Ei Eric Brown Chief Financial Officer

Transcription

1 Ei Eric Brown Chief Financial Officer 1

2 Safe Harbor Statement During the course of this meeting EA may make forward-looking statements regarding future events and the future financial performance of the company. We caution you that actual events and results may differ materially. We refer you to EA s most recent Forms 10-K and 10-Q for a discussion of risk factors that could cause actual results to differ materially from those discussed today. EA makes these statements as of September 10, 2008 and disclaims i any duty to update them. 2

3 Electronic Arts The Interactive Entertainment Industry is Changing & Growing Rapidly No One has EA s Underlying Strengths Our Focus Improve the Core and Drive Digital/Direct to Consumer Fiscal 2011 Goal: > $6 Billion in Revenue; > $1.5 Billion in Operating Income 3

4 The Industry 4

5 Transforming Industry Current Cycle by Segment Global Retail Software Sales (USD in Billions) $50 16% CAGR $48 Mobile $40 Online $30 $20 $23 Packaged Goods $10 $0 CY05 CY06 CY07 CY08 CY09 CY10 CY05 CY10 PG $17.9 $28.7 Online $3.4 $10.9 Mobile $1.8 $8.4 Total $23.1 $48.0 Industry Doubles Becomes Less Cyclical Source: EA estimates for packaged goods; DFC for online; Informa, Jupiter, Gartner for mobile. 5

6 Electronic Arts 6

7 Assessment Strengths / Opportunities Strengths IP Portfolio Creative Talent Direct Publishing Pogo Opportunities Segment Shares Especially Nintendo Costs / Productivity Expand Digital / Direct to Consumer Smart M&A Mobile 7

8 Intellectual Property Top Selling Franchises North America & Europe 2005 to 2007 Top Selling Franchises - Calendar 2005 to 2007 Top Total Strongest Portfolio Sources: North America - NPD Trst; Europe - UK Chart-track, France Gfk, Germany MCC & EA estimates. 8

9 Intellectual Property EA Top Franchises 2005 to of Top 50 Franchises Over Last Three Years Sources: North America - NPD Trst; Europe - UK Chart-track, France Gfk, Germany MCC & EA estimates. 9

10 Best Creative Talent Worldwide Studios Studio Titles EAC (Canada) FIFA, NBA Live, NHL, March Madness, Fight Night, Playground Tiburon Madden, NCAA Football, Tiger Woods, NASCAR Black Box Need for Speed, SKATE EA Redwood Shores Godfather, Simpsons, Dead Space Maxis SPORE EA Montreal Army of 2, Boogie EALA (Los Angeles) Tiberium, Command & Conquer, Medal of Honor, Boom Blox Bright Light Harry Potter Criterion Burnout, Black The Sims The Sims, MySims BioWare Mass Effect, Dragon Age, New MMO Pandemic Mercenaries 2, Saboteur, Lord of the Rings Mythic Warhammer Digital Illusions Battlefield, Mirror s Edge EA Salt Lake Hasbro Games Phenomic BattleForge Best Creative 10

11 Global Publishing Organization Worldwide Publishing Offices Locations Australia Korea Austria Mexico Belgium Netherlands Brazil New Zealand China North America Czech Republic Norway Denmark Poland Finland Portugal France Russia Germany Singapore Greece South Africa Hong Kong Spain Hungary Sweden India Switzerland Italy Taiwan Ireland Thailand Japan United Kingdom Most Direct Sales Organization of any Third Party Sell More Units Global Launches 17 Languages on Hits / Day & Date Ship Fastest Time-to-Market Aggressive Marketing Retail, Media, Non- Traditional Most Direct Publisher 80%+ of Revenue Direct 11

12 Pogo Time Spent (Monthly Minutes in Billions) Pogo #1 US Gaming Site in Time Spent Average Minutes of Usage Per Day #2 in Unique Visitors Million Monthly Engagement Pogo Yahoo! AOL MSN Addicting Games (Average Minutes Spent per Day) 57.2 Club Pogo g 1.6 Million Paying Subscribers 75% Female Average 14 hours Per Player Per Week 85% Annual Subscribers $40 of Gems Purchased per Buyer International Live in the UK, Germany & France Pogo AOL Yahoo! MSN Games Addicting Games $100 Million in Revenue in Fiscal 2008 Source: Media Metrix; gaming sites June

