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EBM Assignment Three: Nine Elements of Business Models EA Sports FIFA

Fernando Ortenblad Sigaud

Full Sail University Entertainment Business Models 02/18/2018

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Why I choose this company: I decided to select EA Sports FIFA due to two factors, first because video game have always been important to me, since my ten years old, when my parents gave me my first video game and I started to play FIFA. It is a realistic soccer simulator that immerses you inside the day by day of a professional soccer team. With the advance of technology, FIFA has become a fantastic game, where nowadays you can control your favorite player or team, or even create a brand new team and compete against people from over the world. Second, because of the , that has drastically increased over the years, where companies are always searching for new talents, especially in Brazil, that is lacking in good professionals. Even that my career goal is to work in the live music events industry, as an entertainment business student is essential to understand all entertainment areas, especially video games. By analyzing EA Sports FIFA this month, I am going to learn about a successful business model and understand how a powerful conglomerate like operates and maximize his profits every year.

EA Sports FIFA Background Information: EA Sports FIFA is a video game franchise that simulates soccer, created in 1993 by the name of FIFA International Soccer. Making an incredible success because it was the first soccer video game to have a license from FIFA (Federation of International Football Association), the entity responsible to regulates soccer and for several tournaments and soccer events around the world (FIFA.com, 2017). The game gives you the opportunity to control different soccer teams and famous soccer players from all over the world and faithfully reproduced every aspect of real football. It is released annually by Electronic Arts under the EA Sports division. In 2017, FIFA represented approximately 16 percent of the company total net revenue (EA 2017 Annual Report). It is considered one of the most successful franchises of Electronic Arts together with Madden NFL, being sold worldwide.

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Electronic Arts Background Information: Electronic Arts was founded in 1982 by by the name of Amazin Software. (SucessStory,2017). Their Global headquarter is located in Redwood City, and it is run by Andrew Wilson, since 2013. Andrew has been working at Electronic Arts for 18 years and was nominated CEO after running the FIFA Soccer franchise for several years. The company started as software’s game developer for all type of computer hardware and nowadays are the leading global interactive entertainment software company. Delivering for all over the world, games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets (EA.com,2017). In 2017, the company total revenue was $ 4.845 billion (yahoofinance.com, 2018), with a net income of US$ 967 million (yahoofinance.com, 2018). With several games that are released annually for PlayStation, Microsoft , , Mobile and Personal Computers worldwide, their primary products, are Madden NFL, EA Sports FIFA, Stars Wars Battlefront and Battlefield, that together represents more than 35% of the company total revenue (EA Annual Report, 2017). Where for the first time EA Sports FIFA passed Madden NFL as the Electronic Arts best-selling console title in the world in the calendar year 2016.

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Customers Segments: 13-44 years old: The primary target customer for EA Sports FIFA are men between 13 and 44 years old (deep.social.com, 2018), who are video games players and interested in soccer. EA Sports FIFA also attracts soccer enthusiast, where according to giltedgesoccer.com, 34% of the game players become soccer fans after playing the video game. Customers that plays FIFA are looking for social interaction, relationship building, overcoming challenges and building self-worth. It is a mass market that manages to attract customers worldwide, where the ages between 13-17 represented 35% of the players (deep.social.com, 2018).

Sponsors: Adidas and Coca-Cola are the exclusive brands inside FIFA. Adidas entered in 2013, by making a deal where the players can use one of their famous football boots and on the FIFA 2018 edition, Adidas design unique in-game soccer kits, where only FIFA players can purchase inside the video game (news.adidas.com, 2017). In the recent EA Sports FIFA 2018 game edition, Coca-Cola sponsor deal manages to create the first “virtual sponsorship deal”, where coke promotes an in-game Coca-Cola zero sugar commercial inside of FIFA. This new customer segment builds Coca-Cola connections with soccer on video games and real soccer (coca-colacompany.com, 2017).

Value Proposition:

Best Soccer Simulation Video Game: FIFA presents an immersive atmosphere, with realistic players visual. Creating an authentic game that shows an accurate rendering of the match-day experience (easports.com, 2017).

FIFA main idea is to simulate soccer, at FIFA18 they introduce Real Player Motion Technology, a new system that innovates the gameplay of real players, more accurately through motion capture. Several new animations show precisely how famous players like Cristiano Ronaldo or moves on the actual pitch.

