In this segment, we discuss EA’s revenue boom in the last year, and why it may have to do with the success of Apex Legends.
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Paul Dawalibi 42:26
So the headline here EA signals and gaming boom, extending run with upbeat annual forecasts. And the the headline basically says that they adjusted their revenue forecast above analyst estimates above analysts estimates, betting that demand for its titles, including FIFA, and Apex would stay strong, even as COVID restrictions ease. There’s general stats about you know, consumer spending on gaming going up, obviously. But this is a big adjustment, I think, where they went from an estimate of 6.6 billion to 7.3 billion, which is not an insignificant jump in terms of guidance. I don’t know, I’m curious to get a your thought on. Have you seen this big of a sort of an upwards adjustment? And and the second point here is a lot of the discussion was around very strong growth in apex. Which you wouldn’t think, you know, considering that the games, what, two three years old now, but that they’re very bullish on the future of Apex as well. So I just curious to get your thoughts, Jeff on on EA in general, but also this move in terms of upping their guidance?
Jeff Cohen 43:55
Yeah, I think, um, you know, I hadn’t I didn’t get a chance to look at the call. So I don’t know or dig into the numbers. So I don’t know if the guidance might be a scenario where they’re increasing the guidance, also, because they close some of these acquisitions. So they might not have included like the Glu Mobile acquisition numbers in yet. And maybe this is the first time they’re, they’re giving guidance with that. Because that would You’re right, that $600 million jump like, is a lot higher than what you’d normally see, like a lot of times, you’ll see, you know, each quarter throughout the year, they’ll kind of walk it up like 100 or even 150 million, but to do 600 million, you know, particularly this early in the year, I think because this they just finished their this would have been their fiscal q1 or no, did they just guide for? They just finished their fiscal year, right? Correct.
Paul Dawalibi 44:48
Yep. So there’ll be and this is for their full year revenue, right for fiscal 2022.
Jeff Cohen 44:54
Yeah. So it’s a little early in the year for them to really be doing that. So I imagine it’s a little bit of a kind Just adding different stuff to the pie, but that’s not the take away. I mean, they’re like, like you said, Apex is doing really well as had, you know, I don’t even know if we should call it a resurgence. It’s kind of just maintain been steady, you know, over the last two years. While everyone thought it was dying, I think it’s had a pretty nice content cadence. And I guess this goes back to our earlier point, we’re talking about about Ubisoft, it took people forget now, like, it took several quarters really for the responding team to get comfortable with live service game. I mean, they were very candid early on after Apex came out that they were overwhelmed. And they kind of didn’t really know how to make a live service game, they were used to, you know, that team had done more like box copy games, and they had done Titanfall, which, you know, those games didn’t really have a live service component. So Apex was very different for them. So it’s, it’s it’s not an easy skill to run a live service. And I’m glad now that Vince and his team have gotten to the point where it seems like they’re like a well oiled machine. Because that’s great for you. And it’s it’s great for the game and great for the space. Other than that, I mean, the only other thing I would point out from the EIA results, or EIA is kind of recent activity. They’ve been super active on the m&a front, which I think is interesting. I don’t know exactly what that says. Whether that means we’re kind of in the late innings of kind of the cycle or if they just see so much opportunity that they’re taking advantage of it. But they’ve acquired glue, they’ve acquired Codemasters and they just acquired some publisher of like baseball game, kind of publisher. So I think that’s notable.
Paul Dawalibi 46:46
Can I tie two stories together? What do you think is the likelihood that someone at Ubisoft, right, like management at Ubisoft, looked at EA sort of performance here and, you know, all the talking about Apex and life service and all the sort of patting on the back that EA does around that? And said, you know, what, we need to do something about this, like we and that was sort of a lot of the Genesis around the the messaging around free to play in life service on their end, like, do you think how much attention Do you think Ubisoft paying to two other publishers? Frankly,
Jeff Cohen 47:23
I think they’re all they’re all paying a lot of attention. I mean, there definitely is, you know, strategy divisions and competitive intelligence, and, you know, all these inner workings between the companies. You know, I don’t think Ubisoft’s announcement was because of V A’s announcement. You know, they, they wouldn’t make that kind of strategic change, obviously, in like 24 hours, but I am sure that a lot of these companies are looking at the success of Warzone and saying, okay, Call of Duty just added a free to play component. And not only did their bookings grow, and their revenue grow, that grew, they brought in more players. And it didn’t Not only did it not cannibalize the box, copy sales, they actually grew more than ever before. So it kind of it actually to tie it back to the Assassin’s Creed example. But it shows that by making your game free to play, you actually can sell more copies of your game, which is sort of typical and typical to what you would think.
Paul Dawalibi 48:21
Yeah, and you know, obviously this is what why Ubisoft you know, is seems to be wanting to make that pivot. But I do think it’s interesting EA in spite of all the backlash, right that they get around loot boxes and pay to win and like, and this article also mentions FIFA, right? And FIFA got so much hate around pay to win and having to pay for like the best players. And despite all of the pushback and all the noise, right, that you get on Reddit, and in places where gamers complain, they’re still like producing, they’re still a juggernaut in terms of generating results. What is it like? I’m just it’s a bit of a tangent, but I’m curious what you think of sort of the impact of backlash against some of EA is more egregious. Like moves? And it seems to be no impact?
