Lockdowns Fueling Electronic Arts’ Strong Q3
Electronic Arts (EA) is one of the leading video game developers in the world. EA is the creator of multiple successful gaming franchises such as FIFA, Madden, Apex Legends, and many more. Electronic Arts’ strong Q3 in 2020 is leading the company to look to continue an upward trend of video game sales and leagues centered around competitive gaming.
With the shutdown of sports in March, networks such as ESPN as well as professional leagues like the NBA and NFL looked to fill in their TV slots and reporting with sports-related content. The void left by real-life sports was filled by video games. Take-two entertainment’s NBA 2K and Electronic Art’s Madden 21 were utilized to simulate real-life competition in the professional leagues.
It is astonishing to see Electronic Arts post a record-setting financial gain despite their flagship football game Madden posting a 0.2 rating on a scale out of 10. The poor rating comes from over 6,000 fans of the Madden franchise. These fans have been pleading for years to EA to make actual changes. But their pleas are met with nothing more than cosmetic changes and “back of the box” features that look to draw in the casual fan instead of reward loyal customers.
Card Packs are the Key to Success
Despite Madden’s continuous disappointment that did not hold EA back from a strong year. As previously mentioned EA has many different game franchises to fall back on. Easily their most popular is FIFA, an international soccer simulation game.
Apex Legends is a free-to-play battle royal game that along with Madden and FIFA offer extra buy on content through a roulette like card pack system. These packs contain collectible items and playable characters that can improve the buyers’ team or chance of winning.
These card packs are available in every EA game. EA relies heavily on the revenue from what equates to child gambling. FIFA and Madden are rated E for everyone so there is no age limit or requirement for a child to play.
Apex Legends and Battlefront are more violent games that carry a T rating for teens. But these ratings are rarely ever followed so many children with access to these games are using their parents’ cards to charge hundreds of dollars extra to a game that is $60 to begin with.
How much money does EA make from these card packs? It is an overwhelming amount.
- 2020: $1.49bn
- 2019: $1.37bn
- 2018: $1.18bn
- 2017: $775m
- 2016: $660m
EA makes almost a quarter of their revenue from card sales alone. COO and CFO of EA, Blake Jorgensen, reflects on this “We delivered another strong quarter, driven by live services outperformance in Ultimate Team and Apex Legends,” “We are raising our net bookings outlook for the full year on the strength we continue to see in our business. Looking further ahead, even with the upside this year, we anticipate delivering growth in fiscal 2022, driven by the next Battlefield.”
The information below and the quote from Jorgensen comes from EA’s yearly financial report.
- Net bookings* for the trailing twelve months was $5.956 billion, up 8% year-over-year.
- Launched FIFA 21, Medal of HonorTM: Above and Beyond, Need for SpeedTM Hot Pursuit Remastered, and NHL 21 during the quarter.
- Launched FIFA 21 and Madden NFL 21 on next generation consoles during the quarter.
- Over the past fiscal year, EA SPORTSTM franchises have engaged more than 230 million people.
- FIFA Ultimate TeamTM had a record of nearly 6 million daily active players in December.
- Apex LegendsTM had 30% growth in new players, year-over-year.
- Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.
EA stock hit an all-time high following the announcement, and is up 2.2% during Tuesday’s trading. The movement for EA comes amid a broader market rally