Allowing customers to feel the life-like tendencies of the best football players in the world, having a unique experience while playing (easports.com, 2017). Page 5

Play with your favorite team and player: When you log in to FIFA18 by the first time you need to choose your favorite team, the one that you support or like most. This mode can create a connection between you and your favorite player.

Different modes to play: FIFA offers diverse games modes that manage to call attention of different customers, like “The journey” mode that was introduced in FIFA17 and now gain a new chapter, the returns with new changes, and the Ultimate Team mode that offers an excellent platform for competitive online play, where customers can hire their favorite soccer players, build their squad and compete with gamers from all over the world.

FIFA also offers the traditional friendly game, where you can play side by side with up to three friends seated next to you, bringing the game interaction to your sofa.

Overcoming Challenges: FIFA offers several different modes to challenge customers and make them learn to focus on their own actions, how to lose and control impulses. According to Pinola, players can gamify every aspect of your life and learn to use a better strategy to “win” the game (2015).

Create and Manage your own squad: FIFA offers to customers, the FIFA Ultimate Team. Consider the most popular mode inside FIFA, and nowadays is played by millions of people all over the world every day. This mode lets you build your dream FIFA squad from scratch and compete with it in a variety of single player and online modes. Where you can have your own stadium, choose your t-shirts and train your team to become the best FIFA squad of the word or better than your friend’s squads (easports.com, 2018).

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Channels of Distribution: Retail Stores: Even with the advance of technology, where now players are starting to download their games instead of purchasing hard copies, retail stores continue to be FIFA most significant channel of distribution. Electronic Arts see the retail stores as a critical factor to deliver a positive experience to their players, where players want more than the game, they want different products, like collectibles, apparel, and merchandise to bond with the in-game experience (retail-merchandiser.com, 2016). GameStop manages to make pre-sales, promotions and early releases to call customers attention about the game. Other stores, like Wall Mart, , and Target, focus on advertisement to call customers attention.

Consoles: FIFA is sold inside their partner's online networks since 2015. PlayStation, Xbox, and Nintendo, manage to create online contents where customers can buy in advance and download the game inside their video game one minute after the release date. They also create unique editions where you are capable of downloading one week earlier than the release of the hard copies on the retail stores.

Smartphones App: FIFA MOBILE SOCCER is a soccer mobile game created by EA SPORTS for Android, IOS, and platforms. The game was released on October 11, 2016, and is the mobile version for the FIFA Soccer console video game (EASPORTS.COM,2017). Using the touchscreen technology and the features of the mobile phones or tablets, FIFA Mobile Soccer optimizes the game with varied gameplay, different modes, and excellent graphics. Always releasing updates to call customers attention and maintain the game at a competitive level for soccer fans and gamers short on time.

Downloads: Electronic Arts has an online platform called , where customers can purchase EA Sports FIFA for your personal computer. Origin also have social feature where you can chat with friends and play your Xbox Live or PlayStation Network FIFA (origin.com, 2018).

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Customer Relationships: Social Media: EA Sports FIFA has an Instagram account, Facebook page, and a twitter account. With more than 13.6 million followers, FIFA releases daily content to bond with customers from all over the world. Showing new updates inside game, the team of the week, professional soccer players playing FIFA and showing their video game skills and FIFA month awards for real soccer players, due to their outstanding performance. Bonding the customers with the professional player. FIFA Facebook page, has more than 23 million likes, and is focused on presenting what are the best services inside the game, new released and to transmit parts of their live events tournaments that happen worldwide. On Twitter, FIFA has more than 6 million followers who are able to see news about the game, especial releases and videos of the best goals of the week.

Website: EA Sports FIFA website is the best place for new customers, that wants to know about the game before buying. You can learn about the game, download the demo, see how FIFA is created, their gameplay and also apply to receive email updates about the game, upcoming releases, and FIFA news. The website also offers details about their community and information for active players that want to participate in tournaments and become competitive inside FIFA.

Download Updates: EA Sports FIFA offers to their customers monthly download updates, that are connected with the buy and sell trades between professional soccer teams. Immersing you in the day to day of players transactions.

Online and live events tournaments around the world: EA Sports FIFA together with FIFA have created the FIFA eWorld CUP, a worldwide tournament divided by several phases that give you the opportunity to become the best player in the world and be part of one of the annual FIFA events to receive the trophy. Any FIFA player has the chance to play and try (.com, 2018).

