Electronic Arts 2013 Annual Report Download - page 112

continue to develop and market products and services for current-generation consoles including the Xbox 360
and PLAYSTATION 3 while also developing products and services for next-generation console systems. The
success of our products and services for these next generation consoles depends in part on the commercial
success and adequate supply of these new consoles, our ability to accurately predict which platforms will be
successful in the marketplace, and our ability to develop commercially successful products and services for these
platforms.
Digital Content Distribution and Services. Consumers are spending an ever-increasing portion of their money
and time on interactive entertainment that is accessible online, or through mobile digital devices such as smart
phones, or through social networks such as Facebook. We provide a variety of online-delivered products and
services including those available through our Origin platform. Many of our games that are available as packaged
goods products are also available through direct online download via the Internet. We also offer online-delivered
content and services that are add-ons or related to our packaged goods products such as additional game content
or enhancements of multiplayer services. Further, we provide other games, content and services that are available
only via electronic delivery, such as Internet-only games and game services, and games for mobile devices.
We significantly increased the revenue that we derive from wireless, Internet-derived and advertising (digital)
products and services from $1,159 million in fiscal year 2012 to $1,440 million in fiscal year 2013 and we expect
this portion of our business to continue to grow in fiscal 2014 and beyond.
Wireless and Internet Platforms; Casual and Mobile Games. Advances in technology have resulted in a variety
of platforms for interactive entertainment. Examples include wireless technologies, streaming game services, and
Internet-based platforms. These technologies, services and platforms grow the consumer base for our business
and have led to the growth of casual and mobile gaming. Casual and mobile games are characterized by their
mass appeal, simple controls, flexible monetization (including free-to-play and micro-transaction business
models) and fun and approachable gameplay. These games appeal to a larger consumer demographic–including
younger and older players and more female players–than video games played on console devices. We expect
sales of casual and mobile games for wireless and other emerging platforms to continue to be an important part
of our business.
Concentration of Sales Among the Most Popular Games. We see a larger portion of packaged goods games
sales concentrated on the most popular titles, and those titles are typically sequels of prior games. We have
responded to this trend by significantly reducing the number of games that we produce to provide greater focus
on our most promising intellectual properties. We published 36 primary packaged goods titles in fiscal year 2011,
22 in fiscal year 2012, 13 in fiscal year 2013, and in fiscal year 2014, we expect to release 11 major titles.
Evolving Sales Patterns. Our business has evolved from a traditional packaged goods business model to one
where our games are played on a variety of platforms including mobile devices and social networking sites. Our
strategy is to transform our core intellectual properties into year-round businesses, with a steady flow of
downloadable content and extensions on new platforms. Our increasingly digital, multi-platform business no
longer reflects the retail sales patterns associated with traditional packaged goods launches. For example, we
offer our consumers additional services and/or additional content available through online services to further
enhance the gaming experience and extend the time that consumers play our games after their initial purchase.
Our casual and mobile games offer free-to-play and micro-transaction models. The revenue we derive from these
services has become increasingly more significant year-over-year. Our service revenue represented 24 percent,
13 percent, and 8 percent of total net revenue in fiscal year 2013, 2012, and 2011, respectively.
Recent Developments
Stock Repurchase Program. In July 2012, our Board of Directors authorized a program to repurchase up to
$500 million of our common stock. Under this program, we may purchase stock in the open market or through
privately-negotiated transactions in accordance with applicable securities laws, including pursuant to pre-
arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several
factors including price, capital availability, regulatory requirements, alternative investment opportunities and
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