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EA results remind the industry that sports, not just Battlefield, pushes profits

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Electronic Arts continues to reap benefits from its position as the leader in sports games, as both Madden NFL and FIFA Soccer produced solid results on multiple platforms in the most recent quarter.

EA said that more than 50 percent of Madden NFL 18 players engaged in the “Longshot” story mode — the first such narrative in the football series’ 29-year history — through the end of the second fiscal quarter ended September 30. On top of that, Madden Ultimate Team players are up 25 percent from a year earlier.

In addition, FIFA Mobile grew its unique player based to more than 113 million players. The numbers show that EA Sports fans are gravitating to EA’s games across multiple platforms, and they’re coming back as EA offers new content beyond what is included in the initial games.

“We saw a notable shift to digital in our sports titles and remarkable growth in Ultimate Team,” said EA chief financial officer Blake Jorgensen, in a statement. “Our sports titles have once again shown their value in delivering a stable and dependable performance. This quarter demonstrates how they can drive our business and offers a window into how our games will evolve over the months and years to come.”

EA beat its estimates for earnings and revenues in the second fiscal quarter ended September 30. Analysts expected EA to report second fiscal quarter adjusted profits of 54 cents a share on revenue of $1.18 billion. EA reported actual adjusted earnings of 62 cents a share on revenues of $1.179 billion, noted Michael Pachter at Wedbush Securities. But EA’s stock price is down 2.9 percent in after-hours trading to $116.35 a share.

“It was a strong second quarter for Electronic Arts, with players around the world captivated by our new EA SPORTS titles, top-performing mobile games, and expanding esports competitions,” said Chief Executive Officer Andrew Wilson, in a statement. “The digital transformation is accelerating across our industry, and we are well-positioned for continued growth with more stunning new titles, thriving event-driven live services including competitive gaming, and continuing innovation for our players on all platforms.”

Above: Andrew Wilson, CEO of Electronic Arts.

Image Credit: Dean Takahashi

Madden and FIFA thrive on live operations, or services that get players to keep engaging with the game over and over, such as the Ultimate Team part of the football and soccer titles. This is a good business model, for sure, as it keeps players coming back and spending. But it has to be done right. Players will only come back if the content is engaging, and that’s why EA has invested in story-based campaigns for both Madden and FIFA.

EA’s services business has been growing this year from existing games such as Battlefield 1, FIFA 17, Star Wars: Galaxy of Heroes, and The Sims. The story isn’t so different from companies like Take-Two Interactive, which expects to have a good year even though it delayed its major release, Red Dead Redemption, until next year.

EA said that event-driven live services drove the quarter’s revenues. For instance, Battlefield 1 has continued to grow as a community, thanks in part to downloadable content (DLC) such as In the Name of the Tsar, which released on September 19 as the latest Battlefield add-on. EA said that the Battlefield 1 community grew to more than 23.5 million players worldwide. And EA said that monthly active players for The Sims 4 on PC increased 40 percent from a year ago.

U.S. accounting rules require video game companies defer revenue from some online games, which is why the GAAP numbers aren’t as useful as the adjusted numbers.

For the fall, EA has a big title coming on November 17: Star Wars Battlefront II. And its racing game Need for Speed: Payback debuts on November 10.

EA said that digital net bookings for the trailing 12 months was $3.24 billion, up 26 percent from a year earlier, and it now represents 63 percent of total net bookings.

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