Electronic Arts 2008 Annual Report Download - page 84

Internationally, we conduct business and have wholly-owned subsidiaries throughout the world, including
offices in Europe, Australia, Asia and Latin America. International net revenue increased by 21 percent to
$1.723 billion, or 47 percent of total net revenue in fiscal 2008, compared to $1.425 billion, or 46 percent of
total net revenue in fiscal 2007.
Our international and European regional publishing organization headquarters is located in Geneva, Switzer-
land. We have local offices in several European countries including England, France and Germany, among
others. We also have European distribution centers in the Netherlands and elsewhere in Europe.
We also have a regional publishing headquarters located in Singapore. We have local offices in several Asia
Pacific countries including Australia, Japan and New Zealand.
The amounts of net revenue and long-lived assets attributable to each of our geographic regions for each of
the last three fiscal years are set forth in Note 18 of the Notes to Consolidated Financial Statements, included
in Item 8 of this report.
The console, PC and handheld games that we publish are made available to consumers as packaged goods
(usually in Blu-ray Disc, CD, DVD, cartridge or Universal Media Disc format) that are typically sold in retail
stores and through online stores (including our own online store). In North America and Europe, our largest
markets, we sell these packaged goods products primarily to retailers, including mass market retailers (such as
Wal-Mart), electronics specialty stores (such as Best Buy) or game software specialty stores (such as
GameStop). Many of our PC products and related content (such as booster packs, expansion packs and smaller
pieces of game content) can also be purchased over the Internet through digital download.
Our global sales network allows us to market, publish and distribute games for all labels in over 35 countries
throughout the world. We generated approximately 95 percent of our North American net revenue from direct
sales to retailers in fiscal 2008, with the remaining net revenue being generated 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 agreements. We also
distribute products of other companies through our rack jobbing business in Switzerland. We had direct sales
to GameStop Corp. which represented approximately 13 percent and 12 percent of total net revenue in fiscal
2008 and 2007, respectively. We also had direct sales to Wal-Mart Stores, Inc. which represented approxi-
mately 12 percent of total net revenue in fiscal 2008 and 13 percent of total net revenue in both fiscal 2007
and 2006, respectively.
Marketing activities conducted by the Global Publishing Organization primarily focus on television and online
advertising, but also include print advertising, retail merchandising, website development, event sponsorship,
and trade shows.
Our Central Development Services group, which is part of our Global Publishing Organization, provides
development services to our labels, such as product localization, quality assurance and certification, motion
capture, art outsourcing and media mastering. Each service is essential to the development and publishing of
our games. By grouping these services together within a single, centralized organization, we expect to achieve
cost savings through greater scale and efficiency, while improving the overall quality of our games by
providing more sophisticated and robust services than any of our labels could sustain on its own. Key
components of Central Development Services’ strategy are outsourcing to third parties and moving work
offshore to lower-cost markets.
Competition
Our industry is intensely competitive. We compete for the leisure time and discretionary spending of
consumers with other video game companies, as well as with other providers of different forms of
entertainment, such as motion pictures, television, social networking, online casual entertainment and music.
Our competitors vary in size from very small companies with limited resources to very large, diversified
corporations with global operations and greater financial resources than ours.
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