Is Electronics Arts Pooling Its Money Into R&D Effectively?

Money that Electronic Arts pours into research and development for churning out new games and expansions plays a crucial role in governing the company’s sales. Ideally, the impact of the aforementioned investment should be a consistent improvement in the company’s overall revenues relative to its investments in R&D. This is exactly what Electronic Arts has exhibited over the past four years. Despite the need for higher investments in the development of games for the eighth generation consoles, the company has managed to notably increase its sales for every dollar spent in R&D.

While customers usually follow a franchise once they develop a solid liking for its games, their allegiances are prone to changes during the console refreshing cycle as other developers look to capitalize on the transition period. To this end, long standing franchises require fresh content/expansion/features for their games, so as to keep the customer base loyal. This results in an increase in the R&D expenses, which should ultimately lead to strong sales of new content and games.

Have more questions on Electronic Arts? See the links below.

• What Is Electronic Arts’ Revenue & Cash Profit Breakdown?
• What’s Electronic Arts’ Fundamental Value Based On Expected 2016 Results?
• By What Percentage Have Electronic Arts’ Revenues And Gross Profit Grown Over The Last Five Years?
• How Has Electronic Arts’ Revenue And Cash Profit Composition Changed Over 2011-2015?
• Electronic Arts’ Q4 FY 2016 Earnings Review: Latest Editions Of Sports Titles To Lead The Revenue Growth

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