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EA Q2: Titanfall not coming to PS4, EA expects 10 million PS4 and Xbox One sales this FY

Tuesday, 29th October 2013 20:48 GMT By Brenna Hillier

EA exceeded financial expectations during the quarter ending September 30, largely thanks to ongoing success in non-traditional digital realms.

EA Q2 FY2014

Revenue of $695 million, down year-on-year.

Digital revenue of $450 million, up year-on-year.

Ultimate Team games, Plants vs Zombies 2 and Real Racing 3 cited as strong digital performers.

Year-on-year, console revenue dropped, and PC revenue increased. Mobile remained steady while handhelds nosedived.

Battlefield 4 has hit sell-in targets.

EA expects up to 10 million PS4 and Xbox One hardware sales this financial year.

Titanfall exclusive to PC, Xbox 360 and Xbox One for the life of the product – no PS4 port inbound.

Titanfall and The Sims 4 due in the last two weeks of March 2014.

The publisher reported GAAP revenue of $695 million, a drop from Q2 2012′s $711 million – probably to be expected given the console transition, which would have resulted in lower sales of cross-gen titles like Madden 25.

Backing up this speculation, its traditional revenue for the quarter was $223 million – down from $365 million one year before – while its digital revenue was $450 million, well up from 2012′s $324 million.

Distribution revenue remained static.

Chief financial officer Blake Jorgensen noted that EA is raising its non-GAAP forecasts, having had a strong quarter.

“We exceeded our revenue and EPS guidance in the second quarter through a combination of delivering on revenue, and managing our costs,” he said.

It was newly incumbent CEO Andrew Wilson’s first time in the financial chair, but he had littler to say in the financials press release beyond a comment that the publisher must remain focused.

“EA’s strong second quarter was driven by great title launches, continued digital growth, and financial discipline. While we have made good progress in the first half of the year, we remain focused on executing our FY14 plan and delivering a full slate of amazing games and services to players on current and next-generation consoles, mobile, and PC,” he said.

On a game-by-game basis, EA noted strong performance from digital titles. EA Sports’ Ultimate Team products have grown year-on-year, driving digital revenue growth.

Plants vs Zombies 2 has now been installed over 25 million times since its August launch, more than the lifetime total of the original Plants vs. Zombies.

Real Racing has been downloaded over 70 million times since releasing in February, and is averaging 18 million monthly active users.

Litigation costs
EA has had a busy year in court so far, with two suits related to football titles – the Madden creator suit and another over NCAA player likenesses.

The publisher acknowledged “a $27 million expense related to a settlement of a litigation matter” which was not detailed, as well as $40 million “for expected litigation settlement and license expenses related to our college football business”.

Platform breakdown
EA provided a breakdown of its revenue by platform during the quarter. Consoles remain its strongest area with $309 million, but that’s down 18% year-on-year; it has trended downwards steadily for a full year now. The Xbox 360 remains its most lucrative platform.

PC remains its second most-profitable platform with $274 million, and is growing steadily – that’s a 28% increase on Q2 2012, although a drop from the immediately previous quarter.

Mobile revenue remained static year-on-year but dropped quarter-on-quarter. Handheld revenue dropped sharply.

Battlefield 4
Wilson opened his address to investors in a post-release conference call by congratulating DICE on the launch of Battlefield 4 today, describing it as “another hit title” alongside Madden, FIFA and the like.

Speaking to investors in a Q&A session, Patrick Söderlund said it’s too early to judge Battlefield 4′s success, but that early indicators – notably review scores – look good, and “from a product perspective”, EA is very happy about it. Additionally, the game has already hit its US sell-in targets. “Current-gen seems to be holding up,” Jorgenson said, and noted that pre-orders for next-gen look promising.

