Electronic Arts 2012 Annual Report Download - page 125

Annual Report
Wireless, Internet-derived, and Advertising (Digital) Revenue
Digital revenue includes revenue from sales of our internally-developed and co-published game software
distributed through direct download through the Internet, including through our direct-to-consumer platform
Origin, or distributed wirelessly through mobile carriers. This includes our full-game downloads, mobile and
tablet revenue (each of which are generally classified as product revenue with the exception of our MMO game
downloads which are classified as service revenue) as well as subscription services, micro-transactions, and
advertising revenues (each of which is generally classified as service and other revenue).
For fiscal year 2012, digital Net Revenue before Deferral was $1,227 million, an increase of $394 million, or 47
percent, as compared to fiscal year 2011. This increase was driven by a $452 million increase in sales primarily
from the FIFA and The Sims franchises, as well as Star Wars: The Old Republic. This increase was offset by a
$58 million decrease in sales primarily from the Tetris and Warhammer franchises, as well as a decrease in sales
generated by our Pogo-branded online services.
Distribution Revenue
Distribution revenue includes (1) sales of game software developed by independent game developers that we
distribute and (2) sales through our Switzerland distribution business. For fiscal year 2012, distribution Net
Revenue was $223 million and increased $9 million, or 4 percent, as compared to fiscal year 2011 driven by an
$89 million increase in sales in the Portal franchise. This increase was offset by an $80 million decrease
primarily driven by a decrease in sales in the Rock Band franchise.
Revenue Deferral
Revenue Deferral for fiscal year 2012 increased $373 million, or 13 percent, as compared to fiscal year 2011.
This increase was primarily due to (1) a 47 percent increase in our current year digital sales and (2) a higher
percentage of both our publishing and digital sales being deferred and recognized over time, due in part to a 135
percent increase in full-game download sales and a 47 percent increase in micro-transaction sales, of which both
contain an online service component which requires revenue recognition as the service is delivered.
Recognition of Revenue Deferral
The vast majority of our sales are deferred and recognized over a six month period, and therefore, the related
revenue recognized in any fiscal year is primarily due to sales that occurred during the respective twelve months
period ended December 31. The Recognition of Revenue Deferral for fiscal year 2012 increased $569 million, or
22 percent, as compared to fiscal year 2011. This increase was primarily due to increased publishing and digital
sales during the twelve months ended December 31, 2012, and a higher percentage of those sales being
comprised of games sales that have an online service component, as compared to the same period in fiscal year
2011.
Net Revenue
For fiscal year 2012, Net Revenue was $4,143 million and increased $554 million, or 15 percent, as compared to
fiscal year 2011. This increase was driven by a $1,312 million increase in revenue primarily from the Battlefield,
Crysis, and FIFA franchises. This increase was offset by a $758 million decrease in revenue primarily from the
Medal of Honor, FIFA World Cup, and Army of Two franchises, as well as Dante’s Inferno, for which there
were no iterations in fiscal year 2012.
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