Jeff Cohen 49:19
Well, I mean, yes, and no, I mean, FIFA is basically a license to print money, right? That’s, you know, the hands down best franchise, I think in all of all of gaming, just the Ultimate Team model is is the perfect model for modern day gaming as a live service. And it’s a massively popular game. It’s in and of itself, you know, the individual. FIFA is probably the second most popular upfront paid title. And then you obviously add on the live servers component. But I’m trying to think what your other question Oh, the impact. I mean, you did see I think a lot of what we’re seeing the success of EA now Kind of because of some of the lumps they took, you know, with with some of the backlash, I mean, they did make a really good Star Wars game in the last year out of respond that didn’t have microtransactions was single player and sold really well. I think that was a direct result of the kind of the, the wrist smacking that they got from what they did with Battlefront. You know, x legends, I think, the way they launched it, they talked you know, making it free to play and not having a big marketing campaign. I think a lot of that was due to some of the fan reaction to battlefield. So you know, they they have learned from some of the things that they’ve gotten wrong in the past.
Paul Dawalibi 50:46
Kim says I’ll need some Apex lessons Paul, I tore up on ps4, but I haven’t put the time to learn controls on PC feels so alien. Compared to other PC shooters I’ve played Apex has incredible movement mechanics that separates it from every other shooter cam. I’d be happy to valor and player I can teach you valor one day. We were we were actually just totally rolling a bunch of predator players in the new three v3 mode over the weekend. So happy happy to play some time Kim and Kim says well said Jeff would love EA to move from away from their m TX microtransactions might revenge microtransactions so damn successful Yeah, I don’t think that’s gonna happen not when not when they’re putting up numbers like this. And maybe
Jeff Cohen 51:34
at least know what I mean. That’s the whole business they just never I’m
Paul Dawalibi 51:38
Chris makes the I think the the the right point here right to cams point which is there’s a larger world of buying power outside of Twitter outside of Reddit outside of all the places where people complain, like, Twitter is an especially special kind of cesspool. I just don’t think I don’t think they’re it’s interesting because none of the backlash has affected their business none. Right? Like no amount of hate really affected their business, which I find fascinating. And fundamentally, if we go back to the Ubisoft example, it’s because EA has been making pretty good games, right? Like when you when it comes down
Jeff Cohen 52:16
to me, because I love to play devil’s advocate here. the only the only counter example I’ll give you is battlefield, the last battlefield there was a lot of backlash, mostly around the marketing of it. And it did. I mean, did flop now it also I agree wasn’t a good game. It was delayed and it came out with no, didn’t come out with the battery already. And it came out after Call of Duty, which is a lot better. Yeah, there was a lot of reasons but that did hurt them.
Paul Dawalibi 52:44
So to be clear, as much as people I agreed with the hate on the battlefield marketing, the marketing was terrible. But battlefield five is still a fundamentally great game. It’s a great game. And it’s unfortunate that it didn’t do better than it did. It didn’t never needed a battle royale mode, they should have never focused on that. Like it’s one of those games where they should have focused on what battlefield does best. And I think it’s really unfair to yours or your
Jeff Cohen 53:10
high hopes for the next one. Do you think it has any chance to sort of I don’t wanna say dethrone Call of Duty but it will it will it be close to call of duty in terms of sales
Paul Dawalibi 53:20
battlefield has always been the better game than Call of Duty I saw I always have high hopes for Battlefield like Battlefield games to me are just fundamentally better shooters than Call of Duty the engines better the battles are more epic like it’s just it’s a more for me I speak for myself but I think it’s a more fun game if they don’t mess up the marketing I think it definitely has a shot at you know making a run at Call of Duty I just battlefield I think never captured the console market in the way Call of Duty has Call of Duty is a simpler game it’s a smaller game right like because the maps are smaller the servers are smaller like it’s more console friendly battlefield because of how epic they tried to make the game because of the the size of the battles the number of players it’s always been more PC focused right you needed a powerful gaming PC to run that game well and so I think battlefield will always be smaller than Call of Duty there’s you battlefield may make like EA may make the best Battlefield game ever I just don’t think it’s going to touch Call of Duty from a number standpoint because Call of Duty will always have the console kiddies always well. I don’t think that’s going away. Cam says oh no chance they’ll stop extremely frustrating whenever game mode is a copy paste. But Ultimate Team grows and grows wish they use the revenue to help support other game modes. Yeah, you know, you always hope that with any live service or microtransaction based game that they’re putting the money back back into the game but maybe not always the case. Study to the boomers on the chat and Battlefield 1942 on PC there you go Chris. Bad Company to remaster when cam there’s so much. There’s so many great battlefield games like that’s just the reality and desert combat man that was a great mod. Yes, I agree.