Electronic Arts 2016 Annual Report Download - page 102

for our products or declared bankruptcy. Additionally, receivables from our customers generally increase in our
December fiscal quarter as sales of our games and services generally increase in anticipation of the holiday
season. Having a significant portion of our net revenue concentrated in sales through 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 agreements with our channel partners typically give them significant control over the approval,
manufacturing and distribution of the products and services that we develop for their platform. In particular, our
arrangements with Sony and Microsoft could, in certain circumstances, leave us unable to get our products and
services approved, manufactured and distributed to customers. For our digital products and services delivered via
digital channels such as Sony’s PlayStation Network, Microsoft’s Xbox Store, Apple’s App Store and the Google
Play store, each respective channel partner has policies and guidelines that control the promotion and distribution
of these titles and the features and functionalities that we are permitted to offer through the channel. Moreover,
certain of our channel partners can determine and change unilaterally certain key terms and conditions, including
the ability to change their user and developer policies and guidelines. In many cases our channel partners also set
the rates that we must pay to provide our games and services through their online channels, and 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. If our channel partners establish terms that restrict our offerings
through their channels, or significantly impact the financial terms on which these products or services are offered
to our customers, our business could be harmed.
Our business is subject to risks generally associated with the entertainment industry, any of which could
significantly harm our operating results.
Our business is subject to risks that are generally associated with the entertainment industry, many of which are
beyond our control. These risks could negatively impact our operating results and include: the popularity, price
and timing of our games; economic conditions that adversely affect discretionary consumer spending; changes in
consumer demographics; the availability and popularity of other forms of entertainment; and critical reviews and
public tastes and preferences, which may change rapidly and cannot necessarily be predicted.
We rely on business partners in many areas of our business and our business may be harmed if they are
unable to honor their obligations to us or their actions may put us at risk.
We rely on various business partners, including third-party service providers, vendors, licensing partners,
development partners, and licensees in many areas of our business. In addition, we may have disputes with our
business partners that may impact our business and/or financial results. Their actions may put our business and
our reputation at risk. In many cases, our business partners may be given access to sensitive and proprietary
information in order to provide services and support to our teams, and they may misappropriate our information
and engage in unauthorized use of it. In addition, the failure of these third parties to provide adequate services
and technologies, or the failure of the third parties to adequately maintain or update their services and
technologies, could result in a disruption to our business operations. Further, disruptions in the financial markets,
economic downturns, poor business decisions, or reputational harm may adversely affect our business partners
and they may not be able to continue honoring their obligations to us or we may cease our arrangements with
them. Alternative arrangements and services may not be available to us on commercially reasonable terms or we
may experience business interruptions upon a transition to an alternative partner or vendor. If we lose one or
more significant business partners, our business could be harmed.
We may be subject to claims of infringement of third-party intellectual property rights, which could harm
our business.
From time to time, third parties may claim that we have infringed their intellectual property rights. For example,
patent holding companies may assert patent claims against us in which they seek to monetize patents they have
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