Electronic Arts seems to have outwitted their critics and come very close to a break even, and almost, dare I say it, a positive cash flow. Posted yesterday, EA’s Q1 financial results demonstrate a dramatic improvement in the coffers, reporting a net loss of only $6 million. Granted, 6 million clams is nothing to jump for joy over, especially when it’s $6 million in the red, but when compared to year-over-year results, it’s more than enough to get excited about. Last years Q1 results showed EA with a $135 million loss. Keeping $129 million in the bank account is a tremendous success for the Redwood, California firm.
EA’s first fiscal quarter revenues peaked at $816 million, a dramatic 34 percent increase of 2008’s $609 million. Industry analysts had projected a meager take of only $729.5 million. EA’s digital distribution and virtual goods sales are a major contributor to the over projected earnings take, bringing in approximately $124 million, a noteable 38 percent increase year-over-year.
Putting some wind in EA’s sales (literally) are a string of successful titles and their surrounding executions. Compared to the quarter ending in June 2008, in 2009 EA was the number one publisher in both North America and Europe, with four out of the top ten games. Four of EA’s titles won Best of E3 awards: Mass Effect 2 won best RPG, Fight Night Round 4 took the Best Sports Game award, Star Wars: The Old Republic snagged Best PC Game, and Left 4 Dead won Best Online Mulitplayer. Additionally, while a perennial favorite, and old standby, the Sims franchise was a major factor in EA’s revenue streams this year. Holding the top selling retail sales title in Europe and North America for this past quarter, the Sims 3 moved 3.7 million copies out the door. And last but certainly not least, EA Sports Active helped the company garner a 21 percent market share of the wii market in North America and 13 percent in Europe. Having sold over 1.8 million copies, EA Sports Active is now the company’s best selling wii title to date.
“Good execution delivered better-than-expected financial results in the first quarter,” said John Riccitiello, Chief Executive Officer. “We are very pleased with the success of both The Sims 3 and EA SPORTS Active.”
Looking ahead, briefly discussed the upcoming Tiger Woods PGA Tour title which seeks to drive revenues from the sale of game subscriptions and virtual goods sales, as opposed to the one-time-only-buy-it-in-a-box method. With that said, and keeping EA’s open experimentations with the free-to-play/microtransactions supported model (think Battlefield Heroes) in mind, company president John Riccitiello commented in an earnings call yesterday that EA’s not 100 percent onboard. “A lot of people believe that microtransactions is going to be the lead business model in the US. I’m not so sure about that. We are seeing good microtransaction results on Pogo, but I do think there is a difference between the way that consumers buy and consume content in Asia.”
