Aug 01, 2012 at 02:39 PM
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What We Learned About the State of Gaming From Electronic Arts' Recent Results

Gaming bellwether and major sports and entertainment marketer, Electronic Arts, reported 2nd quarter results last night. The Redwoods-Ca. company lost $120 million on $491 million in revenue, which was slightly down from $524 million a year ago. Here's what some of the EA numbers tell us about the rapidly shifting gaming industry.

  • Moving to freemium: EA said this fall it would offer a new free-to-play option for its popular MMOG title, ‚ÄúStar Wars: The Old Republic." Players will get access to eight Star Wars character story lines up to the 50th level of the game. A more-premium version of the game will cost $14.99 a month.

  • Virtual credits and benefits: Greater emphasis is being placed on creating revenue from micro-transactions, rather than subscription. Similar to Zynga games, users can purchase upgrades with in-game currency. Look for credits and virtual benefits to become an increasingly vital part of the company's partnership activations.

  • CPG falling, all-in on digital: EA is seeing a 20% increase in its digital business while it's seeing single-digit declines in packaged goods. Electronic Arts released no new packaged titles in the first quarter. Not surprisingly, mobile and other handheld digital revenue was up 34% year-over-year.

  • Madden is still a machine: For a franchise that has unprecedented longevity, now approaching its 25th year, Madden is still incredibly strong. 2012 pre-orders are up 25% year-on-year, according to COO Peter Moore.

  • MMA is going to be big business: In terms of new games, one of the partnerships that EA is most excited about is its recent deal with UFC, which it only recently licensed the rights to EA in June after years of negotiations. Already the development team is hard at work on the UFC franchise. Remarking on UFC, Frank Gibeau, President of EA Labels predicts "this franchise could easily grow to be one of the top 3 EA SPORTS brands worldwide." Given EA Sports track record with sports franchises, that's saying something.

  • Zynga vs. EA: For all the hype around Mark Pincus' Zynga, EA is still 33% larger on revenue than the newly public virtual gaming company. Nevertheless, both companies have booked recent losses as they seek sustainable business models online.