Electronic Arts 2012 Annual Report Download - page 123

Annual Report
support, and licensing of game software to third-parties. This excludes game software from our MMO games
(both game and subscription sales), which is included in service and other revenue as such game software
requires continuous hosting support. Product revenue also includes mobile games that do not have an online
service component and sales of tangible products such as hardware, peripherals, or collectors’ items.
For fiscal year 2012, product revenue was $3,415 million, primarily driven by FIFA 12, Battlefield 3, and
Madden NFL 12. Product revenue for fiscal year 2012 increased $234 million, or 7 percent, as compared to fiscal
year 2011. This increase was driven by a $937 million increase primarily from the Battlefield, Crysis, and FIFA
franchises. This increase was offset by a $703 million decrease primarily from the FIFA World Cup, Medal of
Honor, Rock Band, and Army of Two franchises, as well as Dante’s Inferno.
Service and Other Revenue
Our service revenue includes revenue recognized from games or related content that requires our hosting support
to provide substantial gaming experience, and time-based subscriptions. This includes (1) subscriptions for our
Pogo-branded online game services, (2) MMO games (both game and subscription sales), (3) entitlements to
content that are delivered through hosting services (e.g., micro-transactions for Internet-based, social network
and mobile games which includes “freemium” games), and (4) allocated service revenue from sales of online-
enable packaged goods with an online service component (i.e., “matchmaking” services). Our other revenue
includes non-software licensing and advertising revenue.
For fiscal year 2012, service and other revenue was $728 million, primarily driven by (1) Star Wars: The Old
Republic, which was launched in the third quarter, (2) our micro-transactions revenue from browser-based games
including games played on Facebook such as The Sims Social, and (3) our FIFA Ultimate Team add-on game
service. Service and other revenue for fiscal year 2012 increased $320 million, or 78 percent, as compared to
fiscal year 2011. This increase was primarily driven by a $351 million increase from certain services associated
with the FIFA and The Sims franchises, as well as Star Wars: The Old Republic. This increase was partially
offset by a $31 million decrease in service revenue generated by our Pogo-branded online game services and the
Warhammer and Ultima Online MMO franchises. In fiscal year 2013, we expect to increase our total service
revenue as compared to fiscal year 2012.
Net Revenue by Geography
Year Ended March 31,
(In millions) 2012 2011 $ Change % Change
North America ............................................ $1,991 $1,836 $155 8%
Europe .................................................. 1,898 1,563 335 21%
Asia ..................................................... 254 190 64 34%
Total net revenue ........................................ $4,143 $3,589 $554 15%
Net revenue in North America was $1,991 million, or 48% of total net revenue for fiscal year 2012, compared to
$1,836 million, or 51% of total net revenue for fiscal year 2011, an increase of $155 million, or 8%. Net revenue
in Europe and Asia was $2,152 million, or 52 percent of total net revenue for fiscal year 2012, compared to
$1,753 million, or 49 percent of total net revenue for fiscal year 2011, an increase of $399 million, or 23 percent.
The rapid increase in revenue outside of North America was primarily the result of increased sales from our
FIFA, Battlefield, and Crysis franchises in Europe. Additionally, the value of the U.S. dollar relative to foreign
currencies contributed to an increase of total reported net revenue of approximately $143 million (primarily the
Swiss Franc and Australian Dollar), or 3 percent of total net revenue.
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