Running head: ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 1 Electronic Arts, Inc. Business Proposal Alejandro Gutierrez-Pereira Full Sail University ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 2 Table of Contents Brief History of the Company………………………………………………………………Pg. 3 Industry Forecast……………………………………………………………………………Pg. 6 Customer Demographics……………………………………………………………………Pg. 6 Competition…………………………………………………………………………………Pg. 8 Current Status of the Company……………………………………………………………..Pg. 11 Customer Feedback…………………………………………………………………………Pg. 12 Problems Found From Research…………..……………………………………………….Pg. 14 Plan……………………………………………………………………………………….....Pg. 15 ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 3 The gaming industry has been around for decades and with the advancements in technology there is always something new for consumers around every corner. There are very few gaming companies that are able to stay in business and create a reputation for themselves. Among those few is Electronic Arts, Inc. Today I am here to talk to you about a business proposal I have for the future of EA Sports Madden NFL. Electronic Arts, LLC is an American, publicly traded corporation located in Redwood City, CA. “EA develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers” (Electronic Arts, 2019). Our company is best known for creating popular games such as The Sims, Madden NFL, Need for Speed and Plants vs. Zombies. “Electronic Arts was founded in 1982 by three former managers of Apple Computer: William M. (Trip) Hawkins III, who was a marketing director at Apple and at age 26 became head of the new enterprise; William Bingham (Bing) Gordon, who became the company's director of marketing; and Tom Mott. Both Hawkins and Gordon earned MBAs from Stanford University” (Electronic Arts Inc., n.d.). Since 1982, we have grown the company and ensured that we stayed up to date with the changes in technology as well as society. “Over the last few years, EA changed its strategy to focus more on delivering games directly to consumers through online and wireless networks” (MarketLine, 2019). With more and more people turning to their cell phones to play games it only made since that we developed mobile games as well. We are a well-matured company that has cemented itself as one of the industry leaders. When considering some of the financial results our company has achieved in the past 5 years, one can see how dominant we have become in the video game industry. Our market capitalization has stood over $20.5 billion since 2016. "EA is fundamentally sound, with return on equity (ROE) above 28%, operative margin above 22%, as well as having low debts and good cash flow" ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 4 (DePersio, 2018). EA Sports line of games such as Madden NFL, NBA Live, NCAA Football and FIFA among others are titles with yearly releases and an outstandingly loyal audience. The video game industry is becoming massive in reach and profitability as the years pass. With a reported market value of $134.9 billions in 2018 it is evident the video game industry is reaching new heights at an incredible rate. "This value represents an increase of 10.9% over 2017" (Batchelor, 2018). Two big roles to this rise in success in the video game industry is attributed to mobile gaming with a reported value of $63.2 billions in 2018 (Batchelor, 2018). As well as, the rise in popularity of competitive gaming at a global scale, an example of this is esports. Our company represents the gaming and entertainment industry. At Electronic Arts, Inc., we develop and deliver games, content and online services to our customers for internet-connected consoles, mobile devices and PCs. A key benefit we offer our customers is EA Access. “Launched in 2014, EA Access is publisher Electronic Arts’ own slice of the subscription service world, offering Xbox One and PlayStation 4 owners access to its wide library of titles (known as the 'Vault') as well as some additional incentives such as early trials of the newest games and a 10% discount on EA digital purchases” (Boyle, 2019). This service offers members instant access to our game library, a 10% discount, and early access to download and play new releases before anyone else. PC users can take advantage of our sister service called Origin Access. By purchasing our subscription “you can get all-you-can-play access to the “EA Access Vault”, a library of over 50 games. This includes both Xbox One games and older Xbox 360 games you can play on your Xbox One through backwards compatibility” (Hoffman, 2017). When comparing Electronic Arts’ games to others its apparent that we have the lower prices for the services we offer. The price for access for a year to our subscription services will cost you only $29.99. Compared to an Xbox Gold Membership for $59.99 a year and PS Plus $59.99 a ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 5 year, that is a steal! We offer a lower price than Xbox and PlayStation to give our customers an incentive to join our subscription. While we offer an online based library for them to choose games from, customers would still need to purchase an Xbox Gold membership in order to play online multiplayer. This is why we have half the price for an online subscription. Just like with most things in the world, anyone could attempt to get into the gaming industry. That is why there is a whole genre called Indie games. The problem is most never move beyond that first stage and that results in very few with the ability to make their way into the top game developers. It is different for those trying to get into the gaming subscription service. Just like with us, you would have to have enough games to create a large library that you could offer customers. Without this you would never find customers who would be willing to try your subscription service. For our company, you couldn’t substitute what we have to offer because we offer customers access to our content. If you want, you could become a member to another company’s subscription service, but they would only be able to offer you their content and not our content or our deals. This isn’t something we consider our biggest threat to the industry. Video streaming services such as Hulu and Netflix as well as YouTube and Twitch would be the top threats to the gaming industry. If people spent more time binge watching episodes of shows on Hulu and Netflix, they would have less time to play our games. With YouTube and Twitch the treat is that people nowadays are spending more of their time watching another person play games rather than playing the game themselves. “Gamers watch sports on television more often than they watch other people playing games on sites such as Twitch. However, gamers 18-25 spend 77 percent more time watching other people playing online than watching broadcast sports, and those 26-35 spend nearly the same amount of time watching online gaming as ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 6 broadcast sports” (Limelight Networks, 2019). This change in society’s habits would explain the growth in a new technology called Virtual Reality. We strive to ensure that Electronic Arts, Inc. keeps up to date with the changes in technology and society in order to continue being a successful company who can continue to provide our clients with all their gaming needs. From starting out as a simple company who published games and productivity software for PCs to taking on gaming studios and franchises, we strive to continue being one of the top companies in the gaming industry. While the future is uncertain, we believe that the next big thing in the gaming industry will be virtual reality. “The virtual reality (VR) market is expected to grow from USD 7.9 billion in 2018 to USD 44.7 billion by 2024, at a CAGR of 33.47% during the forecast period” (Markets, R. A., 2019). This is a perfect business opportunity for us to take advantage of. Virtual reality has just started to take off and we need to act fast to become successful in this opportunity before us. Afterall, it’s only a matter of time before our competitors come to the same realization and jump on this great business opportunity. Madden NFL has been around since 1988. There is no other sports video game in history that can rival Madden NFL. When considering the target demographic, it is of extreme importance to take the history of this franchise into account. In an interview for gamesindustry.biz Vice President of Global Marketing for EA Sports Anthony Stevenson stated in 2014 that they struggle to reach a specific audience. He stated that “Madden is a franchise that's 26 years old, and that's a little bit of a blessing and a curse" (Sinclair, 2014). He continues to explain that the blessing is their very own fanbase, as they have grown loving this game for over two decades. Stevenson proceeds in his interview to state that the curse side of this already matured franchise is how difficult it is to market and reach new audience. People that have not grown up with the game (Sinclair, 2014). In other words, the target demographic for Madden NFL is composed of those very loyal and ELECTRONIC ARTS, INC. BUSNISS PROPOSAL 7 mature fanbase, and a newer one target audience, younger more impressible and highly competitive. Will Brinson from CBS sports in his article As Madden Championships unfold, eSports look like an important part of NFL's future, he mentioned that there are several factors affecting the ever- growing fanbase of this video game franchise.