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Video Game Conferences: Every Year EA Sports FIFA participates in several games conferences to showcase to their customers what are their new products and the future of FIFA. It is an opportunity to debut new ideas and align the brand with the future of the franchise (e3expo.com, 2018). Electronic Arts creates a special area game, where you can play, watch trailers and interact with the game producers to learn and connect with the EA Sports FIFA World. The most important conferences to FIFA is E3, that happens every year in Los Angeles, California, where they usually release what customers can expect for next year game editions.

Free Demo Releases: Months before releasing the new FIFA, players have the opportunity to download a free demo to play and see what they can expect for the new game. New customers can also download the demo to have an idea of the product before purchasing.

Key Activities: Game Production: To provide the product, each year EA Sports develop and produce a brand- new FIFA. In the 2018 edition, they introduce a new chapter of the “The Journey,” a history campaign that put you in charge of a young player called Hunter, helping him in his pursuit of becoming one of the best players in the world. The game also introduces a brand-new career mode, where you can play with your favorite teams like real life, and the Ultimate Team mode that offers to customers a great platform for competitive online play and competes with other online players worldwide. All this production, to create an immersive atmosphere, with real players and stadium visuals (easports.com, 2017).

Hard Copies Distribution: Electronic Arts have offices in United States, Canada, England, Ireland, Singapore, India, and Australia that provide the game distributions to retail stores in over than 35 countries worldwide (easports.com, 2018).

Real Player Motion Creation: To provide a quality product to their customers, where fans can feel the soccer atmosphere while controlling their favorite player, EA Sports FIFA introduced in their 2018 edition, the Real Player Motion Technology. The system behind the most significant Page 9

step in gameplay innovation in the franchise history. Where a series of new animations system unlocks the next level of responsiveness and players personality. Now players like Cristiano Ronaldo, Messi and other top players fell and move exactly as they do on the real pitch (easposrts.com, 2018)

Licensing: Every year the EA Sports licensing department deals with 33 leagues and 600 teams individually to ensure that they are in the game (Davidson, 2013).

Website and Social Media: EA Sports FIFA has his website, that provides to customers date releases, game details, and instructions to understand how the game works. It is the best place for new customers, where you can learn about the game, download the demo, see how FIFA is created, their gameplay and also apply to receive email updates about the game, upcoming releases, and FIFA news. The website also offers details about their community and information for active players that want to participate in tournaments and become competitive inside FIFA EA Sports FIFA has a Facebook, Twitter, and Instagram, which provide daily content to connect with players and shows what is happening inside the game.

Marketing and Promotion: EA Sports FIFA promotes the game inside their console partners, retail stores, website, social media and video game conferences. With more than 13.6 million followers, FIFA Instagram (instagram.com, 2018) releases daily content to bond with customers from all over the world. Showing new updates inside game, the team of the week, professional soccer players playing FIFA and showing their video game skills and FIFA month awards for real soccer players, due to their outstanding performance. Another form of interaction with a customer is the FIFA eWorld CUP, a worldwide tournament divided by several phases that give you the opportunity to become the best player in the world and be part of one of the annual FIFA events to receive the trophy. Any FIFA player has the chance to play and try (fifa.com, 2018).

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Key Resources: Exclusive Rights with FIFA: To produce the game and create content, EA Sports FIFA needs their exclusive right with the FIFA entity, that allows EA to explore what is real soccer experience and bring to the consoles.

Production facilities, design studios: Located in , Vancouver. EA Vancouver offers a structure that allows EA Sports team to create and develop the FIFA franchise. EA also has offices in Sidney, Australia, and Guildford, England to help EA Sports to distributed and sales FIFA worldwide (ea.com, 2018).

Production Staff, engineers: In order to create EA Sports FIFA, a highly experience team with abilities and credentials create each year a new version of FIFA. The goes from Real Player Motion Creation up to developing the software that will allow the game connects with consoles like PlayStation and XBOX.

Legal Staff: To settle deals with 33 leagues and 600 soccer team, EA Sports FIFA has a legal team ready to negotiate licensing agreements every year to make sure that the teams, players, and stadiums will be represented accordingly inside the video game.

Digital designers: Every year team’s shirts and players changes inside the soccer industry, for this reason EA Sports FIFA digital designers works every year to bring reality inside the game.

Intellectual Property: Electronic Arts business is based on the creation, acquisition, exploitation, and protection of intellectual property. Where almost all of the intellectual property is in the form of software code, patent technology, and other technologies that Electronic Arts use to develop EA Sports FIFA to make the game run properly (csimarket.com, 2018).

