EA chief vows to keep up with big changes in the video game industry

Electronic Arts chief executive John Riccitiello said in a conference call today that the video game industry has fundamentally changed as gamers embrace new digital alternatives to console games – from mobile games to social games. And, he said, EA’s strategy is changing with it.

“Most of us recognize that the industry has radically changed and the pace of change has altered dramatically,” Riccitiello said in a call to discuss its first-fiscal quarter earnings today. “Eighteen months ago there was no iPad. Google was just experimenting with Android. Most games were a single-revenue opportunity.”

Riccitiello said that motion-sensing games have appeared on all consoles and that all of the top paid apps on the iPhone are games.

Now, Riccitiello said, digital games are growing fast. While the market is far more competitive than it used to be, the audience for games is skyrocketing. Rather than launch games once every four or five years, EA is now able to launch games and make them into “year-round events,” Riccitiello said, because the games can be extended across a range of always-on online or mobile platforms.

Eric Brown, chief financial officer at EA, said that revenue in the second-half of the year will benefit from subscription revenues related to the coming launch of the high-profile game, Star Wars: The Old Republic, a massively multiplayer online game that has been in the works for years. This kind of always-on game is what Riccitiello means when he says EA can turn games into year-round events. Titles like Battlefield 3, pictured above, will benefit from online game play long after the game launches in October.

Peter Moore, head of EA Sports, said that FIFA 12 soccer will launch on 12 platforms this year. He is excited about the digital version of the game that saw 3.3 million users in the past year, where paying users have spent $51 per paying user on the game’s various digital goods. He also said EA Sports games on Facebook will bring new players to EA’s console games. Average revenue per paying user on Facebook is $56.

Riccitiello said, “FY12 will be a positive inflection point for Electronic Arts.” The year includes the launch of Star Wars: The Old Republic, Battlefield 3, FIFA 12, Madden NFL 12, the Sims on social platforms, EA’s new Origin digital game distribution business and the addition of PopCap Games to EA’s line-up. He said EA’s strategy will focus on intellectual property, EA’s platforms including its Origin digital game distribution, and talent.

“We intend to finish this fiscal year a much different company than when we started,” Riccitiello said.

As we reported earlier, EA reported strong gains for the first fiscal quarter ended June 30 as both its digital and packaged goods games saw good results.

The publisher of video games is pursuing a multi-pronged strategy to beat rivals such as Activision Blizzard and Zynga. Aiming to be a leader in both console games and social/mobile games, EA recently bought PopCap Games for at least $750 million. Based on what EA emphasized in its press release, the company’s focus going forward is heavily weighted toward digital games.

GAAP revenue for the quarter was $999 million, up from $815 million a year ago. GAAP net income was $221 million, or 66 cents a share, up from $96 million, or 29 cents a share a year earlier. On a non-GAAP basis, revenue was $524 million, down from $539 million a year ago. Non-GAAP loss was $123 million, compared with a non-GAAP loss of $78 million a year ago. Non-GAAP loss per share was 37 cents, compared to a 24 cent loss a year ago.

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