Asked whether Battlefield will be annualised, EA played coy, not denying it might ever happen but reaffirming its commitment to give the franchise the time it needs; Söderlund said DICE needs to ‘lick its wounds’; that’s Swedish for “enjoy the launch”, Wilson clarified. Jorgenson said EA will reveal its revenue plans for Battlefield 4 in the future, and that EA has plenty of annual titles to fill the gap left by not having a major shooter for the holiday season, including UFC and NBA Live.

Console Transition
In his overview of the quarter Wilson acknowledged that EA has “much of the work” for the year ahead of it thanks to the console transition, but pointed to its weighty launch line up and ongoing digital growth as indicators of future success.

“The latest indicators from Microsoft And Sony, as well as pre-order data, indicate strong demand for the new consoles,” he added, saying both platform holders had committed to ongoing support for the PS3 and Xbox 360 as well.

EA said that its forecasts for next-gen sales are quite conservative, but multiple executives reiterated that the publisher has a stronger partnerships with platform holders than ever before. EA is feeling “very bullish” and is “well ahead” on the transition; it’s “going to nail it”, and if it “squints” it can see “ten million unit sales combined” from the two new consoles. EA’s “five truly next-gen titles” will capitalise on that.

One caller questioned the likelihood of next-gen uptake. Citing his third console transition with EA, Wilson said he expects PS4 and Xbox One pricing to “come down aggressively” a few years out of launch, leading to large install bases; he also cited PS4′s much lower launch price than the PS3 as a good sign for the future.

EA noted that this is the first time two consoles have launched within weeks of each other, and that retailers are going to experience “unprecedented spend”; as a result, they’ll have plenty of cash to buy-in software stock.

The Future
Wilson acknowledged the promotions of Patrick Soderlund and Lucy Bradshaw, which incurred some restructuring costs, as well as ongoing leadership from Frank Gibeau and Peter Moore.

Moving forward, Wilson nominated three major characteristics for EA’s future under his leadership. The first is that “delivering amazing games and services must be at the core” of everything EA does; he said the publisher is “committed to strengthening the bond” with players. Secondly, Wilson said EA’s people are its greatest asset, and it must continue to nurture its talent as it brings its properties to as many platforms as possible. Finally, “making games profitably is vital to EA’s future”.

Jorgenson said add-on digital revenue had grown thanks to FIFA Ultimate Team, FIFA Online 3, and Star Wars: The Old Republic. The sunsetting of social games and the decline of Japanese mobile sales contributed to the less stellar performance in the mobile sector.

Titanfall was repeatedly mentioned as one of the highlights of the upcoming year, with EA commenting that Respawn has done an excellent job by staying on target and even “ahead of target, in some ways”.

One investor asked if Titanfall had been rushed to capitalise on the next-gen launch window, but EA said it had always been scheduled for northern spring (March, April and May), and that it saw an opportunity to move its release into FY 2014 (the first two months of calendar 2014) because other next-gen titles moved out of a busy release period. Disappointingly, Titanfall was confirmed as exclusive to PC, Xbox 360 and Xbox One for “the life of the product”.

In addition to Titanfall, EA’s next major release after the next-gen splurge is The Sims 4, which it acknowledges can “release any time”. Both titles are due in “the last part of” Q3FY14 – the final two weeks of March 2014.

The publisher is predicting GAAP net revenue of approximately $775 million for the third quarter and $3.55 billion for the financial year.

Breaking news

34 Comments

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  1. Legendaryboss

    More word on this Titanfall exclusivity is, “for the life of the title/product” is exclusive to Xbox One, Xbox 360 and PC. So the game is not a timed exclusive.

    I don’t even know why it was phrased like that and i still don’t buy it.

    #1 9 months ago
  2. Xbone

    @1 I think that means until they support it, servers… I mean the cloud is up. 2-3 years.

    #2 9 months ago
  3. Tech-N9ne

    Jeez, these guys at Microsoft are like Rocky, just when you think their down and out they come back with a KO.

    #3 9 months ago
  4. Legendaryboss

    @2
    Now it makes sense after thinking it through, phrased in a way that initially confused me. Still phrased in a odd way i think.

