Note: Electronic Arts' fiscal year ends on March 31
First, EA acquired Codemasters, a UK-based developer specializing in racing games, for $1.2 billion. This deal outmaneuvered a $973 million bid from Take-Two Interactive and granted EA access to popular racing franchises such as Formula One and DiRT, which complement EA's own established Need For Speed series. Leveraging EA's expertise in live services and its extensive global reach, Codemasters' racing titles are likely to see an increased integration of live services in the years to come. The acquisition was completed as an all-cash transaction.
Later in 2021, EA further strengthened its mobile presence with the $2.1 billion acquisition of Glu Mobile. This acquisition brought a collection of popular mobile games to EA's portfolio, including female-centric hits like Kim Kardashian: Hollywood and Covet Fashion, as well as MLB Tap Sports Baseball. The addition of MLB Tap Sports Baseball broadened EA's sports game offerings, which already featured major franchises like FIFA and Madden NFL. The acquisition of Glu Mobile was intended to significantly enhance EA's mobile business, which at the time represented 15% of the company's total sales.
Further bolstering its mobile division, EA also completed the acquisition of Playdemic, a UK-based mobile games company known for the popular game Golf Clash, in October 2021 for $1.4 billion.
More recently, in April 2024, EA formalized its ownership of Motive Studio, a Montreal-based development team that had previously operated within EA. Motive is known for its work on titles like Star Wars: Squadrons and the remake of Dead Space, indicating EA's continued investment in internal studio capabilities alongside strategic acquisitions.
Below are key drivers of value that present opportunities for upside or downside to the current Trefis price estimate for Electronic Arts's stock.
Electronic Arts' focus on digital services and e-sports has proven highly lucrative. A key driver of this success is the FIFA Ultimate Team mode, which generates considerable revenue through features like matchmaking – connecting players for online games. This successful model has been replicated across other major EA sports titles, including Madden NFL and NHL. Furthermore, EA has effectively monetized its other franchises through digital content such as expansion packs for Battlefield. Consequently, the company's Services segment has experienced substantial revenue growth.
Electronic Arts is a global leader in digital interactive entertainment, developing, marketing, publishing, and distributing video games for various platforms, including video game consoles, personal computers, and mobile devices. EA's portfolio features a wide range of popular franchises, with notable successes in sports games under its EA SPORTS label (such as EA SPORTS FC, Madden NFL, and NHL), iconic franchises like Need for Speed and The Sims, and popular titles across various genres.
EA generates revenue primarily through the sale of full game downloads and physical copies, as well as through a growing segment of digital services, including downloadable content, in-game purchases, subscriptions (like EA Play), and other services.
The mobile gaming market has experienced substantial growth in recent years, driven by increased smartphone usage and accessibility. This trend has led to significant revenue growth for Electronic Arts in its Mobile segment. While mobile gaming continues to expand, the Console segment remains a critical part of EA's business, particularly for its core gaming audience who often prefer the immersive experiences offered by consoles. Therefore, both the Mobile and Console platforms are vital revenue streams for Electronic Arts, catering to different player preferences and market trends.
The video game industry has undergone a significant transformation over the past decade. The widespread adoption of smartphones and tablets has democratized access to gaming, leading to the surge in popularity of casual gaming. Players are no longer limited to traditional consoles and high-end PCs, as mobile devices allow for gaming on the go. This evolution has necessitated a shift in business models for video game companies to effectively engage with the expanding and diversifying player base.
The launch of the latest generation of consoles, the PlayStation 5 and Xbox Series X/S, which began in late 2020, has significantly impacted the gaming market. These new consoles brought enhanced performance and features, driving a new cycle of hardware upgrades. While initial adoption was strong, the dynamic between hardware and software sales continues to evolve, influenced by factors such as digital game purchases, subscription services, and the ongoing popularity of casual mobile gaming alongside dedicated console gaming.
The competitive video gaming sector, or esports, has experienced substantial growth in both viewership and participation over the past decade. This expansion has been fueled by increasing prize pools, professionalization of the scene, and growing mainstream recognition, making esports a significant aspect of the gaming industry landscape.
