Electronic Arts Q2 FY2020

This week EA revealed their Q2 earnings report for the period July 1 - September 30, 2019. Top level impressions from the report is that things look good overall across most of their titles. Their live service games continue to do well and the live service offerings inside most of their sports titles. Revenue and earnings per share exceeded their Q2 expectations and based off of a strong second quarter, EA will be adjusting its full year projections as well.

One of the strongest aspects of the earnings call for EA was their sports titles, as expected. Madden has seen another strong year, with a nice boost from the early release. I would expect Madden to now be released early August going forward with the success they have seen from this year. EA credits the hype generated from the start of the preseason and then another round of hype from the kickoff. According to the earnings call, player engagement, units sold and ultimate team are showing year over year growth. The number that most likely pleases EA the most would be that Ultimate players in Madden are up nearly 20% versus this time last year. This is incredible news because as we have seen before in earnings calls, EA makes a bulk of their profit from the live service, Ultimate. They also mentioned NHL 20 showing similar growth compared to the previous release as well as great growth in Ultimate. When we talked about the NPD charts from last month, one of the games that stood out to me was NHL 20 being in the top ten considering Hockey lacks the popularity of the other major sports.

However, the golden goose for EA when it comes to their sports titles is FIFA, due to its global popularity. The great news is that the growth trends were echoed for the FIFA series. Growth in this series is not a given due to sheer size and popularity of it and that eventually you plateau with consumers. New players were up around 7%, with returning players up around 15% and the most important growth was that FIFA Ultimate unique players were up 22%. The global reached also saw the FIFA series show strength in other aspects including FIFA mobile being downloaded more than 250 million times now with China and Korea particular areas of success.

One of the beacons of light earlier in the year for EA was Apex Legends. With minimal releases from EA earlier in the year, Apex Legends getting off to such a great start helped keep investors happy. Within the first month, the Respawn developed shooter had reached 50 million downloads but then the news went quiet on the series and investors seemed disappointed that it wasn’t the next Fortnite. The series has also had some bumps in the road regarding a slow trickle of content, battle passes that didn’t offer much value and an in game economy that was a little unfair. EA and Respawn have tried to address the problems with the game as much as possible by constantly tweaking the economy and also by trying to release timed content, involving new game modes. It seems that the commitment EA and Respawn have given to Apex has gone a long way in shaping its success. Weekly player count in the newly released third season is greatly above what it was compared to the second season and EA has announced that the game has now been downloaded over 70 million times, which definitely puts the game in rarified air for the moment. The next plan for the game is to expand to mobile, new platforms, new territories and also launch an Apex competitive program that they will reveal soon. If the game is already on PS4, Xbox, PC and they are talking about bringing it to mobile then the only new platform this game can come to is either Switch or Stadia and I would put my money on Switch port happening soon with Overwatch recently showing that, in addition to Fortnite, these games can work on the Nintendo Platform.

There were a few other important notes from the earnings call. EA mentioned that with the launch of EA access on the PS4, they saw their subscriber base grow significantly. This success combined with the upcoming launch of Star Wars Jedi : Fallen Order, as well as the Disney contract coming closer to the end probably prompted EA to branch away from Origin and put EA Access on Steam as well. From the outside looking in, this seems like a smart move that will bring a lot more potential customers to the upcoming Star Wars game but also to upcoming EA games as well. Microsoft has shown us that just because you own something like Minecraft doesn’t mean it can only succeed on your platform. It’s a win win scenario if people are buying your game and if more people have the opportunity to do so.

The other large piece of news that was slipped into the very end of the earnings call was during their look ahead at the future of EA. The next Battlefield will not be released until FY2022, which means that at the earliest we will see this game will be April 1, 2021. This means that with no Battlefield title this year and no release next year we won’t be seeing it might be almost three years from the release of Battlefield V to the next instalment. This is somewhat surprising as we are expecting new consoles from Sony and Microsoft next holiday season. There is no better way than to show off your fancy new hardware then with a brand new shooter. A big question will be what title will be the next release ? Are fans finally going to see a Bad Company follow up ? Will EA play it safe and release a mainline Battlefield ? Will it have been long enough for angry fans to forget about Battefront and all the Microtransactions? My other concern is that with Resapawn shipping Jedi Fallen Order in a few weeks, it would seem like their next mainline project would be targeted FY2022 or would they require a three year cycle before their next game putting the release date into FY2023. That sounds like a long time to wait for the next Titanfall but maybe we can get lucky and get some Titans in Apex Legends.