Electronic Arts 1999 Annual Report Download - page 6

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Revenue Mix
% by Geography is making EA’s online marketing steadily more sophisticated and effective.
In fact, the launches of both SimCity 3000 and Alpha Centauri were supported
by dedicated web sites that allowed consumers to experience the games first-
hand. These sites had very heavy traffic and made a significant contribution to
the success of both titles.
While interactive entertainment on the Internet is still in its infancy, we believe
it has tremendous potential. EA has already established itself as a leader in this
segment, and we fully intend to remain at the cutting edge of new developments
in this important emerging market.
Strong Global Distribution
EA has been building a strong global presence since its inception and in fiscal 1999
42% of our sales were generated by international territories. We now have direct
distribution in 75 countries, including new offices established last year in Korea and
— through acquisition of a former distribution partner — in Switzerland and Austria.
The two joint ventures we formed in May 1998 with Square Company, Ltd. of Japan
are off to excellent starts. In Japan our products are now reaching a wide retail
audience through Square’s proprietary distribution channel, and — reflecting
new EA management in Japan and more rigorous cost control — we grew revenues
by 52% and achieved a profit in this historically challenging territory. We look
forward to accelerating local development of original products aimed at Japanese
consumers. Our other joint venture, in North America, is also off to an outstanding
start with strong sales of Square’s Parasite Eve™. We will be distributing the widely
anticipated Final Fantasy®8 — a product that has already sold more than 3 million
units in Japan — during fiscal 2000.
EA’s broad global presence has also helped us build a roster of high quality
affiliated label and co-publishing partners. In addition to Square, these include
NovaLogic, Fox Interactive, MGM Interactive, Universal Studios Interactive, and
DreamWorks Interactive. In fiscal 1999, affiliated label/co-publishing revenues
comprised 20% of total worldwide sales. We anticipate maintaining this approximate
mix as our revenues continue to grow.
Growth Drivers
Looking forward, the future is bright for EA. Not only has interactive software
become a mainstream form of entertainment, favorable demographic trends
will bring millions of new consumers into our target market. The emerging
“Generation Y” — coupled with the traditional game players who have made this
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99 98
1 North America 58 57
2 Europe 36 36
3 Asia Pacific 3 5
4 Japan 3 2
Revenue Mix
% by Platform
99 98
1 PlayStation 43 42
2 PC-CD 22 25
3 EA Distribution 20 20
4 N64 12 6
5 Saturn — 2
6 License, OEM
& Other 3 5