Business Models (EA) Business Models Each major player has focus on particular genres and channels with fairly significant variation in EBITDA margin; EA higher cost structure due to larger number of titles and product quality has recently lagged Business Models Business Model FY13 Revenues / EBITDA Strategy Genres Geography $4.6bn / $1.7bn (37%) Strategy: Produce development based on franchises that have potential to sustain customer appeal over long periods of time Strength: Specializes in first person shooter & open world concept games Weakness: Mobile & social gaming trend are not priority Hardcore gamers World of Warcraft, Call of Duty, Starcraft, Guitar Hero North America (53%) Europe (40%) Asia Pacific (7%) $1.2bn / $698m (30%) Strategy: focus on organic growth & capitalize on digital distribution initiatives Strength: Strong developers 2K Games and Rockstar Games Weakness: Dependent on success of a couple of franchises Grand Theft Auto, 2K Sports titles North America (47%) International (53%) $873m / $63m (7%) Strategy: Strong focus on developing mobile games based on consumer demand Strength: Successful franchises that generated large amount of attention and demand Weakness: Volatile revenue driven by dependency on hit or miss titles Casual & social gamers Farmville, Zynga Poker, Words with Friends North America (60%) International (40%) $1.6bn / $607m (38%) Strategy: Bring social and interactive experiences to its games, with focus on creating games for new console platforms Strength: A couple strong franchises that generated attention, along with benefits of Uplay, its online distribution portal Weakness: Historical poor performance in casual game market Assassin’s Creed, Just Dance, Ghost Recon North America (50%) Asia-Pacific (6%) Other (4%) $7.7bn / -$288m (-4%) Strategy: Content-first strategy, believing hardware sales will follow Strength: Strong brand after +25 years in the video game industry and historic popularity of their console games Weakness: Continued decline in Wii and DS game sales Mario, Pokémon, Wii Series, The Legend of Zelda Japan (33%) North America (37%) Europe (27%) Other (3%) $4.0bn / $944m (24%) Strategy: Obtain a higher digital mix of revenues and develop select number of blockbuster titles for console & digital games Strength: Proven and strong franchises (EA Sports) that bring stability to revenue stream Weakness: Difficulty in developing blockbuster hits, execution of game releases, poor game quality , low customer satisfaction Hardcore/Casual gamers Sims, Need for Speed, Madden NFL, FIFA North America (42%) International (58%)