5 Things Electronic Arts Inc.'s Management Wants You to Know

The Sims' absence weighed on second quarter guidance.

Sam Mattera
Sam Mattera
Aug 4, 2015 at 9:00AM
Technology and Telecom

Electronic Arts' (NASDAQ:EA) management had a lot to say on the company's first quarter earnings call.

CEO Andrew Wilson, CFO Blake Jorgensen, and COO Peter Moore commented on a variety of factors affecting Electronic Arts' business. Below are five of the most important quotes from that call.

More games are coming to the vault
Last year, Electronic Arts announced EA Access, a subscription-based digital service that gives Xbox One owners access to a variety of older Electronic Arts games for a relatively modest fee. Unfortunately, Electronic Arts does not break out the number of subscribers it has to the service, but during the call, Jorgensen highlighted the company's continued commitment.

"EA Access is delivering strong, sustained growth, and we continue to build its value to gamers as we add more games to the Vault. Titanfall is now in the Vault and Dragon Age: Inquisition will join it at the end of the summer, bringing the total titles to 13."

Sims 4 and foreign exchange
Electronic Arts shares fell in after-hours trading on Thursday following the release of its first quarter results. Although they exceeded analyst expectations for the current quarter, its outlook fell short. During the call, Jorgensen offered up an explanation.

"Guidance for our second quarter is for [adjusted] net revenue to be $1.075 billion, 12% lower than last year's $1.22 billion. In this quarter, we're launching Madden NFL, FIFA, Rory McIlroy PGA Tour, NHL and NBA Live. While last year's Q2 saw the launches of our major sports titles, it also included The Sims 4. In addition, FX presents a year on year impact of around $100 million to Q2 revenues."

A strong slate of upcoming titles
As a video game publisher, Electronic Arts' performance depends on the demand for its games. During the call, Wilson outlined several of the company's long-term projects.

"Looking further ahead, we're preparing more new games for our players. The reaction to a first look at Mass Effect: Andromeda at E3 was incredibly positive. We have a new Battlefield experience coming in Q3 FY 2017 and another new Star Wars project"

Star Wars will be a major part of EA's future
Stars Wars: Battlefront could be the biggest game Electronic Arts releases this year. The first-person shooter is based on the long-running sci-fi series and is set to arrive in stores this November, ahead of the release of the next Star Wars film. But Electronic Arts' commitment to Star Wars involves much more than one game. During the call, Jorgensen hinted at additional titles.

"We don't have the timetable yet to announce those, but trust that you will see multiple Star Wars titles both on console and PC, as well as on mobile. We have at least one mobile title that's going to come out this year and we have more in the process as well. So lots to come on Star Wars, and you'll hear about that as we discuss our future guidance. We're very excited about the franchise and about our partnership."

Free-to-play Titanfall probably won't be a big profit driver
Electronic Arts released Titanfall for the Xbox One and PC in March of last year. An Xbox 360 version soon followed. Titanfall isn't a completely traditional first-person shooter, but it does adhere to traditional pricing -- if they wish to play it, gamers must pay to purchase it. But Electronic Arts will soon release a free-to-play version of Titanfall in Asia. When asked about this development, Moore made no sweeping promises. Instead, he characterized it as an experiment -- not a major new source of revenue.

"Think of this as a classic free-to-play game there, but do not think of this as being particularly material to revenue. It's an interesting experiment in looking at that type of game and whether it plays in a free-to-play environment. We'll be interested to see the results."