    Now that i think about it that sounds like a long timed exclusivity.

    #4 9 months ago
  5. noamlol2

    EA can suck my nuts

    never buying next gen or buying games on origin

    EA go away.

    #5 9 months ago
  6. DrDamn

    Interesting. This certainly wasn’t tied down until now. Smart move by MS. PS4 only owners going to have to wait for a sequel?

    #6 9 months ago
  7. zinc

    @5, You need to click the heels of your ruby slippers together, if you want your wishes to come true Dorothy.

    #7 9 months ago
  8. Erthazus

    Yeah. Titanfall is Exclusive to PC, 360 or XO

    Until

    Titanfall: SPECIAL EDITION

    We had this shit before with Mass Effect and other exclusives.

    #8 9 months ago
  9. Legendaryboss

    @Zinc
    HA! LOL :P
    http://i5.photobucket.com/albums/y191/DarthCrimmy/WellPlayed.gif

    #9 9 months ago
  10. jaysea

    Shouldn’t we want systems with exclusives? I mean this would spur more competition and creativity rather than every console has the same games.

    #10 9 months ago
  11. Erthazus

    This won’t make a difference in any creativity. It’s a marketing tool to sell more boxes to some kids.

    #11 9 months ago
  12. fearmonkey

    Seems like a really stupid thing to do, MS must have pad a ton for it.
    It’s a new franchise and they are gimping it by not having it on everything. It’s not going to be as big as COD if it’s not on everything COD is on. I guess they don’t care about that. it seems smart for MS, but not that smart for EA and Respawn,

    To me this kind of game works best on PC anyways, as it’s multiplayer and no single player. I feel the same about all the PC FTP play games coming to PS4/Xbone, not sure why i would play them when they are PC games really. Warframe, World of Tanks, Planetside 2, etc etc.
    I guess it’s just me but I could never pay full price for a game without a real single player campaign, I might pick it up on sale or something.

    The bad thing about the PC versionis that it will be tied to Origin and I hated Battlefield 3′s setup on origin, hopefully they make it better.

    #12 9 months ago
  13. Dark

    http://i.imgur.com/IJkje0R.png

    #13 9 months ago
  14. Major Mayhem 70

    I don’t know why they keep saying its exclusive. It’s coming out on the 360 and PC as well… Yeah, I’m being an ass. Lol

    #14 9 months ago
  15. AmiralPatate

    @14
    “Exclusive” makes it sound so much cooler though. It’s the “x” sound, it really makes everything better.

    #15 9 months ago
  16. dkpunk

    Apparently TF2 will be making it’s way to ps4.

    http://abload.de/img/tfxk6dwr.jpg

    #16 9 months ago
  17. pcbros

    “Titanfall was confirmed as exclusive to PC, Xbox 360 and Xbox One for ‘the life of the product’.”

    Titanfall being labeled an exclusive? This should be good…

    #17 9 months ago
  18. Major Mayhem 70

    To be honest, it was worded kind of funny. “Titanfall 2″ is a whole new title and could pop up on the PS4. If MS was smart and this game becomes the hit that most of us believe it will be, I’d keep throwing more money at Respawn to keep it exclusive. Or should say “under the Microsoft umbrella”.

    #18 9 months ago
  19. zinc

    Killzone, Uncharted, Infamous, Little Big Planet & Forza are all direct responses to exclusive’s offered on competing console’s.

    Without that rivalry fuelling our console fanboy love of gaming, we may as well just buy pc’s & jerk off over graphics cards :(

    #19 9 months ago
  20. pcbros

    ^^^ Why the PC hate? PC is your friend :)

    #20 9 months ago
  21. DSB

    The PC is your console. Satanface.

    #21 9 months ago
  22. Dragon

    “UPDATE: Respawn co-founder Vince Zampella has suggested that Titanfall – or at least a Titanfall sequel – could come to PS4 after all.

    When asked on Twitter if Respawn would make PS4 games in the future, Zampella replied, “Of course we will, just not the first Titanfall.

