Electronic Arts 2016 Annual Report Download - page 90

in our FIFA, Madden NFL and NHL games and digitally delivered expansion packs for our Star Wars, Battlefield
and Sims franchises have extended the life of those games by engaging players over longer periods of time. This
digital transformation also is creating opportunities in platforms, content models and modalities of play. For
example, we have leveraged franchises historically associated with consoles and traditional PC gaming, such as
FIFA, Madden NFL, The Sims, SimCity, and Star Wars, to create mobile and PC free-to-download games that
are monetized through a business model in which we sell incremental content and/or features in discrete
transactions.
Our digital transformation also gives us the opportunity to strengthen our player network. We are investing in a
technology foundation to enable us to build player relationships that can last for years instead of for days or
weeks by connecting our players to us and to each other. This connection allows us to market and deliver content
and services for popular franchises like FIFA, Battlefield and Star Wars to our players more efficiently. That
same foundation also enables new player-centric ways to discover and try new experiences, such as our
subscription-based EA Access and Origin Access services.
We believe that our digital revenue, which generally has a higher gross margin relative to packaged goods sales
revenue, will continue to increase during fiscal year 2017 relative to packaged goods revenue and in absolute
terms as we continue to focus on developing and monetizing products and services that can be delivered digitally.
One EA
The pursuit of our goals requires that we operate as one team that is faster, more focused and constantly
evolving, and we have undertaken a cultural shift across our organization in order to become more flexible. We
have changed how we develop our games, engaging players through alphas, betas and other programs to seek out
more feedback earlier in the game development process. We have also changed the makeup and skill set of our
workforce, and combined the art of game-making with the science of managing dynamic live services and
marketing those games and services. These changes have enabled us to increase our operational speed and
organizational flexibility while improving our fiscal discipline.
Our Games and Services
We develop games and services for consoles, PCs, mobile phones and tablets, and we market and sell our games
and services through retail channels and through digital distribution channels. We believe that flexibility across
platforms and distribution channels is critical to maintaining and growing our overall consumer base, which
continues to evolve in response to the introduction of new platforms and business models. New gaming
platforms, engagement models and business models are expected to continue to emerge in the future, and we
intend to evaluate these new platform, engagement and business model opportunities on a case-by-case basis.
Digitally, our console games, additional content and online services can be purchased through Sony’s PlayStation
Network and Microsoft’s Xbox Store. Our PC games and additional content can be downloaded directly through
our Origin online platform, as well as through third-party online download stores. Our mobile, tablet and PC
free-to-download games and additional content are available through third-party application storefronts such as
the Apple App Store and Google Play. Our massively multi-player online service, Star Wars: The Old Republic,
is available both as a free-to-download and as a subscription basis, and certain casual games such as card, puzzle
and word games are available through our Pogo online service.
Our packaged goods games are sold in mass market retailers (such as Walmart), electronics specialty stores (such
as Best Buy) and game software specialty stores (such as GameStop). Our direct sales to GameStop Corp.
represented approximately 11 percent and 13 percent of total net revenue in fiscal years 2015, and 2014,
respectively. We sell our games to GameStop Corp. pursuant to numerous and frequent individual purchase
orders, which contain delivery and pricing terms. There are no minimum sales or purchase commitments between
us and GameStop.
In our games, we utilize established brands that we either wholly own (such as Battlefield, Mass Effect, Need for
Speed, The Sims and Plants v. Zombies) or license from others (such as FIFA, Madden NFL and Star Wars).
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