Electronic Arts have announced on February 5, 2019 the preliminary financial results for its third fiscal quarter ended December 31, 2018. Let’s find out how the company sees the current state of the FIFA franchise.
The Current State of the FIFA Franchise
During the quarter, FIFA Ultimate Team matches played increased 15% year-over-year. However, even being FIFA 19 the highest-selling console game in Europe during the calendar 2018, not everything is going fine. Let’s see by EA’s eyes, the current state of the FIFA franchise.
‘FIFA continues to be a growing business for us – in fact, we sold more units of FIFA last calendar year than any year before, and we welcomed four million new players into our FIFA ecosystem on console and PC. Our plans for FIFA 18 were aggressive in a World Cup year, and we ended up selling an additional 2.4 million units of FIFA 18 throughout the year, with the intention of converting those players to FIFA 19 when it launched. The conversion has been slower than planned, leading to unit sales that were effectively flat year-over-year. In a year where there was intense competition and many iterative titles were challenged, FIFA 19 still became the best-selling console game in Europe last calendar year. Even on a flat year-over-year install base, FIFA Ultimate Team has performed well, and it accelerated in January with our most successful Team of the Year event ever. Our competitive gaming programs are also adding strength to the franchise, with our expanded FIFA Global Series already garnering 80% more total minutes watched compared to last fiscal year, along with new sponsor engagements and partnerships with industry leaders such as Eleague, Gfinity and PGL. We continue to be very positive on the strength of FIFA and FIFA Ultimate Team around the world.’
‘Looking ahead to FY20, we have a large slate of new games, beginning with some big new additions in our next FIFA title. (…) In FY20, we’re also set to deliver more content and new experiences in more live services than ever before. We’re excited to continue building on the success of our Ultimate Team modes for EA SPORTS. In fiscal 2020, we will continue to innovate on our sports titles, with growth for them expected to be in the range of flat to up 5%. In particular, FIFA 20 will include some significant new features, and we plan for both FIFA and FIFA Ultimate Team to grow over this year. (…) ‘To sum up, FIFA stands out as a robust franchise through a tumultuous year in the videogame industry. We are making changes to improve execution and we’re refocusing R&D investments to projects with near to medium-term returns without impacting our long-term vision. (…) FIFA, in particular, continues to demonstrate its leadership as a top title in the industry, and it is growing as a business. We will build on the continued success of our EA SPORTS portfolio with significant innovation and new ways to play in FY20. ‘
‘The mobile market is characterized by a small number of highly successful games together with a long tail of much smaller games, many of which merely break even or actually lose money. Our focus has been, and continues to be, on building profitable franchises. Our business continues to be profitable, but growth is unpredictable in such a market. We continually review how we might improve the performance of this business.’
Performance in Asia
‘Our performance in Asia was also not as strong as expected through Q3. In Korea, FIFA Online 4 is performing well, with monthly average players exceeding the trajectory of FIFA Online 3 in a similar period from launch. Given nuances in the Chinese market, our transition to FIFA Online 4 has been slower than anticipated, and FIFA Mobile is still in early stages after launching in the market. We have long-term strategies with robust content plans for both games that, combined with the popularity and growth of soccer in the region, we believe will fuel further growth.’
‘The performance of FIFA and FIFA Ultimate Team was a bright spot, with the franchise proving extremely resilient in the face of intense competition. In addition, we set a new third quarter record for operating cash flow over the last twelve months’ (…) ‘Life to date, FIFA 19 full game unit sales are roughly flat to FIFA 18, and slightly below our expectations. We believe the underperformance was driven by the intense competition throughout this year. It is possible that the success of the World Cup promotions pulled FIFA 19 sales into FIFA 18, given that, during calendar 2018, we sold more copies of FIFA than ever before. Fiscal year to date sales for FIFA 19 are approximately 20 million units, and we’ve also sold over 3 million units of FIFA 18 this fiscal year. (…) FIFA Ultimate Team delivered its best quarter ever, up from last year’s Q3, which was an all time high due to the addition of esports. Although fewer people than expected have bought FIFA 19, average spend per payer is up over last year’s title.’
Digital Net Bookings
‘Digital net bookings were $1.199 billion, down 3% on the year-ago period. Strong digital sales of Battlefield V compared to Star Wars Battlefront II were more than offset by decline in our mobile business and the extra game launch in last year’s third quarter. Digital net bookings now represent 74% of our business on a trailing twelve-month basis, a new record. This compares to 67% in the prior year. (…) Live services net bookings were down 0.4%, to $784 million. FIFA Ultimate Team grew, but did not offset the decline in Battlefield 1 live services and in FIFA Online. Mobile delivered net bookings of $142 million, down 22% year on year, with declines across our portfolio. (…) Full game PC and console downloads generated net bookings of $273 million, 5% higher than last year. Growth was driven by the ongoing shift to digital, in particular, for FIFA 19, for which sell through is 27% digital, life to date, compared to 21% for FIFA 18 last year. Overall, 47% of our units sold through were digital rather than physical, measured on Xbox One and PlayStation 4 over the last twelve months. This compares to just 37% a year ago.’