1. 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%)