Why does EA pinch pennies? It works

EA

Like a number of other industry members this week, Electronic Arts released its fourth-quarter fiscal results, completing its 2013 fiscal year. To the chagrin of many, the two-time “Worst Company in America” award winner has proven that its unpopular, profiteering ways continue to work.

Before I continue, I should note that – despite the language of the previous paragraph – I have no real aversion to EA’s business practices. As far as I’m concerned, EA is just that: A business. As long as the company is not providing a service vital to the public and is abiding by the law, its operators can run their business in whatever way they see fit.

Others don’t necessarily see things that way, though, and it’s hard to blame them. Over the past few years, EA has shown a trend of making money hand over fist at the expense of user experience. Just this year, the horrendous SimCity launch, widespread microtransaction mania and the proliferation of online passes have served as targets for some serious animosity toward the company.

The anti-EA voices, though, while loud, don’t seem to make a huge dent in the game publisher’s bottom line.  EA’s Quarter 4 GAAP (Generally Accepted Accounting Principles) net revenue came in at $1.04 billion, with the GAAP net income sitting at $323 million. Due to greater overall costs incurred this year, the company’s net income is down about $73 million from last year, though its actual revenue rose by $63 million. Over the entire year, EA’s accumulated a net revenue of almost $3.8 billion. Again, the number is down from last year, but the gross profit margin of 63.4 percent (up from 61.4 percent) tells the real story of cost and benefits.

Here’s where the facts get interesting (and more germane to this article), though. Those things people complain about? They’re proving to be some of EA’s most noteworthy successes this year. A presentation made available through the company’s investors website puts the total digital revenue at $1.663 billion, representing a year-over-year growth of 36 percent. This includes full-game digital downloads, DLC, advertisements and, yes, revenue generated from microtransactions.

Likewise, EA is able to tout 1.4 million copies of SimCity sold in the first four weeks, despite the game’s starting-block stumbles. And while season passes weren’t enumerated, EA’s fourth quarter saw $121 million of the full year’s Battlefield 3 Premium subscriptions. That service has over 3.5 million subscribers to date.

These numbers present a problem for detractors of EA, as they show that, even through rampant scrutiny, the company can make a damn fine profit. Unfortunately for EA though, these detractors aren’t going away, and the publisher’s bad press won’t always be able to hold up to the old adage.

Hopefully the company’s recently announced agreement with Disney’s Star Wars franchise will mark a new era of customer-driven business, because – as the Internet knows – you do not want to piss off Star Wars fans. Then again, if EA can continue to post the kinds of figures they did this fiscal year, it’s going to be awfully hard to steer its managers and investors in a different direction.

Being undeniably bad at video games has never stopped Sam from loving them, and now he's covering the gaming industry daily. When he's not writing about (or playing) video games, Sam can usually be found watching past-their-prime TV shows on Netflix or reading whatever finds its way onto his Kindle. Twitter: @scnolan13 PSN/Steam: rotcerid