Electronic Arts 2006 Annual Report Download - page 85

and beneÑts, such as additional member-exclusive games, ad-free gameplay, and an enhanced prize
system. Club Pogo players also have the option of purchasing digital content such as premium
badge albums. Club Pogo also provides a deeper community experience through upgraded player
proÑles, weekly game challenges and member badges. We had over 1.2 million paying subscribers
as of March 31, 2006, up from 800,000 paying subscribers as of March 31, 2005.
‚Pogo-To-Go Ì Pogo-to-Go is our downloadable games oÅering. A one-time fee allows users to
download a Pogo game to play oÉine. We currently oÅer approximately 240 downloadable games
under the Pogo-To-Go service, including third party games. The Pogo-To-Go games include extra
features like exclusive game modes, bonus levels, high scores and enhanced graphics and sounds.
We also oÅer packaged goods versions of some of these games that consumers can purchase at
retail outlets.
Massively Multiplayer Online Games. Massively multiplayer online games are played exclusively online
and are experienced as interactive virtual worlds where thousands of other players can interact with one
another. Massively multiplayer online games are sold to consumers in the form of a CD, DVD or
download containing the software necessary to play the game. After installing the software on their PCs,
players are able to log-on to servers in order to interact with other players.
To date, we have launched Ñve massively multiplayer online games with mixed results. While we have
achieved success with Ultima Online, our other massively multiplayer online games have not met
expectations. We continue to explore opportunities to build success in this segment of online games.
Online-Enabled Packaged Goods. 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 Ñscal 2006, 16 Xbox, 14 PlayStation 2,
eight PC, seven Xbox 360 and four PSP titles had online gameplay capability. We expect to include online
gameplay capability in almost all of our titles going forward.
Marketing and Distribution
We market the products produced by our studios under the EA SPORTS, EA SPORTS BIG, EA and
Pogo brands. Products marketed under the EA SPORTS brand typically simulate professional and
collegiate sports and include franchises such as Madden NFL, FIFA Soccer and NBA Live. Products
marketed under the EA SPORTS BIG brand typically feature extreme sports or modiÑed traditional sports
in arcade-style games and include such titles as FIFA Street 2 and NBA Street V3. We market non-sports
games under the EA brand including franchises such as Need for Speed, The Sims and The Lord of the
Rings, as well as The Godfather
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The Game.
Annual Report
Our EA Partners business unit operates under a variety of deal types and structures with the intent of
generating, leveraging and/or owning intellectual properties conceived by other developers, publishers or
licensors worldwide. Through EA Partners we provide direct development expertise to our partners via an
internal production staÅ, while also making available our publishing resources to provide sales, marketing
and distribution services on a global basis. EA Partners also provides distribution and manufacturing
services to other publishers. These titles are typically delivered to us from other publishers in gold master
form or as completed products.
The interactive software game business is ""hit'' driven, requiring signiÑcant expenditures for marketing and
advertising of our products. There can be no assurance that we will continue to produce ""hit'' titles, or that
advertising for any product will increase sales suÇciently to recoup those advertising expenses.
We generated approximately 94 percent of our North American net revenue from direct sales to retailers.
The remaining 6 percent of our North American sales were made through a limited number of specialized
and regional distributors and rack jobbers in markets where we believe direct sales would not be
economical. Outside of North America, we derive revenue primarily from direct sales to retailers. In a few
of our smaller markets, we sell our products through distributors with whom we have written agreements
or informal arrangements, depending on the business customs of the territories. We had direct sales to one
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