Electronic Arts, the sports game publisher that spent years neglecting the mobile gaming market, couldn’t have had a better time to jump into the deep end.
Last year, EA spent nearly $4 billion trying to get its way to a strong position in mobile. This year, it launched a new version of its popular FIFA franchise for smartphones and released a mobile spinoff of its hugely successful Apex Legends Battle Royale. The company’s competitors have followed suit with even more lucrative acquisitions, including Take-Two Interactive’s purchase of Zynga for about $13 billion in January and Microsoft’s acquisition of Activision Blizzard for a record $69 billion, including Candy Crush Studio King is included.
After a period of fiery M&A and a nearly two-year pandemic-era boom for the industry, the video game market has begun to decline significantly, driving global trade through declines in share price, consumer spending and revenue in the process. Billions have been wiped out.
But that’s not a concern of Jeff Karp, the head of EA’s mobile gaming division, who said that EA is not only in a position to weather the storm, but also thrive in a more cross-platform games industry that’s less focused on depends on which hardware product a player prefers. And about to meet players wherever they are.
Karp told Protocol in an interview last week, “The challenging times with IDFA and COVID and all the unprecedented headwinds we are facing… Deploys well.” (IDFA refers to Apple’s App Tracking Transparency, a privacy change introduced on iOS last year that has hindered digital advertising efforts.) “It’s something we recognized a year ago, and it’s something like which we continue to build and double in the future.”
live service future
In many ways, EA’s investment in mobile is combined with its transition to a live services company, in which games are designed, integrated and supported (and in many cases distributed for free) over the course of several years, rather than secretly being developed. ) is done. Then sold for $60 a pop.
EA’s biggest acquisitions over the past half-decade have been mobile game companies, including Golf Clash maker Playdemic, and prolific smartphone publisher and developer Glu Mobile in 2021. And those investments, combined with the growth of its live services, are now paying off.
While many of EA’s competitors have seen a double-digit drop in the stock price this year, apart from declining sales and revised forecasts, the FIFA developer has remained steadfast. In the most recent quarter – a period of decline for Microsoft, Sony and many of EA’s third-party publishing competitors due to a major slowdown in the games market – EA’s sales and profits increased. The company’s net bookings have grown 22% year over year to nearly $7.5 billion over the past 12 months, and it now has nearly 600 million active player accounts.
It’s impossible to ignore the impact EA’s live service change has had on its business, and how resilient the company has been in the face of external pressures, from Apple’s iOS privacy crackdown to a year-long deficient video game release and continued game console supply. has done. Sanctions.
“We are excited about where we are. Arguably, the times today favor companies like EA that have well-established brands and IPs,” said Karp. One challenge facing the industry is app tracking transparency. It restricts how advertisers are able to track users in the iOS ecosystem, using a code unique to each user called IDFA that users are required to opt in to. It has cost more than $10 billion in lost revenue and increased user acquisition markets for mobile gaming companies, many of which rely on in-game advertising to attract new players.
“There is no doubt that IDFA is a significant change, and we are all learning and adapting to the way we engage with our players. Obviously, it all starts with the best quality games,” said Karp “But we are confident that we will thrive in this environment. We are well positioned because we don’t just have to see [user acquisition]Which is important for bringing new players to our games, but also how we can leverage our brands and IPs that are clearly very familiar and that have decades of communities and markets to build upon.
EA’s portfolio goes cross-platform
This approach of taking its existing brands and finding new ways to grow them beyond the console market has become a cornerstone of EA’s live service approach. Live service products like Apex Legends and FIFA, both of which are now on mobile, account for more than 70% of EA’s business, Chris Suh, the company’s chief financial officer, told investors last week. Suh said live service games will be a “key driver” of its profits in the long term.
“We are excited that we have 3.5 billion players in our addressable market. This brings our brand reach,” said Karp. “This is really an opportunity for the brand to expand our overall ecosystem, and it’s practical. Creates recurring revenue. It also brings an opportunity to bring our games to all platforms. ,
Apex Legends Mobile launched in May, and the company is testing a smartphone version of its battlefield shooter. Also in the works is a new game based on “The Lord of the Rings” called Heroes of Middle-Earth, which will test EA’s new mobile chops when using another company’s intellectual property on a premium smartphone. When it comes to giving games.
Regarding the development process for the mobile division, Karp said, “We are taking longer at soft launches than ever before, which often includes extensive beta periods spent collecting data from players in the Philippines, Australia and other regions. “Knowing these games now run for five to 10 years, we want to be really thoughtful and methodical when we launch this globally.”
Karp said the key to EA’s strategy is game accessibility to consoles and PCs once considered exclusive to smartphones. It’s a balancing act in which EAs have to weigh two conflicting goals: “How do we make sure we respect our brands in a meaningful way,” Karp said, as well as ensuring that EAs “are those Players can get where they are” in regards to how sophisticated their phone can be. The game may not be a dramatic departure in graphical quality or performance from its console counterpart, but it will also have to run on cheap Android phones primarily used in mobile-first markets like India.
The EA is taking an equally measured and careful approach to monetization. The company is well aware of the dangers of transplanting a business model from one environment into games played on an entirely different platform; That’s exactly how the company misfired dramatically with Star Wars Battlefront 2 and to a lesser extent with its recent failure with Battlefield 2042.
Monetization is a particularly sensitive topic as more console developers transition to mobile and try to engineer fair, but profitable, monetization strategies. For example, Blizzard’s recent entry into premium mobile gaming with Diablo Immortal has been marred by the game’s massive and aggressive microtransaction model.
Karp said EA tackles this dilemma by trying to set realistic expectations for players that align with why they’re playing the game on a smartphone and what they can expect to get out of it. .
“I think it’s just understanding the needs that they would expect at various consumer value propositions,” he said. Karp compared playing the console version of the game to watching a movie, in which a viewer expects a certain quality bar and is willing to pay for it. “It’s the best graphic feature and production value, and then you get a game on mobile that still has phenomenal production value, but a different experience and a different type of game.”
Looks like the approach is working, especially for FIFA. The first quarter of the fiscal year was FIFA Mobile’s best quarter so far in six years, the company said last week, with the company releasing mobile ports of the franchise. “I think we’ve done a great job with FIFA,” said Karp, noting that the mobile division at EA is growing and that many of its new releases are proving to be instant hits. “Those are things we are quite proud of. Also understand that there are a ton of opportunities for us and a great road ahead.”
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