Electronic Arts 2007 Annual Report Download - page 119

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North America
For fiscal 2006, net revenue in North America was $1,584 million, driven primarily by sales of (1) Madden
NFL 06, Need for Speed Most Wanted, NBA LIVE 06, NCAAยปFootball 06 and The Sims 2, (2) titles for the
PSP, which was launched in North America in March 2005, and (3) titles for the Xbox 360, which launched in
November 2005. Overall, net revenue decreased $81 million, or 5 percent, as compared to fiscal 2005. Our net
revenue was adversely impacted by the transition to next-generation consoles in fiscal 2006 as overall net
revenue from sales of our titles for the PlayStation 2, Xbox and Nintendo GameCube decreased. While sales
of titles for the PSP and the Xbox 360 helped to mitigate the impact of the transition in fiscal 2006, they were
not enough to offset the overall decrease in net revenue in North America.
From a title and franchise perspective, the decrease in net revenue was primarily due to (1) lower sales from
our NFL Street, NBA Street, Def Jam and The Urbz
TM
franchises as there were no corresponding titles released
during fiscal 2006, and (2) lower sales from our Lord of the Rings franchise which was released on multiple
platforms during fiscal 2005 as compared to two platforms, the PSP and PC, during fiscal 2006. The overall
decrease in net revenue was mitigated by (1) sales of Battlefield 2
TM
on the PC which was released during the
first quarter of fiscal 2006 and Battlefield 2: Modern Combat
TM
on the PlayStation 2 and Xbox released during
the third quarter of fiscal 2006, (2) increased net revenue from our Madden franchise primarily resulting from
the release of Madden NFL 06 on the Xbox 360 and PSP in fiscal 2006, and (3) increased net revenue from
our Burnout franchise primarily resulting from the release of Burnout
TM
Revenge on the Xbox 360 and
Burnout
TM
Legends on the PSP in fiscal 2006.
Europe
For fiscal 2006, net revenue in Europe was $1,174 million, driven primarily by sales of Need for Speed Most
Wanted, FIFA 06, The Sims 2, Harry Potter and the Goblet of Fire, as well as sales of titles for the PSP and
Xbox 360 which were both introduced in Europe during fiscal 2006. Overall, net revenue declined $110 mil-
lion, or 9 percent, as compared to fiscal 2005. We estimate that foreign exchange rates (primarily the Euro and
the British pound sterling) decreased reported European net revenue by approximately $36 million, or
3 percent, net of realized gains from hedging activities, for the fiscal 2006 as compared to fiscal 2005.
Excluding the effect of foreign exchange rates, we estimate that European net revenue decreased by
approximately $74 million, or 6 percent, for fiscal 2006. Our net revenue in Europe was adversely impacted
by the transition to next-generation consoles in fiscal 2006 as overall net revenue from sales of our titles for
the PlayStation 2, Xbox and Nintendo GameCube decreased. Sales of titles for the PSP, Nintendo DS, and the
Xbox 360, however, were enough to offset the overall decrease in net revenue from sales of titles for current-
generation consoles.
From a title and franchise perspective, the overall decrease in net revenue was primarily due to (1) lower sales
from our Lord of the Rings and The Sims franchises, (2) the release of The Urbz
TM
: Sims in the City
TM
during
the three months ended December 31, 2004 as there was no corresponding title released during fiscal 2006,
and (3) higher fiscal 2005 sales of UEFA Euro 2004
TM
, which was released in the three months ended June 30,
2004 in conjunction with the UEFA Euro 2004 football tournament held in Europe. The overall decrease in
net revenue was mitigated by increased net revenue from our Battlefield franchise due to the release of
multiple titles during fiscal 2006 and our FIFA Street franchise due to the initial release of FIFA Street late in
the fourth quarter of fiscal 2005 which benefited fiscal 2006 and the release of FIFA Street 2 earlier in the
fourth quarter of fiscal 2006.
Asia
For fiscal 2006, net revenue in Asia increased by $13 million, or 7 percent, as compared to fiscal 2005. The
increase in net revenue for fiscal 2006 was driven primarily by sales of titles for the PSP, which launched in
the fourth quarter of fiscal 2005. We estimate that the foreign exchange rate impact on Asia net revenue was
not material for fiscal 2006 as compared to fiscal 2005.
Annual Report
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