Electronic Arts 2012 Annual Report Download - page 100

As we increase the online delivery of our products and services, we are subject to a number of foreign and
domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and
regulations relating to user privacy, data collection and retention, content, advertising and information security
have been adopted or are being considered for adoption by many countries throughout the world. The costs of
compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any
failure on our part to comply with these laws or the application of these laws in an unanticipated manner may
harm our business.
If we do not continue to attract and retain key personnel, we will be unable to effectively conduct our
business.
The market for technical, creative, marketing and other personnel essential to the development and marketing of
our products and management of our businesses is extremely competitive. Our leading position within the
interactive entertainment industry makes us a prime target for recruiting of executives and key creative talent. If
we cannot successfully recruit and retain the employees we need, or replace key employees following their
departure, our ability to develop and manage our business will be impaired.
If our marketing and advertising efforts fail to resonate with our customers, our business and operating
results could be adversely affected.
Our products are marketed worldwide through a diverse spectrum of advertising and promotional programs such
as television and online advertising, print advertising, retail merchandising, website development and event
sponsorship. Our ability to sell our products and services is dependent in part upon the success of these programs.
If the marketing for our products and services fail to resonate with our customers, particularly during the critical
holiday season or during other key selling periods, or if advertising rates or other media placement costs increase,
these factors could have a material adverse impact on our business and operating results.
The majority of our sales are made to a relatively small number of key customers. If these customers
reduce their purchases of our products or become unable to pay for them, our business could be harmed.
During the fiscal year ended March 31, 2012, approximately 60 percent of our North America sales were made to
our top ten customers. In Europe, our top ten customers accounted for approximately 40 percent of our sales in
that territory during the fiscal year ended March 31, 2012. Worldwide, we had direct sales to one customer,
GameStop Corp., which represented approximately 15 percent of total net revenue for the fiscal year ended
March 31, 2012. Though our products are available to consumers through a variety of retailers and directly
through us, the concentration of our sales in one, or a few, large customers could lead to a short-term disruption
in our sales if one or more of these customers significantly reduced their purchases or ceased to carry our
products, and could make us more vulnerable to collection risk if one or more of these large customers became
unable to pay for our products or declared bankruptcy. Additionally, our receivables from these large customers
increase significantly in the December quarter as they make purchases in anticipation of the holiday selling
season. Also, having such a large portion of our total net revenue concentrated in a few customers could reduce
our negotiating leverage with these customers. If one or more of our key customers experience deterioration in
their business, or become unable to obtain sufficient financing to maintain their operations, our business could be
harmed.
Our business is dependent on the success and availability of video game hardware systems manufactured
by third parties, as well as our ability to develop commercially successful products and services for these
systems.
Our products and services are played on video game hardware systems (which we also refer to as “platforms”)
manufactured by third parties, such as Sony’s PLAYSTATION 3, Microsoft’s Xbox 360 and Nintendo’s Wii.
The success of our business is driven in part by the commercial success and adequate supply of these video game
hardware systems, our ability to accurately predict which systems will be successful in the marketplace, and our
ability to develop commercially successful products and services for these systems. We must make product
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