Electronic Arts 2010 Annual Report Download - page 86

Competition
We compete with other video game companies for the leisure time and discretionary spending of consumers, 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.
We also face competition from other video game companies and large media companies to obtain license
agreements for the right to use some of the intellectual property included in our products. Some of these content
licenses are controlled by the diversified media companies, which, in some cases, have decided to publish their
own games based on popular entertainment properties that they control, rather than licensing the content to a
video game company such as us.
Competition in Sales of Packaged Goods
The packaged goods video game business is characterized by the frequent launch of new games, which may be
sequels of popular game franchises, or newly introduced game concepts. There is also rapid technological
innovation in the packaged goods game business as competing companies continually improve their use of the
powerful platforms on which games are designed to run, and extend the game experience through additional
content and online services (such as matchmaking and multiplayer functionality). Competition is also based on
product quality and features, timing of product releases, brand-name recognition, availability and quality of
in-game content, access to distribution channels, effectiveness of marketing and price.
For sales of packaged goods, we compete directly with Sony, Microsoft and Nintendo, each of which develop
and publish software for their respective console platforms. We also compete with numerous companies which,
like us, develop and publish video games that operate on these consoles and on PCs and handheld game players.
These competitors include Activision Blizzard, Atari, Capcom, Koei, Konami, LucasArts, Namco, Sega,
Take-Two Interactive, THQ and Ubisoft. Diversified media companies such as Fox, Disney, Time Warner and
Viacom are also expanding their software game publishing efforts.
We also see a change in retail sales patterns which decreases our ability to derive revenue from “catalog sales”
(sales of games in the periods following the launch quarter). Currently, many console games experience sales
cycles that are shorter than in the past. To mitigate this trend, we offer our consumers new direct-to-consumer
services such as additional content to further enhance the gaming experience and extend the time that consumers
play our games after their initial purchase.
Competition in Games for Mobile Devices
The mobile entertainment applications market segment, for which we develop and publish games for mobile
devices, is characterized by frequent product introductions, rapidly emerging new mobile platforms, new
technologies, and new mobile application storefronts. As the penetration of mobile devices that feature fully-
functional browsers and additional gaming capabilities continues to deepen, the demand for applications
continues to increase and as there are more mobile application storefronts through which developers can offer
products, we expect new competitors to enter the market and existing competitors to allocate more resources to
develop and market competing applications. As a result, we expect competition in the mobile entertainment
market to intensify.
Current and potential competitors in the mobile entertainment applications market include major media
companies, traditional video game publishing companies, mobile carriers, mobile software providers and other
companies that specialize in mobile entertainment applications. We also compete with mobile content
aggregators, who pool applications from multiple developers (and sometimes publishers) and offer them to
carriers or through other sales channels. In addition, new and existing competitors are offering mobile
entertainment applications on a free download, ad-supported basis. Currently, we consider our primary
competitors in the mobile entertainment applications market to be Capcom Mobile, Gameloft, Glu Mobile,
Namco, and PopCap.
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