EA Makes Digital Money

EA is hoping this is better than Star Wars 1, 2, and 3. It could hardly be worse.

At least there's one traditional publisher that has seen the future and is preparing for it. Electronic Arts has had a string of rough years, but part of the reason for that is they've been shifting their business to take advantage of the shifts in the industry. EA has been investing heavily in social games (buying Playfish), and putting a huge number of games onto the iOS platform, and making big strides in selling virtual goods. The results are starting to come in, and the recent Q4 numbers look pretty good.

EA's managed to eke out $151 million in profit, on sales of $1.1 billion. For the full year, their revenues were down a bit (dropping to $3.59 billion from $3.65 billion, and their losses narrowed to $276 million. (Which actually was a profit if you look at the numbers and consider some of the extraordinary items...but accounting is too complicated for this simple blog to get into.) Their digital revenue for the year was over $833 million, so it's a good 25% of their total business now.

EA's well positioned to take advantage of the rapid growth in social and mobile games, though they still have to make sure they make good money in the packaged goods market. These transitions never proceed at the expected pace, so having a balanced portfolio of games in different market segments is prudent. EA's plays look like they're doing pretty well, as both Playfish and EA's iOS games increased their sales over 100% in the fourth quarter over the last year's fourth quarter.

Still, EA isn't going whole hog into new ways to make money... they still plan to charge a subscription fee for Star Wars: The Old Republic instead of going the free-to-play route. At least, not initially... we'll see how that decision holds up after a few months. EA's also planning to spend big on marketing to try and take awya Call of Duty's market with some upcoming games. They're not all digital yet... but give it a few years, and those numbers will move quite a bit.

It does make you wonder when Activision is planning to dabble in mobile or social games... if ever.