This is Matt Reustle and today we are breaking down the iconic video game publisher, Electronic Arts. 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.
Our guest is the anonymous author of popular investing blog, The 10th Man.
Show Notes
(00:00:00) – Introduction
(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