Electronic Arts 2015 Annual Report Download - page 84

Technology changes rapidly in our business and if we fail to anticipate or successfully develop games for
new platforms and services, adopt new distribution technologies or methods, or implement new
technologies in our games, the quality, timeliness and competitiveness of our products and services will
suffer.
Rapid technology changes in our industry require us to anticipate, sometimes years in advance, which
technologies we must implement and take advantage of in order to make our products and services competitive in
the market. We have invested, and in the future may invest, in new business strategies, technologies, products,
and services. Such endeavors may involve significant risks and uncertainties, and no assurance can be given that
the technology we choose to adopt and the platforms, products and services that we pursue will be successful and
will not materially adversely affect our reputation, financial condition, and operating results.
Our product development usually starts with particular platforms and distribution methods in mind, and a range
of technical development goals that we hope to be able to achieve. We may not be able to achieve these goals, or
our competition may be able to achieve them more quickly and effectively than we can. In either case, our
products and services may be technologically inferior to our competitors’, less appealing to consumers, or both.
If we cannot achieve our technology goals within the original development schedule for our products and
services, then we may delay their release until these technology goals can be achieved, which may delay or
reduce revenue and increase our development expenses. Alternatively, we may increase the resources employed
in research and development in an attempt to accelerate our development of new technologies, either to preserve
our product or service launch schedule or to keep up with our competition, which would increase our
development expenses. We may also miss opportunities to adopt technology, or develop products and services
for new platforms or services that become popular with consumers, which could adversely affect our revenues. It
may take significant time and resources to shift our focus to such technologies or platforms, putting us at a
competitive disadvantage.
If we are unable to maintain or acquire licenses to include intellectual property owned by others in our
games, or to maintain or acquire the rights to publish or distribute games developed by others, our
business may be harmed.
Many of our products and services are based on or incorporate intellectual property owned by others. For
example, our EA SPORTS products include rights licensed from major sports leagues and players’ associations.
We also publish and distribute products developed and owned by third-parties under license agreements with
these parties. Competition for these licenses and rights is intense. If we are unable to maintain these licenses and
rights or obtain additional licenses or rights with significant commercial value, our revenue, profitability and
cash flows may decline significantly. Competition for these licenses may also increase the amounts that we must
pay to licensors and developers, through higher minimum guarantees or royalty rates, which could significantly
increase our costs and reduce our profitability.
Security breaches and cyber threats could harm our reputation and adversely affect our business.
As our digital business grows, we continue to face cyber risks and threats that seek to damage, disrupt or gain
access to our networks, our products and services, and supporting infrastructure. Our business partners, including
our channel partners, also are subject to these risks. Such cyber risks and threats may be difficult to detect. Any
failure to prevent or mitigate security breaches or cyber risk could result in interruptions to the services we
provide, degrade the user experience, cause our users to lose confidence in our products, as well as significant
legal and financial exposure. This could harm our business and reputation, disrupt our relationships with partners
and diminish our competitive position.
Successful exploitation of our systems can have other negative effects upon the products, services and user
experience we offer. In particular, the virtual economies that we have established in many of our games are
subject to abuse, exploitation and other forms of fraudulent activity that can negatively impact our
business. Virtual economies involve the use of virtual currency and/or virtual assets that can be redeemed by a
player within a particular game or game service. The abuse or exploitation of our virtual economies include the
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