Electronic Arts is looking forward and betting on mobile and social gaming, and the timing couldn’t be better: the company posted its 11th consecutive loss, down $82 million for the quarter ending December 31st. Getting deep into the financials, the packaged goods games market has continued its decline quarter after quarter, and EA is predicting it will fall a further 3% in the coming year. These packaged goods are 80% of EA’s bottom line, and the change is hurting EA’s core business. At the same time, EA has been increasingly focused on mobile and web games, and with the purchase of Playfish, entered the realm of Social Gaming in a big way.
To put social games in a little financial perspective here, we can see that EA Mobile’s revenues for the quarter were $38 million for the quarter, up 9% from a year earlier, and although no private numbers were shown for Playfish, estimates put them around $75 million to $100 million a year. These are part of a total digital revenue of $575 million for EA, which pales in comparison with the near $3 billion from game-on-disc games. However, John Riccitello, EA’s CEO since 2007, whose experience comes from working with the music industry’s transition from physical to digital media, has made clear his plans to transition EA to capitalize on the rise of digital distribution and gaming. His COO, John Schappert, himself a veteran of XBox Live announced : “In fiscal 2011 [April 2010 – March 2011], every one of EA’s releases will have an online component, both downloadable content and online play, and don’t forget that we have a full roster of titles coming from our online subscription site, pogo.com, from our mobile and iPhone group, and of course, our social gaming team, Playfish.”
EA has announced major moves in Social Gaming recently. Tiger Woods Online plans to use Facebook Connect, Playfish announced they will bring a popular EA IP to Facebook and the Madden brand will eventually be released on Facebook in some game form. Certainly, the company anticipates bringing its world class brands to the web in a big way, and are poised to do so. The problem is that the world of social, casual and mobile games is a fast-changing one, and it will really come down to the quality of the games to determine whether they achieve their audience and monetary potentials for the company.
