Electronic Arts Inc.: Putting On A Game Face

May 10, 2006
California-based maker of interactive entertainment software battles tough financials via star power.

Twenty-seven of Electronic Arts (EA) titles sold more than 1 million copies in the fiscal year ending March 31, 2006, and seven sold more than 3 million copies each.

But the company, which stresses that it has more than 30 titles in development for the next generation of consoles, is putting a game face on an extremely competitive business.

Electronic Arts' net revenue was $2.95 billion in 2006, down 6% from 2005. Net income for 2006 was $236 million, compared with $504 million in 2005.

"This transition is more than a console upgrade," stressed Electronic Arts Chairman and CEO Larry Probst on May 3. "In addition to creating games for the PlayStation 3, Xbox 360 and Nintendo Wii, EA is positioning for global leadership in line, handheld and mobile phones."

Electronic Arts Inc.
At A Glance

Electronic Arts Inc.
Redwood City, Calif.
Primary Industry: Publishing & Printing
Number of employees: 6,500
2004 In Review
Revenue: $2.9 billion
Profit Margin: 19.5%
Sales Turnover: 0.9
Inventory Turnover: 27.5
Revenue Growth: 19.1%
Return On Assets: 24.5%
Return On Equity: 32.3%
"We continue to invest ahead of revenues for long-term leadership," emphasized Warren Jenson, the company's chief financial and administrative officer.

And for Redwood City, Calif.-based Electronic Arts -- one of IndustryWeek's IW 50 Best Manufacturers for 2005 -- investing in star power is also a must in a highly competitive industry.

In 2005 Electronic Arts announced that Steven Spielberg will collaborate with the game makers at EA's Los Angeles studio to create three new games. According to the company, Spielberg will work directly with EA's development teams on the concept, design, story and artistic visualization of the new games. EA will own the intellectual properties and the game franchises will be developed, published and distributed worldwide by EA.

EA also has secured an all-star cast for the voices in its Superman Returns The Videogame. The game will feature the voice and likeness of Brandon Routh (Superman/Clark Kent) as well as the voices of Kevin Spacey (Lex Luthor), Kate Bosworth (Lois Lane), Parker Posey (Kitty Kowalski) and Sam Huntington (Jimmy Olsen).

Despite all the name dropping and fantasy, EA still has to deal with real issues such as overtime pay. Software engineers at the company won a $14.9 million settlement in a class-action lawsuit against EA. The settlement, which covers programmers working at EA Feb. 14, 2001, and Feb. 14, 2006, must be approved by the San Mateo County Superior Court.

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