Electronic Arts' mobile business is going downhill. Analysis from Deconstructor of Fun
Last year, Electronic Arts (hereinafter EA) spent more than $3 billion on M&A. As follows from the analysis published by Deconstructor of Fun, transactions can hardly be called successful for EA. The company is once again stepping on the same rake.
We have prepared a free translation of the material written by Michail Katkoff, co-founder of the Deconstructor of Fun blog and former top manager of companies such as FunPlus, Zynga, Rovio and Play Ventures. He is now co-owner and CEO of Savage Game Studios.
For a long time, mobile has not been a priority for EA in business. At the same time, the company was doing much more successfully in this niche than its competitors in the console games market — Take Two and Ubisoft. Unlike them, EA had a whole line of mobile bestsellers, including: Star Wars: Galaxy of Heroes, FIFA, Madden, Need for Speed: No Limits and Plants vs. Zombies.
However, since a certain time, the mobile segment of the company has begun to stagnate. The indicators of the leading titles stopped growing or even went down, and new products (like Command & Conquer: Rivals and Sims: Mobile), which had high hopes, began to fail one after another.
Against this background, EA has taken up the revision of its approach to mobile. She decided to become a top player in the mobile games market. And the first step towards achieving this goal was the hunting of Jeff Karp from the post of president of Big Fish Games. At EA, he became the head of the mobile division.
Then the company took on acquisitions. In February 2021, EA agreed to purchase Glu Mobile for $2.1 billion. After that, in September of the same year, Playdemic, famous for Golf Clash, was bought for $ 1.4 billion.
Acquisitions have had a strong impact on EA Mobile’s turnover. Thanks to the purchase of studios and the addition of 8 third-party franchises to the portfolio, the quarterly net receipts (net bookings) of the division increased by 68% year-on-year (we are talking about October-December 2021 relative to October-December 2020).
But is the company doing so well as a result of acquisitions, if we consider the situation for each product separately? According to Deconstructor of Fun, everything is very, very bad. It turns out that EA does not learn from its mistakes of ten and twenty years ago.
Deconstructor of Fun, using the Sensor Tower analytical service, compared downloads and revenue of 21 top EA games for the first quarter of 2021 with similar indicators of the same games for the first quarter of 2020.
It turned out that the total quarterly revenue of titles fell by 23%, and their downloads increased by 22%. It would seem that nothing is critical, everything is within the general market situation (the same Sensor Tower has previously reported that this is a trend that has affected everyone).
However, if you look at the situation separately for each top EA product, you will find out the following:
- almost the entire increase in downloads is due to EA native titles with high organic content (Need for Speed, Plants vs. Zombies, Sims, NBA, FIFA, Real Racing);
- the increase in downloads was observed only in 6 games out of 21;
- only 3 projects out of 21 have increased revenue.
But the most important discovery is something else: the indicators of all key franchises purchased in 2021 (they are highlighted in orange) have gone down:
- revenue of Design Home, the main hit of Glu, sank by a third;
- Kim Kardashian‘s revenue fell by 40%;
- Golf Clash revenue decreased by a quarter;
- MLB revenue, with a 110% increase in game downloads, fell by 78%, although it had been growing continuously since 2017.
Deconstructor of Fun explain the situation with EA’s approach to the acquired teams. If, for example, Zynga retains autonomy for the purchased teams, then EA integrates the new studios into its structure. As a result, the indicators of the projects purchased by Zynga are growing, and those purchased by EA are falling.
The drop is due to the fact that the employees of the acquired teams are not ready to work in the new conditions. For example, after Glu became part of EA, key developers of the MLB series left their posts. A similar situation occurred in Playdemic. This characterizes EA as a company that is not capable of conducting successful mergers.
However, this is not all. The drop in indicators also suggests that EA is not able to operate purchased products without the people who created them, launched them and led to success.
EA has already made a similar mistake before. The lack of autonomy has ruined many studios in the walls of EA. In a sense, “electronics” can be safely called studio killers. During its existence, the company has closed almost 30 assets.
