Electronic Arts 2006 Annual Report Download - page 82

The current and potential competition in the wireless entertainment applications market segment includes
major media companies, traditional video game publishing companies, wireless carriers, wireless software
providers and other companies that specialize in wireless entertainment applications. We also compete with
wireless content aggregators, who pool applications from multiple developers (and sometimes publishers)
and oÅer them to carriers or through other sales channels.
Currently, we consider our primary competitors in the wireless entertainment applications market segment
to be Disney, Gameloft, Infospace, Mforma, Namco, Sony Pictures, Sorrent, THQ Wireless, VeriSign and
Yahoo!.
Online Games
The online games market segment is also highly competitive and characterized by frequent product
introductions, new business models and new platforms. As the proportion of households with broadband
connections increases, we expect new competitors to enter the market and existing competitors to allocate
more resources to develop online games. As a result, we expect competition in the online games market
segment to intensify.
Our current and potential competitors in the online game market segment include major media companies,
traditional video game publishing companies, and companies that specialize in online games. Our
competitors in the casual games market segment include Yahoo! Popcap, Real and MSN. In the massively
multiplayer online game market segment our competitors include Vivendi Games, NC Soft, Sony and
Atari.
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 and online content 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 addition, through another set of agreements
with Sony, we are authorized to develop and distribute games compatible with the Sony PSP.
In Ñscal 2006, approximately 38 percent of our net revenue was derived from sales of EA Studio games
designed for play on the PlayStation 2, compared to 43 percent in Ñscal 2005. We released 28 titles
worldwide in Ñscal 2006 for the PlayStation 2, compared to 27 titles in Ñscal 2005. Our top Ñve
PlayStation 2 releases for Ñscal 2006 were Need for Speed Most Wanted, Madden NFL 06, FIFA 06,
NCAA»Football 06 and NBA LIVE 06.
In Ñscal 2006, approximately 9 percent of our net revenue was derived from sales of EA Studio games
designed for play on the Sony PSP, compared to 1 percent in Ñscal 2005. We released 16 titles worldwide
in Ñscal 2006 for the Sony PSP, compared to three titles in Ñscal 2005. Our top Ñve Sony PSP releases for
Ñscal 2006 were Need for Speed Most Wanted, Burnout Revenge, Madden NFL 06, Need for Speed
TM
Underground 2 and FIFA 06.
We are currently in discussions with Sony Computer Entertainment of America, Sony Computer
Entertainment of Europe and Sony Computer Entertainment Inc. (Japan) to secure a license to develop
and distribute Blu-Ray based software products compatible with the forthcoming PlayStation 3 console.
Microsoft. Under the terms of license agreements we have entered into with Microsoft, we are authorized
to develop and distribute DVD-based software products and online content compatible with the Xbox and
Xbox 360.
In Ñscal 2006, approximately 13 percent of our net revenue was derived from sales of EA Studio games
designed for play on the Xbox, compared to 16 percent in Ñscal 2005. We released 28 titles worldwide in
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