Server Data Base Facilities: A important key resource, responsible to players inside online modes. According to Electronic Arts, the company have server facilities at Canada, United States, Europe and India to maintain players connected while playing FIFA. Page 11

Funding from parent company Electronic Arts: EA Sports FIFA nowadays are considered one of the most important franchise of Electronic Arts. For this reason, Electronic Arts invest millions every year and fund EA Sports FIFA in order to increase sales and create content according to customers’ expectations and needs.

Key Partners: Video Games Consoles: Without PlayStation, XBOX and Nintendo, the EA Sports FIFA franchise will never exist, the consoles are responsible for transforming the game in a huge success, with years of partnership, the consoles updates over the years manage to transform EA Sports FIFA in an incredible success inside the video game industry. Where in 2016, EA sold close to 15.5 million FIFA units worldwide (forbe.com, 2017).

FIFA: One of the most important partners of EA Sports FIFA, is FIFA (Federation of International Football Association). Since 1993 they have been working together to produce a world-class soccer video game for people around the globe. In 2013, they announced an extension of their existing licensing agreement until December 31, 2022 (easports.com. 2013).

Soccer Leagues and Professional Soccer Teams: EA Sports FIFA has 33 leagues and more than 600 clubs inside the game. The licensing department team deals individually with each league, clubs and players unions to ensure that they are in the game (Davidson, 2013). This partnership will allow EA Sports to use players names, uniforms, club names, stadiums and the right to use trophies and championships, as the Spanish League. This deal manages EA Sports FIFA recreate stadiums like the Camp Nou in Barcelona and the Santiago Bernabeu in Madrid. To immerse the customer in the real-life soccer atmosphere.

Sponsors: Adidas and Coca-Cola are the exclusive partners inside FIFA. Adidas entered in 2013, by making a deal where the players can use one of their famous football boots and on the FIFA 2018 edition, Adidas design unique in-game soccer kits, where only FIFA players can purchase inside the video game (news.adidas.com, 2017). Page 12

In the recent EA Sports FIFA 2018 game edition, Coca-Cola sponsor deal manages to create the first “virtual sponsorship deal,” where coke promotes an in-game Coca-Cola zero sugar commercial inside of FIFA. This new customer segment builds Coca-Cola connections with soccer on video games and real soccer (coca-colacompany.com, 2017).

Mobile Platforms: In 2016, EA Sports in a partnership with IOs, Android, and Microsoft, Windows platform’s created FIFA MOBILE SOCCER (easporst.com, 2017). The game mobile version for soccer fans and gamers short on time.

Soccer Players: In each FIFA annual version, EA Sports FIFA partner with a critical soccer player to be the cover of the game during that giving year. The game also makes partnerships with players that are making success, where instead of mere photography to recreate them digitally, the developers have access to the players and can do a 360-degree 3D digital head scan images (Davidson, 2013). On FIFA18 they game introduced the Real Player Motion Technology, a new system that innovates the gameplay of real players, more accurately through motion capture. Where several new animations show exactly how famous players like Cristiano Ronaldo or Neymar moves on the real pitch. Allowing customers to feel the life-like tendencies of the best football players in the world, having a unique experience while playing (easports.com, 2017).

Cost Structure: FIFA, Soccer Leagues and Professional Teams Licensing Rights Deals: EA Sports FIFA has 33 leagues and more than 600 clubs inside the game. The licensing department team deals individually with each league, clubs and players unions to ensure that they are in the game (Davidson, 2013). They also have a licensing fee agreement with FIFA that EA pays annually, where their next extend negation will be set in 2022. Since they negotiate with the leagues and professional teams annually due to changes, it is considered that a big part of their cost is reserved to the usage rights inside the game.

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Game Production: A specialized teamwork every year to create a new version of EA Sports FIFA. Every year with the advance of new technologies the game manages to make graphics and design updates. But this adjustment cost millions of dollars to EA Sports. Since 2017, FIFA is using the engine, a game graphics engine developed by EA that is capable of translating graphical flourishes like lighting and weather conditions through the new generation of consoles onto your TV screen (Parsons, 2017).

Studio Offices: EA Sports FIFA headquarters is located Burnaby, Vancouver. By the name of EA Vancouver, offers many amenities that allow employees to balance their life and work. With a soccer field, two theaters and a cafeteria (ea.com). EA also has offices in Sidney, Australia, and Guildford, England to help EA Sports to distributed and sales FIFA worldwide.

