Electronic Arts (NASDAQ:EA) have delivered their results for the quarter ending September 30, 2021, which was the company’s best Q2 in its long history. A not-insignificant achievement, considering Q2 is usually when EA releases some of its biggest games, including its yearly Madden installments. Net revenue for Q2 2022 was $1.83 billion, above the company’s guidance of $1.78 billion well above the $1.15 billion brought in during the same period last year. Net income was $294 million, above the $185 million brought in during Q2 2020, a figure many at the time considered inflated due to the COVID-19 pandemic. Earnings per share were $1.02. EA’s record-setting results have produced a 5 percent stock bump in after-hours trading.
Livelier-than-Ever Live Services
EA’s success in Q2 was built on the strength of their live services, which now make up 70 percent of their business. It also didn’t hurt that they managed to get FIFA 22 out sooner this year, with the game’s early-access period kicking off in late September. FIFA 22 was the franchise’s strongest launch ever, with new-to-franchise players up 50 percent and spending on Ultimate Team up 15 percent year on year. Meanwhile, Apex Legends had its biggest quarter of spending ever and is on track to bring in over $1 billon this year. Interestingly, EA also mentioned the winding down of COVID-19 lockdowns around the world doesn’t seem to have had much negative impact on EA’s live service game, as it seems consumers are quite happy to continue playing more.
The Battlefield Ahead
EA has boosted their FY2022 outlook yet again, from $6.85 billion to $6.93, based in part on the “tremendous demand” for upcoming Q3 release, Battlefield 2042. EA and DICE’s shooter has certainly been the most talked-about release of the year, although not necessarily in a positive way, with many expressing disappointment in the game’s beta. Despite this, EA CEO Andrew Wilson still sees the beta, which was played by 7.7 million people, as a positive experience…
On balance the feedback from the beta was overwhelmingly positive. I think there was some conversation around some elements of the beta, which is not unnatural in a beta. We've been able to take that feedback around those constructive elements and really implement that in the game.
It was an earlier build of the game that we used for the beta. The team continued to work and tune and polish the final build for the game. We feel really good about that. If you [...] think about the engagement numbers overall, you should read that as tremendous demand.
There’s no denying there is tremendous pent-up demand for a new modern-day-set Battlefield, but as EA itself will tell you, most of the money is in long-tail live services, and those aren’t going to materialize if Battlefield 2042 doesn’t deliver the quality fans are expecting. No doubt, the game will boost Q3 in a big way, but beyond that? We shall see.
Long-Term Outlook
In addition to commenting on Battlefield and their current live-service business, Wilson and COO Blake Jorgensen made some surprisingly forward-looking statements about future plans. For instance, Wilson was unusually forthright when asked about NFTs, strongly hinting they’ll embrace them as a way of boosting the value of their Ultimate Team collectibles.
I do think it will be an important part of the future of our industry. But it’s still early to figure out how that’s going to work. I feel good about our position with respect to that.
Collectability in games like FIFA, and Madden, and NHL is really built on driving value through the traditional sports season. I think your question is ‘Is there an opportunity, as we think about NFTs and other digital ecosystems, to expand that value over time?’ I think the short answer to that is yes.
Furthermore, while Battlefield 2042 is sticking to a premium model this year, free-to-play is definitely in the plans…
When we look at our Battlefield franchise today, we've acknowledged it would probably make sense to have a free-to-play component to that ecosystem in the future. [...] The next phase [after Battlefield 2042] will be the launch of the Battlefield mobile title, and then as we think about further expanding the playerbase over time, free-to-play will make sense for the franchise.
While fan reaction to some of these statements undoubtedly be negative, EA has never met a novel revenue source it didn’t like. Given the success of their live-service business, free-to-play and NFTs will likely to be big money-makers as well.
The post EA Q2 Sets Record, Battlefield 2042 Beta “Overwhelmingly Positive,” More F2P, NFTs Planned by Nathan Birch appeared first on Wccftech.
source https://wccftech.com/electronic-arts-q1-2022-earnings-apex-legends/