Electronic Arts 2005 Annual Report Download - page 64

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We currently compete with Sony, Microsoft and Nintendo, each of which develop and publish software for
their respective console platforms. We also compete with numerous companies which are, like us, licensed by
the console manufacturers to develop and publish software games that operate on their consoles. These
competitors include Activision, Atari, Capcom, Eidos, Koei, Konami, LucasArts, Midway, Namco, Sega,
Take-Two Interactive, THQ, Ubisoft and Vivendi Universal Games, among others. As discussed above,
diversiÑed media companies such as Time Warner and Disney have also indicated their intent to signiÑcantly
expand their software game publishing eÅorts in the future.
In addition to competing for product sales, we face heavy competition from other software game companies to
obtain license agreements granting us the right to use intellectual property included in our products; and some
of these content licenses are controlled by the diversiÑed media companies, which intend to expand their
software game publishing divisions.
Finally, the market for our products is characterized by signiÑcant price competition and we regularly face
pricing pressures from our competitors. These pressures have, from time to time, required us to reduce our
prices on certain products. Our experience has been that software game prices tend to decline once a
generation of consoles has been in the market for a signiÑcant period of time due to the increasing number of
software titles competing for acceptance by consumers and the anticipation of the next-generation of consoles.
SigniÑcant Relationships
Hardware Platform Companies
Sony. Under the terms of license agreements we entered into with Sony Computer Entertainment of
America, Sony Computer Entertainment of Europe and Sony Computer Entertainment Inc. (Japan), we are
authorized to develop and distribute DVD-based software products compatible with the PlayStation 2.
Pursuant to these agreements, we engage Sony to supply PlayStation 2 DVDs for our products. Many of our
PlayStation 2 products are capable of being played online by customers who have an online adaptor, which is
manufactured and sold by Sony.
In Ñscal 2005, approximately 43 percent of our net revenue was derived from sales of EA Studio games
designed for play on the PlayStation 2, compared to 44 percent in Ñscal 2004. We released 27 titles worldwide
in Ñscal 2005 for the PlayStation 2, compared to 24 titles in Ñscal 2004. Our top Ñve PlayStation 2 releases for
Ñscal 2005 were Need for Speed Underground 2, Madden NFL 2005, FIFA Soccer 2005, Burnout 3: Takedown
and NBA LIVE 2005.
Microsoft. Under the terms of a license agreement we entered into with Microsoft, we are authorized to
develop and distribute DVD-based software products compatible with the Xbox. We make many of our games
capable of being played online via Microsoft's Xbox Live service. Customers are able to play these products
online once they have paid an Xbox Live subscription fee to Microsoft.
In Ñscal 2005, approximately 16 percent of our net revenue was derived from sales of EA Studio games
designed for play on the Xbox, compared to 13 percent in Ñscal 2004. We released 26 titles worldwide in Ñscal
2005 for the Xbox, compared to 21 titles in Ñscal 2004. Our top Ñve Xbox releases for the year were Need for
Speed Underground 2, Madden NFL 2005, Burnout 3: Takedown, FIFA Soccer 2005 and NCAA Football
2005.
Nintendo. Under the terms of license agreements we entered into with Nintendo of America and Nintendo
Company Ltd. (Japan), we are authorized to develop and distribute proprietary optical format disk products
compatible with the Nintendo GameCube. Pursuant to these agreements, we engage Nintendo to supply
Nintendo GameCube proprietary optical format disk products for our products.
In Ñscal 2005 and 2004, approximately seven percent of our net revenue was derived from sales of EA Studio
games designed for play on the Nintendo GameCube. We released 20 titles worldwide in Ñscal 2005 for the
Nintendo GameCube, compared to 19 titles in Ñscal 2004. Our top Ñve Nintendo GameCube releases for the
year were Need for Speed Underground 2, Madden NFL 2005, Harry Potter and the Prisoner of Azkaban
TM
,
GoldenEye: Rogue Agent and The Lord of the Rings, The Third Age.
8