Electronic Arts 2000 Annual Report Download - page 10

CONSOLES EA has demonstrated clear and consistent lead-
ership on the gaming console platforms. We are the No. 1
third-party publisher in the current console market, where the
two most popular console hardware brands, PlayStation and
Nintendo 64, have an established installed base of nearly 100
million units. According to TRST reports, the industry standard
for market share reporting in North America, EA finished fiscal
year 2000 with a 16 percent overall console share in North
America, higher than any other third-party company. In
Europe, we were also the No. 1 console publisher. Though we
were not No. 1 overall in Japan, we did achieve the position of
being the No. 1 company among Western based publishers.
In the console software industry, new technology typically
triggers a transitional period every four to five years. The
latest transition began just prior to the 1999 holiday season,
as consumers began to delay purchases of new hardware
and software titles in anticipation of the coming next gener-
ation consoles. Our expectation is that we will see the soft-
ware market flatten out, or even decline slightly, until the
PlayStation 2 console is launched outside of Japan in
October 2000. We plan to focus on two major fronts: (1)
generating the greatest possible sales from the currently
installed console base, and (2) ensuring EA is solidly posi-
tioned to establish leadership on the new PlayStation 2
console and, potentially, on other new generation console
platforms, when they are introduced.
PC GAMES In the PC segment, which has continued to grow
at roughly 10 percent annually, EA has leveraged its global
publishing capability. EA continues to demonstrate that
localization of content creates enormous cross-cultural
appeal. Simultaneous global launches of popular EA titles
such as Command & Conquer: Tiberian Sun, The Sims, FIFA
2000
and SimCity 3000 have met with unprecedented suc-
cess. EA’s top-selling title in fiscal year 2000, Tiberian Sun,
was the No. 1 PC game in the world, generating revenues in
excess of $75 million. The Sims was the No. 1 title worldwide
in the fourth quarter of fiscal year 2000, and continues to
top world charts with the promise of finishing calendar year
2000 as a best seller.
The size and the breadth of our skills provide EA with a
unique ability to orchestrate simultaneous global launches
with localized content and regional marketing. This advan-
EA PUBLISHING
08
tage has translated into greater volume and increased market
share. In fiscal year 2000, EA increased market share in North
America, Asia Pacific and Japan. In addition, EA has obtained
market share leadership throughout Europe.
THREE COUNTRIES—THREE SUCCESS STORIES EA continues
to aggressively grow share both in new markets as well as in
those where we already own a leadership position.
Korea: In fiscal year 1999, EA opened an office in Korea,
building a direct distribution business from the ground up.
Within twelve short months, EA has successfully won the
mind-share of retail outlets and consumers alike with our
focus on localization and cultural issues. This is shown by
EA’s phenomenal growth from an estimate of less than 10
percent market share in fiscal year 1999 to more than 20 per-
cent in fiscal year 2000. EA intends to capitalize on this
momentum to achieve aggressive growth in this new market.
Japan: Japan is one of the few markets where EA’s market
share has been historically weak. This is changing. We have
restructured operations in Japan, by hiring new management,
building a direct PC distribution business and forming a new
partnership with a leading Japanese video game publisher,
SquareSoft. These changes have allowed us to restore the
business to profitability and begin to increase our share in
the PC market. We launched our first PlayStation 2 console
title in Japan in May 2000, with plans to release additional
titles in fall 2000. These releases will position us well for
market share gains worldwide on the important console side
of our business.
Germany: EA has developed a strong lead in Germany, the
largest European market. During calendar year 1999, EA’s PC
titles were No. 1 for 23 weeks of the year. As a result, PC mar-
ket share increased from 18 percent to 24 percent in calendar
year 1999—helped in part by a successful premium price
strategy on hits like Command & Conquer: Tiberian Sun. This
position was underlined in the first week of April 2000 when
the top four chart titles were all EA properties, Command &
Conquer: Tiberian Sun Firestorm™
, (No.1), F1 2000 (No. 2), The
Sims
(No. 3) and Need for Speed™: Porsche
®
Unlimited (No. 4).
Korea, Japan, Germany—radically different markets, one
common approach for EA.
By using our global publishing capability to adapt successful
titles to local tastes, we then take these titles to market with