Electronic Arts Inc (NASDAQ:EA) learns art of raking revenue from digital sales

Posted by Steve Raasch July 25, 2013 0 Comment 765 views

This is the first time that Electronic Arts Inc (NASDAQ:EA)’s real-life money is largely coming in from digital sales. Brick and mortar stores have been on the brink of going down for several years now. Broadband penetration has increased and so have the downloadable releases by indie developers and prominent publishers. All of this has sort of wrenched the power wand from GameStop’s hand and changed the way the game-distribution game is played.

Digital sources rule the day

However, this week may represent a high-point in the war between retail and online distribution in the current-day gaming market. For the very first time, Electronics Arts announced that the large percentage of its revenue of the quarter came from solely digital sources. Of course, only 50.7% of its $949M of GAAP revenue for the quarter came from various direct online downloads. This means that the company still relies pretty heavily on traditional retailing for 49.3% of its business.

A comparative view

Nevertheless, in the same period a year ago, digital sales made up only around 36% of EA’s revenue. This change has been attributed to two different factors. The first is that there has been a marked rise in digital revenues and the second is that brick and mortar sales have reduced significantly. This trend has been evident in the company’s results at least for the last one year.

Unabated demand

A closer look at Electronic Arts’ results shows the exact source of the retailer-free money. It is coming from app purchases. Free-to-play and extra content revenue rose 30% y-o-y to $177M. Smartphone and free-to-play tablet games like Real racing 3 and The Simpsons. These are all large contributors to that increase. However, players across the globe are showing an indefatigable demand for the Ultimate Team feature from FIFA.

In the current quarter, this digital trading card game raked in $70 million which was a whopping 92% in comparison to the same period in the previous year for FIFA 12. As far as EA is concerned, online is the way to go!

About Steve Raasch

Steve Raasch is a breaking news reporter for GDP insider. During his nearly two decades of editorial experience, Steve has covered a variety of topics including small business, health, personal finance, advertising, workplace issues and consumer behavior. Steve is very passionate about his work. Steve earned a master of arts degree in international relations from the Johns Hopkins University School of Advanced International Studies in Washington.

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