ERTS, Electronic Arts Inc

October 12, 2010 by staff 

ERTS, FIFA 11, the latest version of Electronic Arts (NASDAQ: ERTS) perennial football video game, has sold 2.6 million copies in its first week on sale. The soccer simulation has been released throughout Europe last Friday and the United States last Tuesday and has since won and 150 million euros for EA Sports. A week totals FIFA 11 represent an increase of 29% in one week of sales last year. It is the third consecutive year that Electronic Arts has seen a dramatic increase from year to year in sales of FIFA. FIFA 10 has sold about 4.5 million copies between its release in October 2009 and January 2010 and an increase of 26% over the same period in 2008. These represent unit sales on a variety of platforms from Microsoft (NASDAQ: MSFT) Xbox 360 and Windows operating system, Sony (NYSE: SNE) Playstation 3, Playstation 2 and Playstation Portable, as well as Nintendo (PINK: NTDOY) Wii and DS, but they are also the most healthy performance for one of EA Sports titles this year.

Although the bulk of sales at Electronic Arts have released his arm EA Sims and Sims family of software, EA Sports is the workhorse of the enterprise, publishing annual editions of sports video games with official licenses in the league. Much bestselling traditional business underperformed in 2010 though. Tiger Woods PGA Tour 2011, published last June, sold only 32% of Tiger Woods PGA Tour 2010 released the same month a year earlier. While the game has certainly suffered from Tiger Woods very public marital problems, it is still a shocking decline for a series that has performed reliably for ERTS.

Gaming editor football, NCAA 2011 and Madden NFL 2011, has not experienced the same decline in sales that Tiger Woods has done, but both games were flat performance from year to year. Madden 2011 sold just 1.97 million units in August 2010 compared to 1.9 million units in 2009, while 2011 has seen NCAA 692,000 units sold in July 2010 compared to 689,000 in 2009.

Another EA Sports division blow last week when the company announced that they delay the release of their highly anticipated NBA Elite in October 2011 because of technical problems with the finished product. Wedbush Morgananlyst Michael Pachter believes that the delay will be disastrous to provide EA NBA, lowering its sales estimate of 1.65 million units in March 2011 up to 500,000 simple. Pachter predicts that the delay cost EA and 60 million in lost revenue during the third quarter of the year, the filing of its annual sales estimated at 3.96 billion and for society of 1.5%.

While ERTS stock has stayed constant through the good performance of FIFA 11, it is clear that the publisher needs to shake its annual revenue sports game to regain the growth of the label was the experience before 2008 crash. EA Sports president Peter Moore must begin to reposition the publisher provides services rather than physical products. Franchises Tiger Woods, Madden, NCAA, and FIFA, in addition to other properties of the sporting society, must be re-imagined as subscription services that are delivered digitally to pay for annual updates rather than new retail products made physical each year. It will be much lower production costs while maximizing the potential benefits through monthly subscriptions. Just look ERTS shareholders of Activision Blizzard (NASDAQ: ATVI) World of Warcraft to see the profitability of subscription games can be.

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