Electronic Arts 2016 Annual Report Download - page 101

Annual Report
Our business is subject to regulation and the adoption of proposed legislation we oppose could negatively
impact our business.
We are subject to a number of foreign and domestic laws and regulations that affect companies conducting
business on the Internet. In addition, laws and regulations relating to user privacy, data collection, retention,
electronic commerce, virtual items and currency, consumer protection, content, advertising, localization, and
information security have been adopted or are being considered for adoption by many countries throughout the
world. These laws could harm our business by limiting the products we are able to offer to our consumers or the
manner in which we offer these products. 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 and result in penalties or significant
legal liability.
We are subject to laws in certain foreign countries, and adhere to industry standards in the United States, that
mandate rating requirements or set other restrictions on the advertisement or distribution of interactive
entertainment software based on content. In addition, certain foreign countries allow government censorship of
interactive entertainment software products. Adoption of ratings systems, censorship or restrictions on
distribution of interactive entertainment software based on content could harm our business by limiting the
products we are able to offer to our customers. In addition, compliance with new and possibly inconsistent
regulations for different territories could be costly, delay or prevent the release of our products in those
territories.
In addition, we may include additional competitive modes in our games and manage competitions based on our
games and services. Although we structure and operate these skill based competitions with applicable laws in
mind, our skill based competitions in the future could become subject to evolving rules and regulations and
expose us to significant liability, penalties and reputational harm.
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 services and management of our businesses is extremely competitive. Our leading position
within the interactive entertainment industry makes us a prime target for recruiting our executives as well as 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 and services are marketed worldwide through a diverse spectrum of advertising and promotional
programs such as online and mobile advertising, television advertising, retail merchandising, website
development, event sponsorship and direct communications with our consumers including via email. 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 fails 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 customers, and disruptions to
sales through these customers could negatively impact our business.
We derive a significant percentage of our net revenue through sales to our top customers. The concentration of a
significant percentage of our sales through one, or a few, large customers could lead to a short-term disruption to
our business if certain of these customers significantly reduced their purchases or ceased to carry our products.
We also could be more vulnerable to collection risk if one or more of these large customers became unable to pay
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