SWOT Case Study - EA Games

Strengths

• Electronic Arts (EA) Games, is a global corporation which develops, markets, publishes and distributes video game software, online interactive games, and mobile games. They design games for a number of platforms including Sony PlayStation 3, Microsoft Xbox 360 and Nintendo Wii; handheld game systems, including PlayStation Portable (PSP), Nintendo DS and Apple iPod; personal computers (PCs); and mobile phones. The company distributes games in over 35 countries worldwide.
• EA Games has four segments under their label: EA Games, EA Sports, The Sims and EA Casual Entertainment.
• The EA Games label has the largest percentage of research and development staff, and produces action-adventure, role playing, racing and combat games and the extraordinarily popular online role-playing games.
• The EA Sports label produces sports-based video games, including the Madden NFL, (which in 2007 grossed $100 million in sales in their first week on the market), FIFA Soccer and Tiger Woods PGA Tour franchises. The sports division brings in 43% of EA's revenue.
• The Sims label is a line extension of life simulation games, and an online interactive game with over four million regular users.
• The EA Casual Entertainment label develops games that are intended to be quick to learn and play online, making them easily accessible for a wide audience. Pogo has 1.6 million subscribers.
• In 2007, EA created a strategic alliance with Hasbro, which included crossover licensing. They were able to create digital versions of Hasbro's classic board games, including Monopoly, Scrabble, Yahtzee, Trivial Pursuit, Nerf, GI Joe, and Littlest Pet Shop. They have also created these digital games in a variety of platforms, including for mobile phones, handheld gaming devices and computers.
• EA Games has a social responsibility platform that includes a grant program, software donation program, volunteer opportunities, and supporting non-profit organizations and schools by giving to organizations that provide services to underprivileged youth in the areas of math, computer science, music and art.

Weaknesses

• In December 2008, Electronic Arts cut its worldwide workforce by approximately 10% and closed at least nine of its studios and publishing locations. They also laid off 6% of their staff, and let go of Kathy Vrabek, head of EA's Casual Entertainment division, just 18 months after she took the job.
• Their software is dependent upon the platforms that are created by other companies, leading to limitations in design capabilities, graphics and game performance.
• Game release times have to be tied into specific times of year, Christmas sales, sports seasons and major sporting events, any miscalculation of production and distribution further hurts sales, and makes their assets less profitable.
• In 2008, EA, in a licensing deal with Hasbro, created a digital Scrabble game, which was a failure due in part to software problems.
• EA's crown jewel Madden NFL franchise was the company's only title among the industry's top 10 best-selling games in 2007.

Opportunities

• In 2008, EA acquired ThreeSF, Inc., a gaming-based social network; and they acquired J2MSoft Inc., a Korean-based developer of PC online games.
• The computer gaming industry has begun to recognize that the U.S. Army needs simulation training and EA Games can provide the instruments to achieve their goals. Games are also being adopted for defense, medicine, architecture, education, city planning and government applications.
• A line of interactive training tools featuring voice commands and instructional coaching.
• Complete game-in-a-box containing all the equipment necessary for kids to practice and play a sport.
• A line of sports toys that will utilize electronics to reward young athletes with cheers when they use proper techniques.
• A basic line of high density-foam balls to help kids develop skills at an early age.
• CEO Riccitiello believes EA may one day even go so far as to give away many of its games for free, making its money off action figures and other licensing deals the same way that George Lucas did with the Star Wars movie franchise.

Threats

• Since 2004 sales have been steadily increasing, however, profits have been steadily decreasing until 2008, when they actually had a negative profit margin. They earned $3.8 billion in sales, but had a $454 million loss.
• Sales and profits are dependent on the success and prolonged purchasing power of gaming consoles. If sales for a gaming console wane (such as a Playstation or Wii) software/game sales will slump.
• Software piracy has become a serious problem, especially in countries, like South Korea where laws are not enforced; software is pirated and distributed without much fear of consequences, cutting into EA Games' profits.
• In May 2009, EA Games was sued claiming they illegally used the names and likenesses of thousands of college football and basketball players in their software since the 1990's.
• Due to their executive staff layoffs, restructuring, and lack of stability there has been speculation that they are a prime candidate for a takeover by other global entertainment companies.

by Mkt Teachers