Electronic Arts 2014 Annual Report Download - page 86

have been adopted or are being considered for adoption by many countries throughout the world. The costs of
compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any
failure on our part to comply with these laws or the application of these laws in an unanticipated manner may
harm our business.
If we do not continue to attract and retain key personnel, we will be unable to effectively conduct our
business.
The market for technical, creative, marketing and other personnel essential to the development and marketing of
our products and management of our businesses is extremely competitive. Our leading position within the
interactive entertainment industry makes us a prime target for recruiting of executives and key creative and
technical talent. If we cannot successfully recruit and retain the employees we need, or replace key employees
following their departure, our ability to develop and manage our business will be impaired.
If our marketing and advertising efforts fail to resonate with our customers, our business and operating
results could be adversely affected.
Our products are marketed worldwide through a diverse spectrum of advertising and promotional programs such
as television and online advertising, print advertising, retail merchandising, website development, event
sponsorship and direct communications with our consumers. Our ability to sell our products and services is
dependent in part upon the success of these programs. If the marketing for our products and services fail to
resonate with our customers, particularly during the critical holiday season or during other key selling periods, or
if advertising rates or other media placement costs increase, these factors could have a material adverse impact
on our business and operating results.
A significant portion of our sales are made to a relatively small number of key customers. If these
customers reduce their purchases of our products or become unable to pay for them, our business could be
harmed.
During the fiscal year ended March 31, 2014, approximately 68 percent of our North America net revenue was
derived from our top ten customers. Though our products are available to consumers through a variety of retailers
and directly through us, the concentration of our sales in one, or a few, large customers could lead to a short-term
disruption in our sales if one or more of these customers significantly reduced their purchases or ceased to carry
our products, and could make us more vulnerable to collection risk if one or more of these large customers
became unable to pay for our products or declared bankruptcy. Additionally, our receivables from these large
customers increase significantly in the December quarter as they make purchases in anticipation of the holiday
selling season. Having such a large portion of our total net revenue concentrated in a few customers could reduce
our negotiating leverage with these customers. If one or more of our key customers experience deterioration in
their business, or become unable to obtain sufficient financing to maintain their operations, our business could be
harmed.
Our channel partners have significant influence over the products and services that we offer on their
platforms.
Our products and services are sold to customers, primarily through retailers and online through our channel
partners, including Sony, Microsoft, Apple and Google. In many cases, our channel partners set the rates that we
must pay to provide our games and services through their online channels. In certain cases, our channel partners
retain flexibility to change their fee structures or adopt different fee structures for their online channels, which
could adversely impact our costs, profitability and margins.
Outside of the financial arrangements, our agreements with our channel partners typically give them significant
control over other aspects of the distribution of the products and services that we develop for their platform. For
example, our agreements with Sony and Microsoft typically give significant control to them over the approval,
manufacturing and distribution of our products and services, which could, in certain circumstances, leave us
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