Electronic Arts 2000 Annual Report Download - page 13

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EA 2000 AR
11
EA.COM
Our intention is to launch the world’s best online gaming
network with four distinct objectives:
•Develop and launch the best online games—great games
are critical to leading this emerging new market.
•Offer games and web sites that are as easy to play and as
easy to use as TV is to watch.
•Establish strong communities within our gaming network
with the best services, programs and features, such as
tournaments, competition ladders and great chat forums.
•Build and maintain a highly reliable network and infra-
structure with high levels of customer service.
THE BUSINESS MODEL EA.com will generate revenues from
both subscriptions and advertising. EA’s Origin™studio pio-
neered the online game subscription concept when
Ultima
Online
first proved that consumers will pay a monthly sub-
scription fee for a high-quality gaming experience.
Ultima
Online
was the first title to achieve a large number of sub-
scribers in a new genre of games called persistent-world
fantasy. Persistent-world fantasies offer users an ongoing
online experience that is evolving 24 hours a day.
Ultima
Online
boasted nearly 160,000 active subscribers at the end
of fiscal year 2000, with each subscriber paying $10 monthly
to participate in the community that has grown around this
epic medieval fantasy—the average
Ultima
subscriber plays
in excess of 20 hours per week.
Competition and imitation have followed, but
Ultima
con-
tinues to grow in membership and profitability. Our experience
with this title indicates that consumers are willing to pay a
subscription fee to experience quality games.
Advertising will comprise the other major component of
the EA.com revenues. EA will sell advertising both on the web
pages and within the games that consumers view and play
online. We believe that the attractive demographic of online
gamers, coupled with the “stickiness” of our games will allow
us to reap premium rates for advertising on our sites.
PARTNERSHIP WITH AMERICA ONLINE In November 1999,
we announced an unprecedented agreement with America
Online, Inc. (AOL) that makes us the exclusive games channel
to the 22 million subscribers of the America Online service in
North America as of March 2000. We have also agreed to
exclusively provide the game channel content for AOL’s web
properties, including AOL.com, NetCenter, CompuServe and
ICQ. Which will provide EA.com with access to nearly 60 mil-
lion consumers, including 22 million AOL subscribers.
The marriage of one of the world’s foremost developers
and publishers of interactive content, Electronic Arts, with the
world’s most popular Internet service provider, AOL, will
make EA.com a clear leader in online gaming. While AOL
understands how to maintain a mass audience, EA is the
leader in development of interactive entertainment.
OUTLOOK FOR THE FUTURE While online gaming is currently
in its infancy, industry analysts predict online gaming rev-
enues will reach over $2 billion by 2002—an increase of
more than 500 percent from 1999. Built into these projections
is an assumption that as the Internet makes interactive enter-
tainment more accessible, and as developers make the games
easier to play online, there will be a significant broadening of
the demographics of those playing interactive games. This
trend is emerging in some of our greatest new PC game hits,
like
The Sims,
where we are seeing the gaming audience
expand to include more families and women. This new,
expanded market is making up the bulk of those using most
online game services today and should form an important
component of EA.com’s audience in the future. Online gaming
has the potential to push interactive entertainment into living
rooms around the the world.
With this new audience, we believe that EA.com has a
formidable set of advantages as we build toward market
leadership in the coming years. We have the world’s best
game development teams within our Studios and within our
EA.com division. We have our AOL partnership. We have the
strength of the best brand name in the interactive entertain-
ment industry in EA. We have the cross-marketing leverage
inherent in managing the world’s largest game software
business. Our goal is to leverage these advantages to create
something truly fun on the Internet with EA.com . . . and to
achieve the leadership position in this exciting new market
in the process.