How Much Can Electronic Arts’ Console Revenue Grow Over The Next Three Years?

by Trefis Team
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Electronic Arts’ (NASDAQ:EA) console gaming revenue could grow at a CAGR of 6.4% from $3.33 billion in fiscal 2019 to $4.0 billion in fiscal 2022, according to Trefis estimates. This growth will likely be driven by newer generation consoles, which, in turn, could drive the demand for games as well. New consoles could hit the market by the second half of 2020. The console is an important platform for Electronic Arts, as it contributes close to 67% of its annual revenue. In this analysis, we compare Electronic Arts’ growth in console platform vis-à-vis its primary competitors and provides an outlook of the future course of business. You can view our interactive dashboard analysis ~ How Much Can Electronic Arts’ Console Revenue Grow Over The Next Three Years? for more details.  In addition, you can see more of our Information Technology data here.

How Much Has Electronic Arts’ Console Revenue Grown Over The Last 5 Years, And How Much Can It Grow Over The Next 3 Years?

  • Electronic Arts’ console game sales have grown from $3.0 billion in fiscal 2015 to around $3.3 billion in fiscal 2019.
  • This represents a 3% average annual growth in console revenues (2015-2019).
  • This can primarily be attributed to the success of its franchises, such as FIFA, and Battlefield.

What Will Drive The Growth Over The Next 3 Years?

  • Newer generation consoles are expected to launch in the second half of 2020, and this should aid the console gaming demand as well.
  • Revenue growth over the next few years will likely be led by its new titles, along with continued growth in e-sports franchises.
  • The company’s newly launched game ~ Apex Legend ~ has already reached the milestone of 50 million players. This momentum could continue in the near term.
  • New games in the pipeline are from popular franchises, including Star Wars, FIFA, Madden, NBA, NHL, Need for Speed, and Plants vs. Zombies, which should aid revenue growth over the next few years.

How Does Electronic Arts’ Console Gaming Growth Compare To Its Peers?

  • Electronic Arts’ console games sales have grown at an average annual rate of 3.0% since fiscal 2015, which is lower than that of Activision Blizzard, and Take Two Interactive.
  • Activision Blizzard console sales grew at a CAGR of 4.4% from $2.2 billion in 2014 to $2.5 billion in 2018, and they could grow in mid-single-digits on average over the next few years.
  • Activision Blizzard’s gaming growth is largely being led by the Call of Duty franchise.
  • Take Two Interactive’s console games sales grew at a CAGR of 27.5% from $882 million in fiscal 2015 to $2.2 billion in fiscal 2019, and they could grow in the low teens on average over the next few years.
  • While Take Two Interactive’s 2019 revenue growth numbers are partly driven by a change in accounting method (historical numbers not restated), much of the growth can be attributed to strong demand for its games, primarily Red Dead Redemption 2 last year.

How Has Electronic Arts’ Share In Global Console Gaming Market Trended In The Past, And What Lies Ahead?

  • Global console gaming market grew at a CAGR of 4.8% from $30.1 billion in 2015 to $34.6 billion in 2018.
  • Electronic Arts’ share has hovered around 10% over the last few years.
  • Looking forward, the overall market could continue to expand in mid-single-digits in the near term, and Electronic Arts’ share could remain around 10%, in our view.

How Big Is The Console Gaming Business For Electronic Arts?

  • Electronic Arts’ console game sales accounted for 67% of the company’s total revenues in fiscal 2015, and it increased to 70% in fiscal 2017 and fiscal 2018, but declined back to 67% in fiscal 2019. We expect the figure to remain around 67% in the coming years.

 

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