Electronic Arts 2006 Annual Report Download - page 4

Our success in mobile gaming extends beyond phones. We achieved our goal of making EA number one
on the PSP» (PlayStation»Portable) handheld system in both North America and Europe, and have
brought some of our most popular franchises to the Nintendo DS
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system. In the years ahead we plan to
extend our leadership in this rapidly growing segment.
Everything Online
The biggest change in our business today is the way mainstream consumers are using the Internet to
purchase and play videogames. Whether the games are played on consoles, PCs or handhelds, a rapidly
growing percentage are connected.
Consumers are showing an aÇnity for downloading content to both PCs and consoles, paying for premium
content and accepting dynamic in-game advertising. In addition to bringing added value to the consumer,
these elements deliver more revenue and proÑt to our business.
Digital Downloads Ì Retail stores where consumers buy packaged games will always be fundamental to
our industry; however, the wide-spread acceptance of digital downloads foreshadows an exciting future for
buying games online. With the launch of our Xbox 360 titles, EA oÅered seven free demos Ì EA
SPORTS
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Fight Night Round 3 was downloaded more than 400,000 times and became the most popular
demo on Xbox Live
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. For the PC we oÅered additional content for BattleÑeld 2 and The Sims 2 retailing
at price points between $9.99-$29.99 and quickly sold more than 200,000 downloads. This year, most of
our PC games will be oÅered for sale digitally in addition to being available at retail. While the initial
numbers are small, these early experiments are encouraging. Exploiting this opportunity should help us
generate incremental revenue and improve operating margins.
Micro-transactions Ì EA is also investing in the means to deliver premium items that consumers can use
to enhance their games. We started with some of our PC oÅerings Ì Ultima Online
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and Club Pogo
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Ì
and plan to expand this to our multi-million-selling console franchises. Players will be able to download
new uniforms for their athletes, customized parts for their cars and strategy guides to improve their skills.
Providing downloadable content at an easily aÅordable price will improve the game experience and create
new revenue streams for many of our most popular games.
Dynamic In-Game Advertising Ì In recent years, EA games have included a small number of static
ads Ì quick product messages that would not intrude on the player's entertainment experience. We intend
to continue that discipline as the industry experiments with new technology that will allow advertisers to
stream ads into online games. A roadside billboard in Need For Speed could display soft drinks on one day
and a fast food restaurant the next. While this technology is at an early stage, dynamic in-game advertising
is an exciting proposition.
Subscriptions Ì Quick and easy to play, EA's casual game site Club Pogo is building an impressive
audience. More than 1.2 million players pay a fee to play games and participate in the Pogo
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community.
Interestingly, more than half of those subscribers are women over the age of 35. In the year ahead we plan
to launch Pogo in China and Europe.
New Markets Ì While EA is known primarily for its portfolio of great games, we are unrivaled in our
ability to market, sell and distribute our titles to consumers all over the world. Creating new online games
and cultivating new customers is an important part of our growth strategy. By the end of Ñscal 2007, EA
will have more than 300 people dedicated to production, marketing and sales in emerging markets like
China, India and Eastern Europe.
In late May, an online version of FIFA Soccer was launched in Korea in partnership with a local
publisher, Neowiz. EA SPORTS
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FIFA Online reached 100,000 peak concurrent users (PCUs) in the
Ñrst month of open beta Ì setting a new record for PCUs during an introductory period in the world's
largest online game market. While still early, we are extremely happy with the initial results of our online
games business in Korea. We plan to commercialize this service in July 2006 with the introduction of
micro-transactions.