    Furthermore, when asked, “does the new announcement regarding Titanfall exclusivity to Xbox mean the Titanfall series or this release?” Zampella replied, “Just this release.

    Perhaps this means we’ll get a series collection that includes the first Titanfall, the way the first Mass Effect eventually came to PS3 as part of the Mass Effect Trilogy years down the line. This could take awhile though. We’re following up with EA to try to sort out exactly what this exclusivity agreement entails.”
    http://www.eurogamer.net/articles/2013-10-29-titanfall-will-remain-exclusive-to-xbox-one-360-and-pc-forever

    http://www.youtube.com/watch?v=6zXDo4dL7SU

    Mass Effect all over again.
    Oh the use the words :D

    #22 9 months ago
  23. absolutezero

    “No! I must kill the PCs” he shouted
    The radio said “No, John. You are the PCS”
    And then John was a Alienware.

    #23 9 months ago
  24. pcbros

    @22 – Aren’t exclusives usually handled release by release and not by an entire series?

    #24 9 months ago
  25. ddtd

    @24 – Depends. If it’s a first party studio (i.e. Naughty Dog and Lionhead) then no. But third parties do what they want. If the money is good and/or the console manufacturer own the intellectual property (i.e. Ratchet and Clank and Halo) then the series will usually stay exclusive, but in instances like Titanfall Dead Rising, the series can go multiplat.

    Also, it’s not so much that MS threw tons of money at Activision for exclusivity, but more that Respawn is a small studio with a small budget (not indie small, but small) with an untested brand new ip, and MS is currently the only one to offer free dedicated servers (including PC and maybe 360) so it was a no brainer.

    If the IP sells well and gets great reviews, then they’ll likely be able to expand their budget and team on the next one and release it on PS4 as well.

    #25 9 months ago
  26. Hcw87

    @22
    ”UPDATE: Respawn co-founder Vince Zampella has suggested that Titanfall – or at least a Titanfall sequel – could come to PS4 after all.”

    ”When asked on Twitter if Respawn would make PS4 games in the future, Zampella replied, “Of course we will, just not the first Titanfall. ””

    ”Furthermore, when asked, “does the new announcement regarding Titanfall exclusivity to Xbox mean the Titanfall series or this release?” Zampella replied, “Just this release.””

    Uhm, what? That’s just contradicting yourself.

    #26 9 months ago
  27. ysleiro

    @Legendaryboss This is what I call a blow to the face.

    Don’t sweat it. You win some, you lose some.

    #27 9 months ago
  28. The_Red

    Of course, if Titanfall comes out for PS2 (I mean 4), Shinji Mikami will commit suicide. This is set in stone and has nothing to do with MS really needing some good news on the even of this launch.

    #28 9 months ago
  29. Legendaryboss

    @27
    I have no incentive to believe what has been stated, when history on similar situations contradicts itself.

    #29 9 months ago
  30. Arnvidr

    @26 Uhm, what? Where’s the contradiction? They WILL make PS4 games in the future. The series is NOT exclusive to Microsoft’s platforms. THIS game is exclusive to Microsoft’s platforms. Future games are NOT exclusive to any platform.

    #30 9 months ago
  31. ysleiro

    @Legendaryboss

    So you are saying that when all else fails or we don’t like what we are hearing the idea is to “deny deny deny”? That’s denial man.

    #31 9 months ago
  32. Legendaryboss

    @32
    No never said that, i’m only speaking on my behalf: this has been my stance on third party exclusives all along which Titanfall isn’t. Not denial, it is not falling prey to PR speak.

    #32 9 months ago
  33. zinc

    Oh well… its not like its a cure for cancer or anything *shrugs*

    #33 9 months ago
  34. sbrandon

    Oh well,the PS4 has Killzone. I love Killzone 3 multiplayer so im looking forward to Shadow Fall. Titanfall would’ve been nice but meh.

    #34 9 months ago