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EA Sports Online Pass redeemed by 60% of users, says EA
During EA's Q1 financial conference call, COO John Schappert discussed the success of the company's "Online Pass" initiative. According to Schappert, early results from NCAA Football 11 and Tiger Woods PGA Tour 11 indicated that "sixty percent to seventy percent of online connected users" have redeemed a code for Online Pass. He noted further that "the level of online play is up" over last year, as is revenue from paid downloadable content. When asked how Online Pass has impacted used game sales, Schappert noted that it's "too early to tell" but that EA is "encouraged by" the number of people playing online, and that the "extra gift" offered by Online Pass is "driving some of that adoption." EA announced its Online Pass program earlier this year -- bundling a code with new copies of NCA Football 11 and Tiger Woods PGA Tour 11 -- which allows access to online features like multiplayer (among other things). Those who choose to buy used copies of the games can purchase an Online Pass for an additional $10. The Online Pass program operates as part of "Project Ten Dollar," created to stop losses generated by the used game industry. Based on the numbers touted by Schappert, as well as those reported by EA for the quarter, the strategy just might be working.
Analysts discuss impact of EA Sports Online Pass
Over at IndustryGamers, several analysts have chimed in on EA's latest assault on used game sales: The EA Sports Online Pass. The pass will offer players access to online features -- up to and possibly including online multiplayer -- on all future EA Sports titles starting with Tiger Woods PGA Tour 11. Should someone buy a game used, additional passes can be purchased for $10. The overall consensus among analysts: It's a good thing and a smart move on EA's part. According to Wedbush Morgan's Michael Pachter, it only makes sense that EA should be compensated for rendering online services. He noted that EA "currently does not get paid" by those who purchase used games and that the pass "is ensuring that second-hand purchasers will pay something for the maintenance of the server network and for access to premium content." The majority of analysts agreed with Pachter, with EEDAR's Jesse Divnich noting that games now extend far beyond their own physical media. "Seven years ago, when you purchased Grand Theft Auto for $50, the entire experience was encapsulated on a DVD," said Divnich, "in 2010 that is no longer the case." He added that it is "perfectly reasonable" for EA to expect payment for features that aren't included directly on the disc. Also, DFC Intelligence's David Cole expects more companies to pursue similar programs in the future. Meanwhile, Lazard Capital Markets' Cole Sebastian referred to the program as "a double-edged sword for publishers." While it may lower used sales, said Sebastian, it also diminishes the resale value of games that customers would trade in to purchase new ones.
EA posts $677 million loss in FY2010 alongside downed revenues
EA has reported the results for its fiscal year 2010, which ran from April 1, 2009 through March 31, 2010, showing a downed revenue stream for the year and an improved loss. The company took in $3.654 billion (down from $4.212 billion in FY2009) and, measured against money spent, lost $677 million (an improvement from last year's $1.088 billion in losses). Additionally, Q4 2010, running from January 1 – March 31, 2010, saw $979 million come in, compared with $860 million in Q4 the previous fiscal year and $1.243 billion last quarter -- a profitable final quarter for the company, contrasting last year's Q4 loss of $42 million with $30 million earned. CFO Eric Brown said of the coming fiscal year, "We are affirming our FY11 and Q1 non-GAAP guidance and expect to grow profitably in the year ahead. Our digital businesses are expected to grow approximately 30 percent." For all of you wondering what that means in human speak, he's saying that, regardless of today's announcement, he's confident in what the company has predicted for the coming year (as you might imagine, EA predicts it's going to do better than last year). It also means that Brown and EA expect to see a lot more dollars coming in on the digital front in the coming year, a likely possibility given initiatives like Project Ten Dollar, the EA Sports Online Pass and the usual stream of DLC for new games.