Staff Salaries: EA Sports FIFA needs a variety of employees to create the game, where according to Electronic Arts there are 1.300 employees responsible for the game creation. Software engineer, Art Director, Video Asset Producer, Development Manager, FIFA- Java Engineer, Security Producer, Senior Director of Brand Management, Artworks-Development Director, FIFA Global Brand Director, Performance Engineer, Production Coordinator and Technical Interface Designer are the principal employee’s activities roles to help in the creation of FIFA (ea.com, 2018).

Database Storage, Serves and IT: In order to maintain the online structure in control and avoid connection problems, EA invest heavily in database storage and IT security. This segment also includes monthly download updates that EA Sports make in order to correct problems inside the gameplay of FIFA (easports.com, 2018).

Legal Protection: Since EA Sports FIFA deals with several licensing agreements, it is necessary to have a special Legal team to avoid lawsuits. On 2014, Electronic Arts entered into a $40 million settlement with an NCAA’s Collegiate Licensing Corporation because of not paying the licensing fee to use player likenesses in their NCAA games (Investopedia.com, n.d). Page 14

EA SPORTS FIFA has a different agreement with the FIFA Entity and Teams, but since the purpose is to create a realistic simulation of soccer games involving soccer teams, EA needs to take extreme care to avoid having new problems with former players or even teams.

Revenue Streams: Hard Copies: Electronic Arts central revenue stream comes from their sales through retail stores. Where in the United States, Game Stop, Wall Mart, Target and Best Buy are the most important EA Sports FIFA sales distributors. In 2016, the FIFA Franchise sold close to 15.5 million units worldwide, with each unit earning nearly $121 (forbes.com, 2017).

Downloads: With the advance of technology, since 2015 EA Sports FIFA is sold inside the XBOX and PlayStation platforms by the same price as hard copies. This revenue stream has gradually increased in recent years but is still millions behind the hard copies. For personal computers, Electronic Arts have an online platform called Origin, where customers can purchase EA Sports FIFA.

In-game purchases: EA Sports FIFA offers a series of in-game purchases inside the game. Where gamers purchase to hire new players, that allow them to become more competitive inside the online. Especially on the FIFA Ultimate Team, the online mode that manages you to create your squad and compete in online competitions. This mode generates nearly $800 million a year in in-game revenue since the first release (forbes.com, 2017).

Mobile In-app purchases: FIFA MOBILE SOCCER is free for the customers, where you can download in platforms like the IOs and Android. But inside the app, players can make purchases to upgrade their teams. The system is new, for this reason, the revenue represents a small amount of EA Sports FIFA total revenue.

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Conclusion: Based on the research, EA Sports FIFA has a robust business model, with exclusive partners, key resources and a dominant structure that manages to deliver a unique soccer video game experience for more than 35 countries worldwide. It is clear to understand that the product is a success within their customers, where FIFA in 2017, represented approximately 16 percent of the company total net revenue (EA 2017 Annual Report). Being considered one of the most successful franchises of Electronic Arts together with Madden NFL. The recent release of FIFA18, with an immersive atmosphere, realistic players and a new diversity of game modes, such as the new Ultimate Team, shows that the company is following their models and will increase revenue, especially due to the success of online gaming purchases and the extra digital content. EA Sports FIFA customer relationship is an excellent section to look inside, where using the power of technologies, like social media, website content and demo releases the game connects with all types of customers, which goes from 13 to 44 years old (EA annual report, 2017). To conclude, Electronic Arts are on the right track with the EA Sports FIFA, always creating new contents and immersing the customers in the game. FIFA has a broad and intense value proposition, the game presents the best soccer simulation video game, where you are capable of playing with your favorite team and players in several different modes. Players can create and manage their squad to play side by side with their friends or even online with people from all over the world, creating a unique experience This year EA Sports FIFA has a considerable potential to increase due to the Russia World Cup 2018 and is a great time to call new customers attention to enjoy the game. EA Sports FIFA is inside an intensely competitive market, that change rapidly as new platforms are introduced (EA annual report, 2017), for this reason, and to continue to grow, it is necessary to add the game inside new platforms like Virtual Reality and invest in an upgrade on FIFA MOBILE SOCCER, because nowadays mobile is becoming more important than pc gaming and are considered the future of the video games.

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