Fundamental Analysis Electronic Arts Inc. EA
Inc. is a worldwide operating game developer for game consoles, personal computers, mobile phones, and tablets. EA also offers games developed by third parties. The Company’s most popular games are the Battlefield, Mass Effect, Need for Speed, The Sims, and Plants v. Zombies, and license games from others are FIFA, Madden NFL, and Star Wars.
EA, one of the biggest player in the gaming industry, participate in the growing gaming market, thanks to the company’s attractive product portfolio:
EA alredy has more than 300 million registered players around the world.
The Company focuses on growth in four dimensions:
- more players
- more time
- more platforms
- more geographies
- more business models
One of the important advantages of the gaming industry is that the products and services are becoming more digitalised which reduces costs and increases profit margins:
The Company sees the major growth potential in its player network which should connect more players to each other with different types of devices and the network can also provide a dynamic experience with more player engagement. All this means, as mentioned above, players will engage with each other which would enrich their experience and lead to more time spending on the platform.
The strongest economic moat of the company is its brands like FIFA, Sims and Battle Fronts etc. The popularity of the EA’s games and loyalty of their players provide EA competitive advantage to generate revenue.
The growing EA Player Network will contribute to the Company’s competitive advantage thanks to its own network effect.
The Company operates in a highly competitive and innovative environment and has to deliver “hit” products to maintain its growth. If EA cannot provide “hit” products its players can switch to the competition and the Company’s revenue can be harshly punished.
EA has to adapt itself to the technological innovations of the gaming industry and also the Company must anticipate the technological changes in the business.
The International net revenue of the Company makes 56% of the total net revenue which means EA is exposed to the effects of fluctuations in foreign currency exchange rates.
(1) The Gaming Industry has a lot of room to grow and eventually, EA will be one of the main beneficiaries.
(2) The Company depends on hit products but it also has the experience and developer team to provide top games.
(3) EA’s player network can enable the Company to grow within the game market not only with the game market and so, it can provide double-digit revenue growth.
For the List of Corporate Analysis, click here
For the List of Technical Analysis, click here
No Investment or Financial Advice.
GET UPDATES VIA EMAIL
Sign up Now
You can unsubscribe at any time.