Electronic Arts 2014 Annual Report Download - page 75

Annual Report
Direct Consumer Relationship; Games-as-a-Service
We believe establishing and maintaining direct relationships with our consumers and supporting the evolution of
a games-as-a-service business model are strategic priorities.
By acquiring direct relationships with consumers, we are able to market products and services in a direct,
targeted manner, often in response to purchasing history or playing behavior. We believe this reduces overall
customer acquisition and marketing costs.
With network-connected gameplay and digitally-delivered content, features and services, which have become
core elements of the experience we offer to consumers, we are able to update, evolve and refresh our product
offerings over extended periods, increasing both consumer engagement and product life. Additionally, many of
our brands offer different products and services on various respective platforms, offering consumers the
opportunity to engage with their favorite brands more frequently and at different points in time (e.g., on a console
in the home, with a mobile device on the go, and on a PC at work). As a result, we can offer consumers an
always-on, multi-platform, live service organized around one of their favorite brands.
Global Operations
We were initially incorporated in California in 1982. In September 1991, we were reincorporated under the laws
of Delaware. Our principal executive offices are located at 209 Redwood Shores Parkway, Redwood City,
California 94065 and our telephone number is [phone].
We operate development studios in North America, Europe, Asia and Australia. We also engage third parties to
assist with the development of our games at their own development and production studios. Internationally, we
conduct business through our international headquarters in Switzerland and have wholly-owned subsidiaries
throughout the world, including offices in Europe, Australia, Asia and Latin America.
Our North America net revenue was $1,510 million in fiscal year 2014, as compared to $1,701 million in fiscal
year 2013 and $1,991 million in fiscal year 2012. International net revenue (revenue derived from countries other
than Canada and the United States) decreased by 1 percent to $2,065 million, or 58 percent of total net revenue in
fiscal year 2014, as compared to $2,096 million, or 55 percent of total net revenue in fiscal year 2013 and as
compared to $2,152 million, or 52 percent of total net revenue in fiscal year 2012. We attribute net revenue from
external customers to individual countries based on the location of the legal entity that sells the products and/or
services. Note that revenue attributed to the legal entity that makes the sale is often not the country where the
consumer resides. For example, revenue generated by our Swiss legal entities includes digital revenue from
consumers who reside outside of Switzerland, including consumers who reside outside of Europe. Revenue
generated by our Swiss legal entities during fiscal years 2014, 2013, and 2012 represents $1,171 million, $885
million and $589 million or 33 percent, 23 percent and 14 percent of our total net revenue, respectively. Revenue
generated in the United States represents over 99 percent of our total North America net revenue. There were no
other countries with net revenue greater than 10 percent. The amounts of net revenue and long-lived assets
attributable to each of our geographic regions for each of the last three fiscal years are set forth in Note 18 of the
Notes to Consolidated Financial Statements included in Item 8 of this report.
In fiscal year 2014, revenue from sales of FIFA 14 represented approximately 15 percent of our total net revenue.
In fiscal year 2013, revenue from sales of FIFA 13 represented approximately 17 percent of our total net revenue.
In fiscal year 2012, revenue from sales of FIFA 12 and Battlefield 3 represented approximately 13 percent and
11 percent, respectively of our total net revenue.
For the fiscal years ended March 31, 2014, 2013 and 2012, research and development expenses were $1,125
million, $1,153 million and $1,180 million, respectively.
Our Operating Structure
Our studios and development teams are organized around three divisions: EA Studios, Maxis, and EA Mobile.
Each division operates globally with support from our Global Publishing and Marketing organization.
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