Electronic Arts, Inc. engages in the provision of digital interactive entertainment. It develops and delivers games, content, and online services for Internet-connected consoles, mobile devices, and personal computers. It operates through the North America and International geographical segments. The company was founded by William M. Hawkins III and William Gordon in 1982 and is headquartered in Redwood City, CA.
Our business is intensely competitive and “hit” driven. We may not deliver “hit” products and services, or consumers may prefer our competitors’ products or services over our own.
Our industry changes rapidly and we may fail to anticipate or successfully implement new or evolving technologies, or adopt successful business strategies, distribution methods or services.
We may experience security breaches and cyber threats.
Our business could be adversely affected if our consumer protection, data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of consumer protection and data privacy and security laws generally.
We may experience outages, disruptions or degradations in our services, products and/or technological infrastructure.
Negative perceptions about and responses to our brands, products, services and/or business practices may damage our business, and we may incur costs to address concerns.
Our business depends on the success and availability of platforms developed by third parties and our ability to develop commercially successful products and services for those platforms.
Government regulations applicable to us may negatively impact our business.
We may not meet our product development schedules or key events, sports seasons and/or movies that are tied to our product and service release schedule to may be delayed, cancelled or poorly received.
Our marketing and advertising efforts may fail to resonate with consumers.
We may not attract, train, motivate and retain key personnel.
We may experience declines or fluctuations in the recurring portion of our business.
We could fail to successfully adopt new business models.
We may be unable to maintain or acquire licenses to include intellectual property owned by others in our games, or to maintain or acquire the rights to publish or distribute games developed by others.
We rely on the systems of our platform partners who have significant influence over the products and services that we offer on their systems.
Our business is subject to economic and market conditions, particularly risks generally associated with the entertainment industry.
Our business partners may be unable to honor their obligations to us or their actions may put us at risk.
The products or services we release may contain defects, bugs or errors.
We may be subject to claims of infringement of third-party intellectual property rights.
From time to time we may become involved in other legal proceedings.
Our products and brands are subject to the threat of piracy, unauthorized copying and other forms of intellectual property infringement.
We may experience outages, disruptions and/or degradations of our infrastructure.
External game developers may not meet product development schedules or otherwise honor their obligations.
Our financial results are subject to currency fluctuations.
We utilize debt financing and such indebtedness could adversely impact our business and financial condition.
Changes in our tax rates or exposure to additional tax liabilities, changes to tax laws and interpretations of tax laws
could adversely affect our earnings and financial condition.
Our stock price has been volatile and may continue to fluctuate significantly.
Our fiscal year is reported on a 52- or 53-week period that ends on the Saturday nearest March 31. Our results of operations for the fiscal year ending March 31, 2020 contains 52 weeks and ends on March 28, 2020. Our results of operations for the fiscal year ended March 31, 2019 contained 52 weeks and ended on March 30, 2019. Our results of operations for the three months ended June 30, 2019 and 2018 contained 13 weeks each and ended on June 29, 2019 and June 30, 2018, respectively. For simplicity of disclosure, all fiscal periods are referred to as ending on a calendar month end.
Net revenue consists of sales generated from (1) full games sold as digital downloads or as packaged goods and designed for play on game consoles and PCs, (2) full games for mobile phones and tablets, (3) live services associated with these games, such as extra-content (4) subscriptions that generally offer access to a selection of full games, in-game content, online services and other benefits, and (5) licensing our games to third parties to distribute and host our games.
We provide two different measures of our Net Revenue: (1) Net Revenue by Product revenue and Service and other revenue, and (2) Net Revenue by Composition, which is primarily based on method of distribution. Management places a greater emphasis and focus on assessing our business through a review of the Net Revenue by Composition (Digital, and Packaged goods and other) than by Net Revenue by Product revenue and Service and other revenue.