Electronic Arts 2013 Annual Report Download - page 122

Net Revenue before Revenue Deferral
Publishing and Other Revenue
Publishing and other revenue includes (1) sales of our internally-developed and co-published game software
distributed physically through traditional channels such as brick and mortar retailers, (2) our non-software
licensing revenue, and (3) our software licensing revenue from third parties (for example, makers of personal
computers or computer accessories) who include certain of our products for sale with their products (“OEM
bundles”).
For fiscal year 2013, publishing and other Net Revenue before Revenue Deferral was $2,028 million, primarily
driven by FIFA 13,Madden NFL 13, and Need for Speed Most Wanted. Publishing and other Net Revenue before
Revenue Deferral for fiscal year 2013 decreased $708 million, or 26 percent, as compared to fiscal year 2012.
This decrease was driven by a $1,130 million decrease in sales primarily from the Battlefield and Mass Effect
franchises, as well as Star Wars: The Old Republic. This decrease was partially offset by a $422 million increase
in sales primarily from the FIFA, Medal of Honor, and Dead Space franchises.
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 and freemium mobile games 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 2013, digital Net Revenue before Deferral was $1,663 million, an increase of $436 million, or
36 percent, as compared to fiscal year 2012. This increase is due to (1) a $221 million or 51 percent increase in
extra content and free-to-play sales primarily driven by the FIFA and Bejeweled franchises, along with Star
Wars: The Old Republic, (2) a $136 million or 47 percent increase in subscription and advertising sales primarily
driven by Battlefield 3 Premium subscriptions,(3) an $86 million or 30 percent increase in mobile sales primarily
driven by The Simpsons: Tapped Out and FIFA World Class Soccer. These increases were partially offset by a
$7 million or 3 percent decrease in full-game download sales primarily driven by Star Wars: The Old Republic
and the Battlefield franchise.
Distribution Revenue
For fiscal year 2013, distribution net revenue was $102 million and decreased $121 million, or 54 percent, as
compared to fiscal year 2012, due to a decrease in sales primarily from the Portal franchise and to a lesser extent,
our Switzerland distribution business.
Revenue Deferral
Revenue Deferral for fiscal year 2013 decreased $120 million, or 4 percent, as compared to fiscal year 2012. This
decrease was primarily due to a $708 million decrease in Net Revenue before Revenue Deferral related to our
publishing and other sales, which was partially offset by a higher percentage of digital sales being deferred and
recognized over time, due in part to a 51 percent increase in extra content and free-to-play sales, a 47 percent
increase in subscription and advertising revenue, a 30 percent increase in mobile sales, all of which contain an
online service component requiring revenue recognition over the period of time that the service is delivered.
Recognition of Revenue Deferral
Our non-distribution sales are generally deferred and recognized over a weighted average 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 2013
decreased $73 million, or 2 percent, as compared to fiscal year 2012. This decrease was primarily due to lower
publishing sales during the twelve months ended December 31, 2013 as compared to the same period in fiscal
year 2012.
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