Electronic Arts: FIFA, The Sims, Madden and More - [Business Breakdowns, EP. 106]

This is Matt Reustle and today we are breaking down the iconic video game publisher, Electronic Arts. EA’s corporate history dates back to the 1980s and the business has evolved with all of the industry shifts in the decades since. To break down EA, I am joined by the author of The10thMan blog. We cover the role of a publisher in the video game ecosystem, the history and dynamics behind crown jewels like FIFA and Madden, and what the growth in mobile and new forms of monetization mean to a business like EA. Please enjoy this breakdown of EA. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:02:18) - (First Question) - EA’s role as a video game publisher within the broader industry (00:05:06) - EA’s size and scale today compared to its competitors (00:08:15) - The founding story and the company’s background (00:16:12) - The impact of licensing agreements with sports games like Madden and FIFA (00:28:31) - The proportion of their games made for mobile, console, and PC (00:32:29) - Economics of a typical new game development and launch (00:34:38) - Expected lifespan of a game or its peak popularity (00:35:57) - How the industry is shifting from up-front sales to in-game sales (00:38:19) - The cost of keeping games up to date and working properly (00:40:00) - Working with third-party game engines versus developing a proprietary engine (00:44:45) - In-game purchases like loot boxes and the legal risks of being deemed gambling (00:48:26) - The video game M&A landscape and a discussion of Microsoft and Activision (00:50:19) - How EA uses a subscription model to unlock value from their back catalog (00:51:43) - Hypothetical top-line growth in the future and the bull case for EA (00:55:48) - Lessons for builders and investors when studying EA’s story