Electronic Arts 2013 Annual Report Download - page 92

Significant Relationships
Channel Partners
Sony. Under the terms of agreements we have entered into with Sony Computer Entertainment Inc. and its
affiliates, we are authorized to develop and distribute disk-based software products and online content
compatible with the PlayStation 3. Pursuant to these agreements, we engage Sony to supply disks for our
products.
Microsoft. Under the terms of agreements we have entered into with Microsoft Corporation and its affiliates, we
are authorized to develop and distribute DVD-based software products and online content compatible with the
Xbox 360.
Nintendo. Under the terms of agreements we have entered into with Nintendo Co., Ltd. and its affiliates, we are
authorized to develop and distribute proprietary optical format disk products and online content compatible with
the WiiU. Pursuant to these agreements, we engage Nintendo to supply WiiU proprietary optical format disk
products for our products.
Under the agreements with each of Sony, Microsoft and Nintendo, we are provided with the non-exclusive right
to use, for a fixed term and in a designated territory, technology that is owned by the console manufacturer in
order to publish our games on such platform. Our transactions are made pursuant to individual purchase orders,
which are accepted on a case-by case basis by Sony, Microsoft or Nintendo, as the case may be, and there are no
minimum purchase requirements under the agreements. Many key commercial terms of our relationships with
Sony, Microsoft and Nintendo – such as manufacturing terms, delivery times and approval conditions – are
determined unilaterally, and are subject to change by the console manufacturers. We pay the console
manufacturers a per-unit royalty for each unit manufactured and the console manufacturers pay us either a
wholesale price or a percentage royalty on the revenue they derive from the distribution of our online content or
services.
The platform license agreements also require us to indemnify the manufacturers with respect to all loss, liability
and expense resulting from any claim against the manufacturer regarding our games and services, including any
claims for patent, copyright or trademark infringement brought against the manufacturer. Each platform license
may be terminated by the manufacturer if a breach or default by us is not cured after we receive written notice
from the manufacturer, or if we become insolvent. The manufacturers are not obligated to enter into platform
license agreements with us for any future consoles, products or services.
Apple, Google and Other App Stores. We have agreements to distribute our mobile applications through
distribution partners worldwide, including Apple and Google. Consumers download our applications for their
mobile devices and from third party-application storefronts. The distributor invoices the consumers either a one-
time or subscription fee. If the application is a “free-to-download” application, the distributor invoices the
consumer for micro-transactions that are purchased by the consumer within the application. Our distribution
agreements establish the fees to be retained by the distributor for distributing our applications. These
arrangements are typically terminable on short notice. The agreements generally do not obligate the distributors
to market or distribute any of our applications.
Retailers
As our business becomes increasingly digital, more of our products and services are purchased over the Internet
through Origin, our direct-to-consumer platform, or through digital downloads from third party retailers or
through mobile application storefronts.
In North America and Europe, our largest markets, we sell packaged goods products to retailers, including mass
market retailers (such as Wal-Mart), electronics specialty stores (such as Best Buy) or game software specialty
stores (such as GameStop).
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