FIFA 13, Madden NFL 13, and digital sales surge but EA isn’t growing yet

electronic arts earnings

‘Tis the season for video game publishers to lay out their most tumultuous earnings report. The July to September quarter is a perilous period for game makers, a season when most people aren’t buying games, they’re spending on travel and outdoor activities. Electronic Arts is an unusual exception in that landscape, because the summer quarter is when the monster pub releases its most lucrative titles, namely Madden NFL, FIFA, and other sports titles like NHL and NCAA Football that support those titans. EA’s been having a rough year financially, with its stock taking huge hits because of disappointments like Star Wars: The Old Republic. How did it do during summer 2012 according to its earnings report? Very good on one end, and pretty badly on the other.

For starters, Madden NFL 13 and FIFA 13 absolutely dominated the period. FIFA 13 alone sold more than 7 million copies—that’s console and PC copies, not mobile downloads—after releasing with just days to go in the quarter. Madden NFL 13 did very well as well, with the Xbox 360 and PlayStation 3 showing modest growth after two years of audience stagnation. Sales were up 9 percent year-on-year.

Those games kept EA’s packaged goods business booming, but its other success story was the ongoing growth of EA’s digital business. Net revenue from digital goods for the quarter grew by nearly 28 percent year, up to $324 million from $234 million last year. Not only is digital revenue growing, but it’s nearly closed the gap with net revenue from packaged goods, which totaled $365 million for the quarter. EA’s Origin digital storefront also grew to 30 million users over the period, just half of Valve’s user base, but impressive numbers all the same.

Growth for digital and its already hugely popular, profitable sports titles is great news for Electronic Arts, but that growth wasn’t enough to help the company surge to profits in the period. Total revenue was flat, growing from $1.03 billion to $1.08 billion. That slight uptick was a wash, though. It reported a loss of $340 million during the quarter in 2011, and a $381 million loss in 2012.

Worse still was the dramatic erosion of Electronic Arts’ social gaming business. The company invested significant resources in developing social titles over the past three years, and its monthly active users dropped nearly 60 percent, from 101 million during the summer quarter in 2011 down to just 42 million.

“We’ve reached sort of an end of an era,” said CEO John Riccitiello during the company’s conference call speaking of the changing nature of EA’s digital business. The question now: What will be the shape of the new era?


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