March Quarter Brought Promising Start for iPad Games, Electronic Arts Says

Initial results were promising for iPad games released in Q4 ended March 31, Electronic Arts executives said on an earnings call Tuesday. The publisher released five games for the iPad late in the quarter and “had two of the top three grossing titles,” Chief Operations Officer John Schappert said. Scrabble “was the number one grossing title” on the iPad, while Need for Speed Shift was No. 3, he said. EA Mobile also released Command & Conquer Red Alert, Mirror’s Edge and Tetris for the April launch of Apple’s new tablet. But it didn’t specify how those titles fared.

EA’s mobile sales overall “continued to grow,” said Chief Financial Officer Eric Brown. It reported mobile non-GAAP revenue of $55 million in Q4, a 15 percent increase from a year earlier. Mobile non-GAAP revenue for the year increased 12 percent to $212 million. The improvement was “driven by Tetris, The Sims 3, Bejeweled and Need for Speed,” Brown said.

"We continue to be the number one mobile games publisher” in the western world, he said. In March, EA “had seven of the top 10 games on Verizon and achieved more than half of the top 10 games on AT&T, Sprint and T-Mobile,” he said. EA is the No. 1 App Store publisher, he said. The company also makes games for the iPhone and iPod Touch.

Digital sales in general helped offset weakness in packaged games, Brown said. The overall game business including packaged goods and digital was up 3 percent in calendar 2009 from 2008, he said. Global packaged sales were down 9 percent, but that was offset by digital’s rising about 28 percent. In Q4, for the world’s western markets overall, packaged sales were down 2 percent, but that was “more than offset by digital,” Brown said. Schappert predicted that packaged game sales will “pick up in the summer, when major titles launch."

EA’s digital revenue soared 33 percent for the fiscal year to $570 million, Brown said. The company ended its year with 1.8 million paying subscribers to its games including Pogo.com and massively multiplayer online games, he said. Pogo’s subscription revenue increased 3 percent for the fiscal year. EA finished Q4 with more than 58 million registered users, up 18 percent from Q3, he said. Bad Company 2, FIFA 10 and Madden 10 “were the top three titles driving user registrations in Q4,” he said. The downloadable PC version of Bad Company 2 “exceeded our expectations,” he said. The company’s Playfish division, which EA bought late last year, launched the browser game Hotel City in March, and it “looks promising and has already reached 13 million monthly active users and is a top 15 Facebook application,” Brown said. The company expects to increase its total digital revenue about 30 percent to about $750 million this fiscal year, he said.

Overall EA Q4 results improved on strong demand for the games Battlefield: Bad Company 2, Mass Effect 2 and Dante’s Inferno, and on strong performance in its digital business, the company said (CED May 12 p8). Revenue jumped to $979 million from $860 million a year earlier, and it swung to a $30 million, or 9 cents per diluted share, profit, from a $42 million, 13 cents per diluted share, loss.

EA sold through 3 million copies of Bad Company 2 in Q4, including packaged and digital units in Europe and North America combined, Brown said. It has sold through more than 4 million units total, he said. The publisher sold through more than 1.6 million digital and packaged units of Mass Effect 2 on the two continents combined in Q4, more than 1 million copies of Army of Two: The 40th Day globally, and nearly 1 million copies of Dante’s Inferno in Europe and North America combined, “more than any other new intellectual property during the quarter,” Brown said.

"Despite console hardware shortages” that continued in Q4, EA’s PS3 software sales increased 41 percent year-to-year in the western markets, Brown said. Xbox 360 software sales, however, inched up only 1 percent and Wii software sales tumbled 9 percent, he said.

EA ended the fiscal year with about 7,800 employees, down from about 9,100 a year earlier, Brown said. The company expects the figure to increase to about 8,200 this fiscal year, he said. Twenty-two percent of its employees work at “low-cost locations versus 18 percent a year ago,” he said.

Games that EA plans to show for the first time at a June 14 E3 news conference in Los Angeles and during the June 15-17 show will include an unspecified title in 3D, Schappert said without elaborating. He was apparently referring to a stereoscopic 3D game rather than a title merely with 3D assets. But EA spokesman Jeff Brown wouldn’t say. EA hasn’t released a videogame console game in stereoscopic 3D and hasn’t made specific plans known. It could introduce a game for Nintendo’s coming 3DS handheld system, which doesn’t require special glasses to view 3D effects and will be shown publicly for the first time at E3 (CED March 24 p1).

EA “will also unveil games that make use of the new motion controllers from Sony and Microsoft” at E3, Schappert said without elaborating. The company has announced only a Tiger Woods game for the PS3 PlayStation Move, he said. EA also plans to show Madden NFL 11, FIFA 11, NHL 11, NBA Live 11 and Tiger Woods PGA Tour 11 from its EA Sports label at E3, Schappert said. The EA Play label will show a new Harry Potter game and new titles from its partnership with Hasbro, and the EA Games label will unveil a new Need for Speed title, Dead Space 2 and a new Medal of Honor title, he said. EA shares fell Wednesday after the company lowered its sales forecast for this year.