Electronic Arts 2009 Annual Report Download - page 88

carriers or through other sales channels. In addition, new and existing competitors are beginning to offer wireless
entertainment applications on an ad-supported basis. Currently, we consider our primary competitors in the
wireless entertainment applications market segment to be Gameloft, Glu Mobile, Namco, Pangea and Sony
Pictures.
Competition in Online Gaming Services
The online (i.e., Internet-based) games market segment is characterized by frequent product introductions, new
and evolving business models and new platforms. As the proportion of households with a broadband connection
continues to grow, we expect new competitors to enter the market and existing competitors to allocate more
resources toward developing online games services. As a result, we expect competition in the online games
services market segment to intensify.
Our current and potential competitors in the online games market segment include major media companies,
traditional video game publishing companies, and companies that specialize in online games including social
networking game companies. In the massively multiplayer online game business, our competitors include
Activision Blizzard, Infogrames Entertainment SA, NC Soft, and Sony. Competing providers of other kinds of
online games include Big Fish, MSN, Popcap, Real, AOL, Yahoo! and Nexon.
Intellectual Property
Like other entertainment companies, our business is significantly 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. 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 — we call this form of intellectual property “content.”
We develop products from wholly-owned intellectual properties we create within our own studios. We also
acquire the rights to include proprietary intellectual property in our products through acquisitions. In addition, we
also obtain content and intellectual property through licenses and service agreements such as those with sports
leagues and player associations, movie studios and performing talent, authors and literary publishers, music
labels, music publishers and musicians. These agreements typically limit our use of the licensed rights in
products for specific time periods. In addition, our products that play on game consoles, handhelds and wireless
devices include technology that is owned by the console or wireless device manufacturer and licensed
non-exclusively to us for use. We also license technology from providers other than console and wireless device
manufacturers. While we may have renewal rights for some licenses, our business and the justification for the
development of many of our products is dependent on our ability to continue to obtain the intellectual property
rights from the owners of these rights on reasonable terms and at reasonable rates.
We actively engage in enforcement and other activities to protect our intellectual property. We typically own the
copyright to the software code, as well as the brand or title name trademark under which our products are
marketed. We register copyrights and trademarks in the United States and other countries as appropriate.
As with other forms of entertainment, our products are susceptible to unauthorized copying and piracy. We
typically distribute our PC products using copy protection technology, digital rights management technology or
other technological protection measures to prevent piracy and the use of unauthorized copies of our products. In
addition, console manufacturers typically incorporate technological protections and other security measures in
their consoles in an effort to prevent the use of unlicensed product. We are actively engaged in enforcement and
other activities to protect against unauthorized copying and piracy, including monitoring online channels for
distribution of pirated copies, and participating in various industry-wide enforcement initiatives, education
programs and legislative activity around the world.
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