, market, publish, and distribute disc-based products and services, and the company authorizes Sony and Microsoft to distribute its digital products and services, compatible with PlayStation and Xbox consoles, respectively. Under these agreements with Sony and Microsoft, the company has the non-exclusive right to use, for a fixed term and in a designated territory, technology that is owned or licensed by them to publish the company’s games on their respective consoles.

Apple, Google and Other App Stores: The company has agreements to distribute its mobile applications and additional content through distributors, such as Apple and Google. The company’s applications are downloaded for mobile devices from third party application storefronts.

Publishing Partners in Asia: The company has entered into agreements whereby the company partners with certain companies, including Tencent Holdings Limited, Nexon Co., Ltd and Garena Online Private Limited. or their respective affiliates, pursuant to which these companies publish the company’s mobile and PC free-to-play games in certain countries, including China, Korea and certain countries in Southeast Asia. The company’s players access games from the publishers’ online storefronts and are charged for additional content purchased within the company’s game environment.

Seasonality

The company has historically experienced the highest percentage of the company’s net bookings in the company’s third fiscal quarter (year ended March 2023) due to seasonal holiday demand and the launch timing of the company’s games.

History

Electronic Arts Inc. was founded in 1982. The company was incorporated in California in 1982. In 1991, the company was reincorporated under the laws of Delaware.