Electronic Arts Inc. is the second largest video game company in Americas and Europe in terms of revenue and market capitalization. Headquartered in Redwood City, California, the company competes with Activision Blizzard, Ubisoft and Take-Two Interactive. The company derives its revenue from two reportable segments: Product and Services including other. As of Q2 FY20, the revenues from the different reportable segments or business units came in at. And let’s look into the Market Segment wise revenue breakup here.
Revenue (in million USD)
|Service and other||1043||86.27%|
Revenue is classified either as product or service revenue depending on when the performance obligations are recognized. If there is upfront transfer of control, it is classified as product revenue but if it is recognized over the estimated offering period or subscription period as services provided, it is classified as service revenue.
This segment includes revenue allocated to the software license performance obligations and also licensing of software to third-parties.
The net revenue from this segment was $166 million, primarily driven by The Sims 4, FIFA 19, and FIFA Online 4. There was a 18% decline in the net revenue from the Product segment as compared to Q2, FY19 primarily due to the FIFA franchise accounting for a $66 million decline. However, this was offset by a $30 million improvement in revenue from The Sims franchise, amounting to a net $36 million decline.
This segment includes revenue allocated to the future update rights and online hosting performance obligations, subscription services and rights to third-parties.
The net revenue from this segment was $1043 million, primarily driven by FIFA Ultimate Team, Apex Legends and Anthem. There was a 12% increase in the net revenue from this segment as compared to Q2, FY19 primarily due to Apex Legends and FIFA Ultimate Team and the Command and Conquer franchise accounting for $229 million increase. However, this was offset by a $121 million decline in revenue from the Star Wars, Need for Speed and Madden franchises, amounting to a net $108 million increase.
Electronic Arts Inc., is a global leader in digital interactive entertainment, with the mission to inspire the world to play. They develop, market, publish and deliver video games which can be played and watched on different platforms such as game consoles, PCs (desktops), mobile phones and tablets. Their products and services cover a diverse genre such as sports, action, role-playing and simulation. The breadth and depth of their portfolio together with flexibility in business models and distribution channels (retail, download, subscription-based and free-to-play) provides them with a strategic advantage over their competitors.
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