Electronic Arts 2006 Annual Report Download - page 77

Cellular Handsets
Following our acquisition of JAMDAT in February 2006, we merged our existing cellular handset software
game development and publishing business with JAMDAT to establish our EA Mobile business. Through
EA Mobile, we publish games for our customers to download onto their cellular handsets. Our customers
typically purchase and download our games through a wireless carrier's branded e-commerce service
accessed directly from their cellular handsets, which must be enabled by technologies such as BREW or
Java. These wireless carrier services include, among others, Verizon Wireless' Get It Now, Sprint PCS
Vision, Cingular MEdia and Vodafone live!. Our customers are charged a one-time or monthly
subscription fee on their cellular handset invoice for the game. The wireless carriers generally retain a
percentage of the fee and pay the rest to us. The wireless distribution of our games eliminates traditional
publishing complexities, including physical production, packaging, shipping, inventory management and
return processing.
Online
There are three ways in which we publish games that are playable online by consumers:
‚ Online-only casual games that we make available on the World Wide Web Ì such as card games,
puzzle games and word games Ì marketed under our Pogo brand. These are made available to
consumers on our web site, www.pogo.com, and on certain online services provided by America
Online, Inc.
‚ Another type of online-only games is called ""massively multiplayer online games'' (sometimes
called ""persistent state world games''). Players experience these games as interactive virtual worlds
where thousands of other players can interact with one another. We currently have two massively
multiplayer online game products, Ultima Online
TM
and The Sims Online
TM
. These games are sold
to consumers in the form of a CD, DVD or download containing the software necessary to play the
game.
‚ We include online capability features in certain of our PC, PlayStation 2, Xbox, Xbox 360 and PSP
products, which enable consumers to participate in online communities and play against one
another via the Internet.
In addition, online downloads are available for (1) certain PC games either from our EA.com site or third
party sites such as Gametap, and (2) Microsoft's Xbox Live service. We are also developing digital
content, which we intend to sell online via microtransactions, for next-generation console-based games.
Annual Report
Licensed Products
We also maintain a smaller business where we license to manufacturers of products in related industries
(for example, makers of personal computers or computer accessories) rights to include certain of our
products with the manufacturer's product or oÅer our products to consumers who have purchased the
manufacturer's product. We call these combined products ""OEM bundles''.
Intellectual Property
Like other entertainment companies, our business is based on the creation, acquisition, exploitation and
protection of intellectual property. Some of this intellectual property is in the form of software code,
patented technology, and other technology and trade secrets that we use to develop our games and to
make them run properly on the platforms. Other intellectual property is in the form of audio-visual
elements that consumers can see, hear and interact with when they are playing our games Ì we call this
form of intellectual property ""content''.
Each of our products embodies a number of separate forms of intellectual property protection: the software
and the content of our products are copyrighted; our products may use patented inventions or trade secrets;
our product brands and names may be trademarks of ours or others; our products may contain voices and
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