EA games did not reach its target for Q3. It’s something that would make many publishers fearful, but not EA. Despite expecting an operating loss for this Fiscal Year EA is walking away happy thanks to its increased digital business and next-gen sales.
Total net revenue for Q3 was $808 million, down 8.8% compared to the same period last fiscal year. Its when you get deeper into the numbers that you start to see something positive forming. Digital Revenue leaped from $321 million to $410 million. Revenue from packaged goods fell from $568 million to $370 million. Why is this so good? EA makes more money from digital goods because it doesn’t have to split the profits with retailers.
EA also sold a lot of next-gen games. They claim that they were the number one publisher on both the PS4 and Xbox One during the month of December. FIFA 14 and Battlefield 4 were two of the best-selling next-gen games with Call of Duty: Ghosts (Activision) most likely being the third title.
So what made EA miss their target? The current-gen consoles ended up taking that blame. CEO Andrew Wilson placed the blame on the decline of PS3 and Xbox sales stating, “As other have noted, industry sales of major games for PlayStation 3 and Xbox 360 consoles declined in Q3 at a faster-than-anticipated rate, and that softness was the primary driver of our revenue shortfall in Q3.”
So much is EA expecting to lose? About $130 million, but if sales of the next-gen consoles continue to be high then the publisher should do just fine the next fiscal year.