EA, THQ Report Little Impact From Japan Quake, Tsunami

Electronic Arts and THQ, each with a small presence in Japan, suffered little harm from Friday’s quake and tsunami, their executives said Tuesday at the Lazard Capital Markets conference in Boston.

THQ has a small office in Japan that works with distributors and two studios in the country, and “none of the people that we work with have been injured in any way,” CEO Brian Farrell said. Yuke’s, which handles THQ’s wrestling simulation game in Japan, “was down for a couple of days,” he said, apparently referring to its Yokohama facility, near Tokyo. But Yuke’s also has a studio in Osaka and “they transferred all the data over to there, and we don’t anticipate any issues there,” he said. Yuke’s headquarters are also in Osaka. THQ is working with Japanese developer Valhalla Game Studios on the coming game Devil’s Third. There were no injuries at that studio, Farrell said. It, too, was “down for a couple of days,” but the game project being developed there with THQ wasn’t due to launch soon, he said.

"I don’t see any long-term effects” to U.S. third-party publishers of packaged games, Farrell said. “All the replication for us and all the other companies is done in Europe and the U.S. for our releases,” he said.

EA personnel in Japan are “all safe,” Chief Financial Officer Eric Brown said at the conference. The disaster isn’t expected to have a major effect on the company’s results. Japan accounts for only 1-2 percent of EA’s revenue and profit, he said.

Nearly 1.5 million gamers signed up to beta-test the coming EA massively multiplayer online role-playing game (MMORPG) Star Wars: The Old Republic, Brown also said. There will be an expanded, “semi-closed” beta test after the current, closed test, and an open beta test will start before the game’s launch some time this year after March, he said. EA will provide additional details at E3 in Los Angeles in June, Brown said. EA is going after the approximately 12 million people who play MMORPGs in western markets, along with people who don’t usually play the games but will be attracted to The Old Republic because it’s a Star Wars title, he said.

Average revenue for game applications on smartphones and tablets remains low, Brown said when asked about the challenge of monetizing games on those devices. But he said it’s a “big market” that’s “growing rapidly.” It’s “pretty difficult” for independent developers with just one hit game to operate in the market, he said, but “the barriers to entry are pretty low,” and there’s “a pretty robust app ecosystem, particularly for iOS-enabled devices.” He predicted that the Android app ecosystem will be strengthened.

"For certain platforms,” free-to-play is a “really important” business model, Brown said. The business model is emerging in mobile gaming, he said. EA’s strategy is to “coexist in all revenue models,” he said.

Mobile and social network games both offer large opportunities, Brown said. “We can see an additional $1 billion of addressable total segment revenue within the next several years in both markets,” he said. Mobile gaming already accounts for $1 billion, and “we see it getting to $1.8 billion or so within the next three to four years,” Brown said. Social network games will probably reach $2 billion “a little quicker than smartphone” games in the “western world,” he predicted.

EA still expects to release the latest entry in its annual Madden NFL game series on time late in August, despite the NFL lockdown. “We will bring it to market” with help from a restructured deal that the company recently reached with the NFL and NFL Players Association, Brown said. Just before he spoke, Bank of Montreal Capital Markets analyst Edward Williams said the lockout was “placing in jeopardy” the latest Madden, “one of EA’s linchpin franchises.” If the next NFL season is canceled, “we believe there could be a significant hit to Madden revenues,” Williams said.