Electronic Arts' Profits Blast Up 51%, Mobile Continues To Surge
Electronic Arts let loose their financial details for the previous quarter, and they're doing well... very well. The company's dodge out of the Worst Company in America vote actually netted them enough positive press for the first time in a long time to walk out of the quarter with their profit up by 51% over the previous year during the same period.
Earlier in the year, Electronic Arts had an opportunity to manage a threepeat as the Worst Company in America in a Consumerist user poll. The company actually managed to escape a three-year run as the worst in America, ending what many thought would be the close of the Riccitiello era, as the company could get back on track with high-end games and high-quality products.
However, the company's image was still marred by events like the Dungeon Keeper fiasco that actually managed to get consumer advocacy groups involved, as well as the most recent fallout over the removal of key features from the The Sims 4, such as pools and toddlers, as well as introducing a new subscription-based model for the game, similar to Battlefield's premium service.
Nevertheless, the company's sketchy practices has still netted them top-end profit, as the BBC is reporting that the company is up by a margin of 51% compared to the same quarter of last year. A lot of this was thanks to the multiplatform release of Titanfall, the new IP from Respawn Entertainment, as well as their mobile division, netting them a profit $335 million for the quarter.
Sterne Agee analysts Arvind Bhatia and Brett Strauser commented about EA's surprising performance, stating that...
“F1Q (June) results were well above expectations driven by upside in revenue (packaged and digital) and margins. F2Q guidance is in line with consensus. Full-year guidance was unchanged despite the 1Q beat as two titles are being delayed.”
The delayed titles he mentions refers to Dragon Age: Inquisition, which has been pushed back to November, and Battlefield Hardline, which has been pushed all the way to early 2015; and it could be good for the game.
As far as EA's mobile division goes... the company managed to leverage $105 million during the quarter, mostly thanks to their pressure on putting out more freemium titles and utilizing in-app purchases or microtransactions in their games. Despite gamers complaining about them, many apparently have a compulsory reaction to spend money on the game. The practice of microtransactions continues to catch the ire of content advisory boards who feel as if many of these features are not entirely upfront with consumers about the way they operate.
Nevertheless, the practice is making money for EA so they will continue to use it, as noted by Blake Jorgensen, chief financial officer of the company, who stated that...
"We continue to view mobile as a business with tremendous opportunity as the market is experiencing significant global growth in smartphones and tablets,"
EA's Origin business on PC, along with digital downloads on console, have done well enough, as their revenue was up 90% compared to last year, earning the company $71 million.
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