13 Mobile North America Share Jul 07 to Jun 08 Top North America Titles June 2008 Rank Title Publisher 27% 1 Tetris EA Mobile 2 Bejeweled EA Mobile 3 Guitar Hero III Hands-On Mobile 4 PAC-MAN Namco 5 Wheel of Fortune Deluxe Sony Pictures Mobile 6 Ms. PAC-MAN Namco 7 Are You Smarter Than a 5th Grader? Capcom Glu 8 Tetris Mania EA Mobile Mobile Gameloft 9 Monopoly Here & Now EA Mobile 10 Frogger Konami Mobile 30% EA 25% 25% 20% 15% 10% 5% 0% 15% 12% 11% Jul-07 ` Jun-08 Top UK Titles May 2008 Rank Title Publisher 1 Tetris EA Mobile 2 Pac-Man Namco Mobile 3 Who Wants To Be A Millionaire? Glu Mobile 4 Monopoly: Here & Now EA Mobile 5 Bejeweled EA Mobile 6 World Snooker Championship 2008 I-Play 7 Crash Nitro Kart Vivendi Mobile 8 Indiana Jones: Crystal Skull THQ Wireless 9 Brain Challenge Gameloft 10 Bomberman 2008 Disney Mobile Leader - $150 Million in Fiscal 2008 Sources: North America Telephia; UK - ELSPA. 13

14 Three-Year Goals 14

15 Key Metrics Our Focus FY11 Targets Key Metrics Fiscal 2011 Revenue > $6 Billion Operating Income > $1.5 Billion Quality Scores On Core Titles >80 Digital as % of Total Revenue ~ 15% Clear & Measurable Targets 15

16 Our Priorities FY11 Targets Revenue* (in $Bs) Operating Income* (in $Ms) $7,000 2x $1,600 >$15B $1.5B $6,000 $5,000 > $6.0B $1,200 6x $4,000 $3,000 $800 $2,000 $400 $1,000 $- FY05 FY06 FY07 FY08 FY09E FY10E FY11E $- FY05 FY06 FY07 FY08 FY09E FY10E FY11E FY11 2x Revenue / 6x Operating Income Growth in 4 Years *Note: All Non-GAAP Metrics 16

17 Assessment Strengths / Opportunities Strengths IP Portfolio Creative Talent Direct Publishing Pogo Opportunities Segment Shares Especially Nintendo Costs / Productivity Expand Digital / Direct to Consumer Smart M&A Mobile 17

18 How Do We Get There? Question # 1: How Do We Increase Segment Shares & Achieve Target of $6 Billion + in Revenue? 1) Product & Marketing Innovation: Drive Major IP Into Top 20 Chart Positions Madden Burnout Battlefield ld Mirror s Edge SPORE Need for Speed FIFA Rock Band Saboteur Godfather 2 The Sims NCAA Dead Space Mercenaries 2 2) Platform Focus: Increase Nintendo Shares by 5+ Share Points MySims SPORE Littlest Pet Shop Skate It. The Sims NERF Boom Blox Celebrity Sports Showdown 3) Increase Segment Shares in Three Under-Represented Categories Action /Adventure - Pandemic Family Hasbro / MySims RPG BioWare 4) Continue To Drive EA Partners MTV / Harmonix Valve id Software Epic Grasshopper It s the Products 18

19 Fiscal 2009 Slate New IP Hasbro Family Game Night BOOM BLOX LITTLEST PET SHOP FACE BREAKER NERF SimAnimals 15 New Titles 19

20 Nintendo Games Announced FY09 Slate EA Casual The Sims EA SPORTS EA Games Boom Blox Wii MONOPOLY Wii TRIVIAL PURSUIT Wii Hasbro Digital Playroom Wii, NDS LITTLEST PET SHOP Wii, NDS NERF N-STRIKE Wii ZUBO NDS Boogie Super Star Wii Brain Quest NDS MySims Kingdom Wii, NDS MySims Party Wii, NDS Sim City Creator Wii, NDS SimAnimals Wii, NDS Sim 2 Apartment Pets NDS Madden NFL 09 Wii, NDS NCAA Football 09 Wii Tiger PGA 09 Wii FIFA 09 Wii, NDS NBA Live 09 Wii FaceBreaker Wii Celebrity Sports Showdown Wii 40 Nintendo SKUs in FY09 vs. 26 Last Year Rock Band Wii Need for Speed Wii, NDS Skate It. Wii, NDS Lord of the Rings NDS Sonic RPG NDS SPORE Creatures NDS 20

