Electronic Arts, Inc. engages in the development, marketing, publishing and distribution of interactive software games. The company's games are playable by consumers on the following devices: Video game consoles, such as the Sony PlayStation 2 and PLAYSTATION 3, Microsoft Xbox and Xbox 360 and Nintendo Wii; Personal computers (PCs); Mobile platforms, including cellular handsets and handheld game players such as the PlayStation Portable (PSP), Nintendo DS and Game Boy Advance and iPod, and Online (over the Internet and other proprietary online networks).
As of March 31, 2007, the company developed or published products for 13 different platforms. It has published games for approximately 50 different platforms. The interactive software games that the company develops and publishes are broken down into two major categories: games developed by EA Studios, and games that co-publishes with, or distributes on behalf of, another company through EA Partners group. The company’s EA Studios games are either developed internally at development and production studios located in the United States, Canada, England, Sweden, Germany, Singapore, China, Romania and India, or by third parties whom it engages to develop games on its behalf at their own development and production studios. The company markets, publishes and distributes games in approximately 30 countries throughout the world.
The company markets the products produced by its studios under the EA, EA SPORTS, EA SPORTS BIG, and POGO brands.
EA Studios
The company develops packaged goods games internally at its development and production studios located in the United States, Canada, England, Sweden, Germany, Singapore and China. The company invests in the creation of software tools to develop games for multiple platforms. It also makes investments in facilities and equipment that allow it to create and edit video and audio recordings that are used in its games. The company also engages third parties to develop games on its behalf at their own development and production studios.
The company following acquisition of JAMDAT Mobile Inc. in February 2006, merged its existing cellular handset software game development and publishing business into JAMDAT’s to establish its EA Mobile business. The company engages third parties to develop games for cellular handsets on its behalf at their own development and production studios and, to a lesser extent, the company develops cellular handset games internally at its development and production studios located in the United States, Canada, England, Romania and India.
The company develops online games and content internally at its development and production studios located in the United States, Canada and Singapore. In early 2007, the company acquired Mythic Entertainment, Inc., a developer and publisher of massively multiplayer online role-playing games. It also engages third parties to develop online games on its behalf at their own development and production studios.
In early 2007, the company released 32 EA Studio titles. In early 2007, the company released approximately 190,000 stock keeping units, or SKUs (a version of a title designed for play on a particular platform), for cellular handsets.
Co-publishing, Distribution and Third Party Development
The company, through its EA Partners group, teams with other game development companies to assist with the development of their own interactive software games, which the company then publish, market and distribute. (co-publishing). In early 2007, the company signed a co-publishing agreement with NAMCO BANDAI Games America for Hellgate: Londontm, which is being developed by primary Studios. The company also distributes interactive software games that are developed and published by other companies. The company also engages third parties to develop games on its behalf.
Publishing Games — Marketing, Market Segments and Distribution
The company markets its products under four major brand names: EA — the company publishes various games under its EA brand. Its products published under the EA brand include Need for SpeedCarbon, The Sims2 and The GodfatherThe Game; EA SPORTS — sports simulation games. Its products published under the EA SPORTS brand include Madden NFL 07, FIFA Soccer 07 and Tiger Woods PGA TOUR 07; EA SPORTS BIG — arcade-style extreme sports and modified traditional sports games. Its products published under the EA SPORTS BIG brand include Def Jam: Icontm, NBA STREET Homecourt and FIFA Street 2; and POGO — Online casual games and downloadable casual games.
In 2007, the company had two titles, Need for Speed Carbon and Madden NFL 07, published on 10 different platforms. In 2006, the company had one title, Need for Speed Most Wanted, published on eight different platforms.
Packaged Goods
The console, PC and handheld games that the company publishes are made available to consumers as packaged goods (usually Blu-ray Disc, CD, DVD, cartridge or Universal Media Disc format) that are typically sold in retail stores and through online stores (including its own online store). In North America and Europe, the company’s major markets, it sells these packaged goods products primarily to retailers, including mass market retailers (such as Wal-Mart), electronics specialty stores (such as Best Buy) or game software specialty stores (such as GameStop). Majority of its PC products can also be purchased over the Internet through digital download.
In a few of its smaller markets, the company sells its packaged goods products through distributors with whom it has written agreements or informal arrangements, depending on the business customs of the territories. The company also distributes products of other companies through its rack jobbing business in Switzerland. The company had direct sales to Wal-Mart Stores, Inc. The company also had direct sales to GameStop Corp.
Video Games — Consoles, Handhelds and PCs: The console platforms for which the company has published titles include: PlayStation manufactured by Sony; Nintendo GameCube manufactured by Nintendo; Xbox manufactured by Microsoft; Xbox 360 manufactured by Microsoft; PLAYSTATION 3 manufactured by Sony; and Wii manufactured by Nintendo.
