Fun Facts From EA’s Annual Report

The annual report of game publishing giant Electronic Arts landed in GP’s inbox this morning. Typically, reading through these things is a surefire remedy for insomnia, but EA’s contains a few tidbits worth mentioning.

1.) EA’s failed bid to gobble up Take-Two cost the company $21 million:

As a result of the terminated discussions [with T2], we recognized $21 million in related costs consisting of legal, banking and other consulting fees…

2.) EA uses DRM (you knew that) and is watching for piracy online:

We typically distribute our PC products using copy protection technology, digital rights management technology or other technological protection measures to prevent piracy… We are actively engaged in enforcement and other activities to protect against unauthorized copying and piracy, including monitoring online channels for distribution of pirated copies, and participating in various industry-wide enforcement initiatives, education programs and legislative activity around the world.

3.) Only 3% of EA employees are unionized, and they all work for DICE:

As of March 31, 2009, we had approximately 9,100 regular, full-time employees, of whom over 5,100 were outside the United States… Approximately 3 percent of our employees, all of whom work for DICE, our Swedish development studio, are represented by a union, guild or other collective bargaining organization.

4.) GameStop and Wal-Mart are EA’s biggest customers; each accounts for 14% of EA sales:

Worldwide, we had direct sales to two customers, GameStop Corp. and Wal-Mart Stores Inc., which each represented approximately 14 percent of total net revenue for the fiscal year… the concentration of our sales in one, or a few, large customers could lead to a short-term disruption in our sales if one or more of these customers significantly reduced their purchases or ceased to carry our products…

5.) EA worries about game content legislation and its potential effect on sales:

Legislation is continually being introduced in the United States… for the establishment of government mandated rating requirements or restrictions on distribution of entertainment software based on content… Other countries have adopted or are considering laws regulating or mandating ratings requirements…  Adoption of government ratings system or restrictions… could harm our business by limiting the products we are able to offer to our customers…

6.) EA worries about falling victim to a Hot Coffee incident but has taken steps to prevent it from happening:

If one or more of our titles were found to contain hidden, objectionable content, our business could suffer… Retailers have on occasion reacted to the discovery of such hidden content by removing these games from their shelves, refusing to sell them, and demanding that their publishers accept them as product returns.

We have implemented preventative measures designed to reduce the possibility of hidden, objectionable content from appearing in the video games we publish. Nonetheless, these preventative measures are subject to human error, circumvention, overriding, and reasonable resource constraints.

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