NBA Street, Def Jam Vendetta boost profits
Vidgame giant Electronic Arts rode its strong new franchises “NBA Street” and “Def Jam Vendetta” to record first-quarter profits Wednesday.
“We had the biggest Q1 in the history of the company a year ago, and analysts were saying it was the quarter that would never be topped,” said EA prexy and chief operating officer John Riccitiello. “I’m just very proud of the organization to be able to lap it and then some.”
Net income was $18 million, up 148% from last year. Revenues were up 6% from the year-ago period at $353 million.
The company also announced a revamped deal with AOL. Previously, EA had paid AOL $4 million a quarter for the right to be the online service’s exclusive game provider. Under the new two-year deal, AOL will instead pay EA to use its Club Pogo subscription game service and other material as enticements to get and keep subscribers for AOL’s new broadband service, and for its European version. AOL users will get to use the Club Pogo games for free.
“We’ve now gone from paying for access to being paid for our content,” said chief financial and administration officer Warren Jenson. He declined to specify how much AOL is paying, citing a non-disclosure agreement, but said the arrangement is good for both companies.
The new deal unwinds the previous agreement, which cost EA $80 million in carriage fees over five years. With the new deal, EA has put behind it the last major vestige of its boom-era push into ad-based casual gaming. The company still has a major online presence, but is trying several new approaches to make money from ardent gamers, such as pay-to-play tournaments for sports games.
The day’s biggest news, though, was EA’s very plump bottom line, which further beefed up its pile of cash and short-term investments to $1.6 billion, for a company that projects to have $2.8 billion to $2.9 billion in revenues this fiscal year. That money could be used for an acquisition, dividend or stock buyback, but Riccitiello and Jenson said no such plans are currently in the works.
Sims game’s vim
Big revenue generators included: the latest expansion to the Sims, Sims Superstar (1.5 million copies); budding franchise NBA Street 2 (1.4 million copies); and Def Jam Vendetta (nearly 1 million copies), a fighting game whose characters are based on the Def Jam record label’s rapper stars.
Electronic Arts said it still expects the 2004 fiscal year to end with revenues up as much as 17%. This quarter should also be strong. The NCAA Football title broke out quickly, selling more than 400,000 copies in its first week, and the company already has a record number of pre-orders for its powerhouse Madden NFL title.
The company reported earnings after the market closed Wednesday, but still saw its share price jump $2, or 2.46%, to $77.66 on the day.