21 Quality Improvement Fiscal 2009 Metacritic Scores Key Titles Note: Metacritic ratings reflect average scores for PS3 & Xbox 360 SKUs. Spore & Mass Effect is PC and Boom Blox is Wii Turning the Corner on Quality Source: Metacritic.com (as of 9/5/08) 21

22 How Do We Get There? Question # 2: How Do We Drive Costs to Improve Margins? 1) Label Structure Studio Cost Centers Four Label Profit Centers Innovative Games Drive Hits R&D leverage Cost Orientation Strong Marketing 2) Drive Outsourcing & Offshoring Example: Offshoring R&D Headcount 12% in FY07 16% in FY08 20%+ in FY11 3) Scale Infrastructure IT CDS / QA Corporate Publishing Overhead Basis Points 4) New Label Incentive Plan Effective April 1, 2008 Franchise Level Effective April 2009 Profit Focus = P&L Leverage 22

23 R&D Costs R&D Headcount Low Cost Locations * High Cost Locations 1, % 1,090 6,000 4,000 5,240 11% 5,840 Ex-VGH 5,065-3% Y/Y ,000 0 FY07 FY08 0 FY07 FY08 Making Progress * Low-cost locations include Shanghai, India, Romania, Montreal and Spain. 23

24 How Do We Get There? Question # 3: How Do We Expand Digital Revenues? 1) Online: Direct-to-Consumer Pogo Expansion Warhammer / Austin MMO Mid-Session Games East & West Packaged Goods Digital Content Package Goods Subscription Asia Advertising Social Networking 2) Mobile International Expansion The Right Games / Platforms Direct-to-Consumer High Margin & Less Cyclical 24

25 How Do We Get There? Question # 4: What Are Our M&A Priorities? IP & Studio Talent : Strategic & Accretive Publishers, Developers Revenue & Cost Synergies Push IP More Global / Cross-Platform Asia, Digital, IP: Strategic Margin Expansion / New Business Models Leverage EA s IP A Part of Our Growth Strategy 25

26 Electronic Arts The Interactive Entertainment Industry is Changing & Growing Rapidly No One has EA s Underlying Strengths Our Focus Improve the Core and Drive Digital/Direct to Consumer Fiscal 2011 Goal: > $6 Billion in Revenue; > $1.5 Billion in Operating Income 26

27 Safe Harbor Statement Some statements set forth in this presentation, including EA s fiscal year 2011 financial targets, contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", estimate or "expect" and statements in the future tense are forwardlooking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause EA s results to differ materially from its expectations include the following: timely development and release of Electronic Arts products; competition in the interactive entertainment industry; EA s ability to successfully implement its reorganization plans; the consumer demand for, and the availability of an adequate supply of console hardware units (including the Xbox 360 video game and entertainment system, the PLAYSTATION 3 computer entertainment system and the Wii ); consumer demand for software for legacy consoles, particularly the PlayStation 2; EA s ability to predict consumer preferences among competing hardware platforms; the financial impact of potential future acquisitions by EA, including the potential acquisition of Take-Two Interactive Software, Inc.; EA s ability to realize the anticipated benefits of its acquisition of VG Holding Corp.; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; EA s ability to manage expenses during fiscal year 2009 and beyond; EA s ability to attract and retain key personnel; changes in EA s effective tax rates; the performance of strategic investments; adoption of new accounting regulations and standards; d potential regulation of EA s products in key territories; i developments in the law regarding protection of EA s products; fluctuations in foreign exchange rates; EA s ability to secure licenses to valuable entertainment properties on favorable terms; the general health of the U.S. and global economy; and other factors described in EA s Annual Report on Form 10-K for the year ended March 31, 2008 and Form 10-Q for the quarter ended June 30, These forward-looking statements speak only as of September 10, Electronic Arts assumes no obligation and does not intend to update these forward-looking statements. 27

28 Ei Eric Brown Chief Financial Officer 28