Electronic Arts has presented its financial report for 2020. Especially FIFA 21 and Apex Legends impressed in the last 12 months. With microtransactions in the cash shops of EA games, the company earned 4.06 billion US dollars. This is as much as selling 130 million console games, explained the CFO. Next year, they plan to develop significantly for PS5 and Xbox Series X.
Where do the numbers come from? They are from the “Q4 2021 Earning Call” of EA. There, CEO Andrew Wilson and CFO Blake Jorgensen present EA’s financial figures every quarter and answer questions from analysts representing the interests of the investors.
The analysts work for Credit Suisse, Wells Fargo, J.P. Morgan, and Goldman Sachs: What is generally seen as “the global money flows”.
FIFA 21 and Apex Legends are the major money makers of 2020
This is how the year 2020 went for EA: The financial year from April 1, 2020, to March 31, 2021, went excellently for EA, certainly also because of the Corona pandemic. The lockdown kept players at home and in the games:
Even though COVID is so terrible, it has brought a lot of people to gaming.
Blake Jorgensen, CFO EA
The CFO Jorgensen explains to the analysts that EA is not only bringing players into the games but also into the social networks around these games, whether in sports games, shooters, or the Sims.
- EA has set a new revenue record. In no year since the company’s founding in 1982 has EA generated more money.
- Revenue amounts to 5.629 billion US dollars (about 4.66 billion euros).
- However, revenue figures fell in the last quarter.
Live Service is the money printing machine for EA
Where does all the money come from? A huge portion of the revenue comes from the “live service” sector, which consists of microtransactions in EA games, the income from the cash shop, namely:
- FUT packs and coins in games like FIFA 21 or Madden
- cosmetic skins in Apex Legends
- revenue from the Sims
EA has earned a total of 4.6 billion US dollars from the live service. The CFO explained:
To put this into perspective: The 4.6 billion US dollars are equivalent to selling 130 million console games.
Blake Jorgensen, CFO EA
As the main driver for the revenue, Jorgensen highlights FIFA Ultimate Team and Apex Legends. Additionally, mobile titles like Star Wars: Galaxy of Heroes or SimCity BuildIt performed better than expected.
What is EA doing with all the money? They are going on a shopping spree:
- EA is buying back shares for 2.6 billion US dollars
- EA has acquired new brands and teams with Codemasters and Glu
- they are building new offices in Bucharest, Los Angeles, Orlando, and in the UK
- EA is pouring a lot of money into research and development, especially for Battlefield and Apex Legends Mobile
- the marketing for the new Battlefield and for Apex Mobile is expected to be quite costly
Apex Legends had player numbers in Season 8 as high as at release
This is how it goes for EA in 2021: Just like the last years.
- They expect great success again from the next generation of sports games like FIFA 22. These are also supposed to be released for the console generation PlayStation 5 and Xbox Series X. The games are expected to improve in physics, artificial intelligence, and immersion.
- Apex Legends is set to come to mobile. It has an “incredible momentum and is growing in every way.” Season 8 has been exceptionally well received, with 1.2 million active players, the shooter has not seen this many games since its release in 2019. The game is also doing great in Asia, especially in Japan.
- Additionally, EA apparently expects a lot from Battlefield 6. In June 2021, they plan to present the new Battlefield to fans. The financial model is said to be “conservative”: This likely means the game will cost 60 €. However, they also seem to be planning other “business models”: It sounds like EA is looking to Activision Blizzard and Call of Duty. A main game, a free spin-off, and a mobile title:
EA earns massively in 2020 even without a new Battlefield or Battlefront
This is what it is about: What EA is conveying to investors here is: We are making a crazy amount of money with the existing games, even if we do not release Star Wars Battlefront 3 and had no Battlefield 6 in 2020.
The ongoing revenue from the “live service” model is simply so enormous.
This makes it hardly noticeable, that the planned blockbuster hit Anthem flopped and was discontinued. In EA’s plans, the free-to-play title “Apex Legends” has long replaced Anthem.
The financial reports from EA are nearly the same from quarter to quarter: FIFA, Sims, and Apex Legends are the cornerstones of profit, which continue to grow. Additionally, EA is planning an expansion to mobile and Asia.
The questions from analysts often revolve around things like: “When will we see the revenue breakthrough in Asia and mobile, which we are waiting for?” – Analysts are watching the markets “Asia and mobile” at every conference. EA does not want to commit here but still sees tremendous growth potential.
The clear winner at EA in recent years has been clearly Apex Legends. While the FIFA series and “The Sims” were planned hits, EA seems to be amazed every quarter how fantastic the free-to-play shooter continues to perform and how well it is developing.
The traditional blockbuster shooters and classic console games from EA like Star Wars Battlefront or Battlefield are still important, but are moving to the background. The revenue from live service is simply too good.
It makes sense that while Battlefield will continue as before, a free-to-play spin-off and a mobile version will also be brought out, just as Activision Blizzard succeeded with Call of Duty: Warzone and Mobile:
Battlefield 6 announces release period 2021 – Also coming for old consoles
