EA raises forecast on digital revenue, Star Wars

Reuters News
Posted: Oct 27, 2011 4:44 PM
EA raises forecast on digital revenue, Star Wars

By Liana B. Baker

(Reuters) - Electronic Arts Inc's <ERTS.O> second-quarter results beat Wall Street estimates and the video game maker raised its earnings forecast because of the upcoming holiday title "Star Wars: The Old Republic," which it expects to be a hit.

For the third quarter, the company raised its earnings outlook to a range of 85 cents to 95 cents per share. Analysts on average were expecting 93 cents, according to Thomson-Reuters I/B/E/S.

For the full-year, the company now expects revenue of $4.050 billion to $4.20 billion, ahead of analysts' expectations of $4.1 billion.

The company's finance chief Eric Brown said in an interview the company is raising its earnings outlook on the strength of digital revenue, which comes from online games that can be played on PCs such as "Star Wars.

"We're quite confident that we're going to easily clear $1 billion in overall digital revenue in our full fiscal year 2012," Brown said."

Brown said "hundreds of thousands" of people have pre-ordered "Star Wars," the online game that EA hopes will rival Activision Blizzard's "World of Warcraft," which has more than 12 million subscribers. EA is said to be spending more than $100 million to develop "Star Wars." The game comes out on December 20.

EA, like many video games companies, is starting to offer a wide range of games played over the Internet and on Facebook, to compete with upstarts such as Zynga, which develops simple, casual games.

The company wants to sell more digital content to consumers because it has higher margins than selling games to consumers on discs and does not have to give a cut to brick and mortar stores such as GameStop Corp <GME.N>.

EA said on Thursday that six million customers have downloaded the digital platform it unveiled earlier this year, where users can download full-PC games directly from EA. Gamers will be able to download the Star Wars game over that system.

Brown, the CFO, also said EA's highly anticipated shooter game, "Battlefield 3," which came out earlier this week, "is meeting expectations."

"We think the title will do well, not just in the launch week, but into the holiday season and into next year as well," he said.

EA's aim is to gradually chip away at Activision Blizzard Inc's <ATVI.O> "Call of Duty" series and gain enough momentum to take the crown back from its rival in the next few years.

In the quarter ended September 30, the second-largest U.S. video game publisher's adjusted revenue rose 17 percent to $1.03 billion, which beat analysts' expectations for $966.56 billion.

The main drivers were sales of EA's sports games such as "FIFA 12" and "Madden NFL 12," which were up 20 percent from a year earlier.

Taking into account the deferral of digital revenue from online games, EA's adjusted earnings per share was 5 cents per share, which breezed past Wall Street's expectations of a loss of 4 cents per share.

EA shares were flat at $24.50 in after-hours trading.

(Reporting by Liana B. Baker; editing by Richard Chang and Andre Grenon)