Two of EA’s 3DS Games to Ship at Device’s Launch, COO Says

Electronic Arts expects to have two of the three titles it’s announced so far for the Nintendo 3DS “out on launch day and the other to follow within the calendar year,” Chief Operating Officer John Schappert said in an earnings call.

Schappert didn’t say which of the three titles -- Madden NFL Football, FIFA Soccer and The Sims 3 (CED Jan 20 p3, June 16 p3) -- will be available for the handheld autostereoscopic 3D game system’s launch. But EA spokesman Jeff Brown said the two launch titles will be the Madden and FIFA games. It’s “possible” there will be other EA 3DS launch games, but there’s been “nothing announced beyond” those, he said. The 3DS will ship in the U.S. March 27 at $249.99 after launches in Japan Feb. 26 and Europe March 25.

EA CEO John Riccitiello still believes IPTV “is a bigger idea, at least for gaming near-term, than the 3D is,” he said in the earnings call. But he predicted there will be the equivalents of the hit 3D movie Avatar for 3D gaming.

EA, meanwhile, was “happy with our showing with” the game EA Sports Active 2, as well as Harry Potter and the Deathly Hallows on the Kinect in Q3 ended Dec. 31, Schappert said. “We saw a nice lift on Harry Potter with the Kinect support in it,” he said, predicting Microsoft’s new motion-sensing system will help grow the Xbox 360 installed base. But Chief Financial Officer Eric Brown said EA Sports Active 2 sales were “well below our expectations for the quarter."

"Both Microsoft and Sony had good holidays with their hardware peripherals, Kinect and Move,” said Riccitello. EA is “optimistic they're going to show continued growth and strength through the calendar year,” he said. EA will “be ready” to take advantage of that, he said.

EA reported a 39 percent increase in Q3 digital revenue versus Q3 the year earlier, and Brown said the company was “tracking toward” its $750 million “digital revenue target” for the fiscal year (CED Feb 2 p4). But the digital growth wasn’t enough to offset weaker sales of EA’s traditional packaged games for platforms other than the PS3 and 360 as the company reported weaker revenue and a wider loss than a year ago.

While retail game sales fell overall in the industry in Q3, sales of packaged games for the HD consoles, PS3 and Xbox 360, “are actually growing,” said Schappert. Global packaged game sales fell 4 percent in 2010, but PS3 and 360 software sales grew 22 percent, he said. EA’s game “portfolio strongly favors these growth platforms and we now command a 22 percent segment share on HD consoles in Western markets,” he said.

Schappert again complained that sales results released by retail tracking services were still not providing the entire industry picture because of “the near-total absence of digital sales recorded by” them. EA estimated that digital sales represented about 30 percent of game revenue in Western markets and about 45 percent globally -- “sales not captured in the retail tracking data,” he said. Therefore, “contrary to the headlines, there is a solid growth story for publishers that have invested in HD consoles as well as digital goods and services,” he said.

EA was helped in December by “a well-timed promotion” of its iPhone and iPad games that Schappert said “resulted in an unprecedented share and chart position for our titles.” One day after Christmas, “when millions were activating their new devices, EA held 14 of the top 25 paid apps for the iPhone and 15 of the top 25 paid apps for the iPad,” he said. The result was “a record-breaking quarter on iOS” devices, he said. “Each of these devices represents a new platform, a new revenue stream and millions of new consumers,” he said.

The publisher “saw a dropoff in games” on Facebook last year “related to changes on the Facebook platform,” Schappert said. But he said EA was “encouraged by the recent turnaround” there as the publisher is “seeing an increase in game traffic” on Facebook and believes the site “has stabilized with a current estimate of 290 million gamers playing an average of 3.5 hours per month.” EA’s Playfish division is the No. 2 publisher in this category, “with a lot of potential for growth,” he said. This week, in partnership with Hasbro, EA launched Monopoly Millionaires on Facebook, and EA’s Pogo casual game site “is in beta on Facebook,” while its Dragon Age Legends is now in closed beta on Facebook, he said. “In 2011, you'll see more of EA’s big franchises come to Facebook,” along with new, original titles, he said.

Significant digital contributors for EA in Q3 included FIFA 11 Ultimate Team mode on consoles, Angry Birds on smartphones and downloadable content such as Battlefield: Bad Company 2 Vietnam, Brown said. As of Dec. 31, EA had 98 million registered users in its Nucleus cross-platform consumer registration system, up from 50 million a year ago, he said. EA then “broke through to over 100 million registered users in January,” he said. FIFA 11, Battlefield: Bad Company 2 and Madden NFL 11 helped drive registrations in Q3, he said. In addition to the Nucleus registered users, EA has “tens of millions of additional consumers playing” its social and browser-based games, he said. It has 39 million monthly active social game users and 7 million daily active users, he said.

EA expects about 80 percent of its total packaged game revenue to be on the “growing, high definition platforms” this fiscal year, Brown said. But he said software sales for the SD and handheld platforms, including the Wii, PS2, PSP and Nintendo DS were down by about 24 percent in Q3 and the year so far.

Sales of EA’s catalog games accounted for 30 percent of its sales in Q3, down from 40 percent in Q3 last year, Brown said. FIFA 11 and Madden NFL 11 were especially strong catalog titles for it, he said. The publisher shipped more than 5.5 million copies to date of Madden NFL 11 and more than 11.5 million units of FIFA 11, he said.

EA expects to release 37 titles this fiscal year, up from 35 previously projected, Brown said. It will release 10 titles in Q4, he said. EA expects that its top 20 titles for this fiscal year will generate about 77 percent of total non-distribution packaged game revenue versus 76 percent last fiscal year, he said. It expects this year will “be a bit more back-end loaded given our expected title ship dates,” he said. The publisher is “optimistic about” its outlook for next fiscal year, but won’t provide its specific forecast until next quarter, he said.

EA ended Q3 with 7,742 employees, down from 8,537 a year ago and 7,820 in Q2, Brown said. Twenty-two percent of the employees “are now in low cost locations,” he said.