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Electronic Arts announces shift to digital games

The company says it plans to focus more on video games distributed digitally instead of ones produced on discs.

May 05, 2011|By Alex Pham, Los Angeles Times

The video game disc may be getting the long goodbye.

Electronic Arts Inc. chief executive John Riccitiello on Wednesday said the game publisher is shifting to focus more on digitally distributed games and de-emphasizing its investments in shrink-wrapped games sold at retail stores.

"Today, we're announcing a big shift," Riccitiello said during the Redwood City, Calif., company's fourth quarter earnings call with analysts. "Over the coming years, we're transforming EA from a packaged goods company to a fully integrated digital entertainment company."

EA has been gradually ramping up its digital and mobile games business the past two years. It bought social game developer Playfish in 2009 for $400 million, followed by a $20-million purchase of mobile games publisher Chillingo. On Tuesday, EA announced it had acquired two other mobile game companies, Firemint and Mobile Post Production.

EA also said it will launch long-awaited online game Star Wars: The Old Republic late this summer or in early fall. Already, about a million players have tested the game, which would compete with Activision Blizzard Inc.'s hugely popular World of Warcraft.

Meanwhile, 27% of EA's revenue in its fourth quarter ended March 31 came from its digital business, including social games on Facebook, downloads on PCs or game consoles or mobile games, up from 18% a year earlier, according to Eric Brown, EA's chief financial officer.

EA reported an 11% increase in fourth-quarter revenue, to $1.1 billion, up from $979 million in the year-ago period. Net income jumped five-fold to $151 million, or 45 cents a share, up from $30 million, or 9 cents a share.

For its full fiscal year, EA saw a 2% decline in sales to $3.59 billion, down from $3.65 billion the prior year. Its net loss narrowed to $276 million, or 84 cents a share, from $677 million, or $2.08 a share, the year before.

alex.pham@latimes.com

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