The handheld video game players for which the company has published titles include: Game Boy Advance and Nintendo DS manufactured by Nintendo; and PSP manufactured by Sony.
Cellular Handsets
The company, through EA Mobile, is a global publisher of interactive entertainment software playable on cellular handsets, including games, ring tones, images and other content. The company’s customers typically purchase and download its games through a wireless carrier’s branded e-commerce service accessed directly from their cellular handsets. These wireless carrier services include Verizon Wireless’ Get It Now, Sprint PCS Vision, Cingular MEdia and Vodafone live!. Its customers might also purchase and download games directly from its Web site. The company publishes games in multiple categories designed to appeal to a range of wireless subscribers.
Online
The company publishes four types of games that are played online by consumers — online casual games, massively multiplayer online games, mid-session games, and online-enabled packaged goods.
Online Casual Games: The company offers online casual games, such as card games, puzzle games and word games on its website, pogo.com, and on certain online services provided by third parties. The company had approximately 1.5 million paying Club Pogo subscribers as of March 31, 2007.
Massively Multiplayer Online Games: Players experience online-only massively multiplayer online games as interactive virtual worlds where various other players can interact with one another. After installing the software on their PCs, players are able to subscribe and interact with other players online. The company offers three MMO games: Ultima Onlinetm, Dark Age of Camelot and The Sims Online. It is in the process of developing Warhammer Online.
Mid-session games: The company offers one mid-session game, EA SportsFIFA Online.
Online-Enabled Packaged Goods: The company includes online functionality in certain of its PC, PLAYSTATION 3, PlayStation 2, Xbox 360, Xbox and PSP products, which enable consumers to participate in online communities and play against one another through the Internet.
Digital Content: The company offers full-game downloads and additional content (such as booster packs, expansion packs and smaller pieces of game content referred to as micro-transactions) for its PC and console-based games through its EA.com Web site and online interfaces with in game consoles. In addition, its POGO games are offered through third-party websites.
Significant Relationships
Hardware Platform Companies: Sony: Under the terms of agreements the company has entered into with Sony Computer Entertainment, Inc. and its affiliates, the company is authorized to develop and distribute disk-based software products and online content compatible with the PlayStation 2, PLAYSTATION 3 and PSP. Pursuant to these agreements, the company engages Sony to supply PlayStation 2, PLAYSTATION 3 and PSP disks for its products.
Microsoft: Under the terms of agreements the company has entered into with Microsoft Corporation and its affiliates, the company is authorized to develop and distribute DVD-based software products and online content compatible with the Xbox and Xbox 360.
Nintendo: Under the terms of agreements the company has entered into with Nintendo Co., Ltd. and its affiliates, the company is authorized to develop and distribute proprietary optical format disk products and cartridges compatible with the Nintendo GameCube, the Wii, the Nintendo DS and Game Boy Advance. Pursuant to these agreements, the company engages Nintendo to supply Wii proprietary optical format disk products and Nintendo DS cartridges for its products.
Cellular Handsets: The company has agreements to distribute its wireless applications through approximately 110 carriers in approximately 40 countries.
Content Licensors: Its products are based on or incorporate content and trademarks owned by others. the company’s EA, EA SPORTS and EA SPORTS BIG products include rights licensed from third parties, including major studios, publishers, artists, authors, celebrities, athletes and the major sports leagues and players associations.
Suppliers
The suppliers the company uses to manufacture its games and related materials include independent third parties, Sony and Nintendo.
Competition
Sales of Packaged Goods: For sales of packaged goods, the company competes directly with Sony, Microsoft and Nintendo, each of which develop and publish software for their respective console platforms. The company also competes with various companies, such as Activision, Atari, Capcom, Koei, Konami, LucasArts, Midway, Namco, Sega, Take-Two Interactive, THQ and Ubisoft. It also competes with media companies, such as Fox, Disney, Time Warner, Viacom and Vivendi
Sales for Cellular Handsets: The company considers its primary competitors in the wireless entertainment applications market segment to be Disney, Fox Mobile Entertainment, Gameloft, Glu Mobile, Hands-On Mobile, Namco, Sony Pictures and THQ Wireless.
Online Sales: The company’s competitors in the casual games segment include MSN, Popcap, Real, AOL and Yahoo!. In the massively multiplayer online game segment its competitors include Atari, Midway, NC Soft, Sony and Vivendi Games. In the mid-session game segment its competitors include Nexon.
History
Electronic Arts, Inc. was incorporated in 1982.
