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Student- Michael Hoban

Student ID – C00216709

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Business Management(CW_KCZZZ) Y2

 

Lecturer- Dr. Agnes Maciocha

 

Date of Submission- 4th
December 2017

 

Word Count-1544

 

 

 

 

 

 

 

 

 

 

 

 

 

Overview

Name of the Company: Electronic Arts.

 

About the Company: Electronic Arts (EA) is a video game
company based in in California in America. EA was founded on the 28th
of May in 1982 by Trip Hawkins, it is one of the largest publishers and
developers of video games in the industry. They have created many Well-known
games such as FIFA, Madden, Need for Speed, The Sims.

Why I chose this
company: I am very
Interested in computer games and I was interested to cover this topic with one
of the most successful and controversial gaming companies.

 

 

 

 

 

 

 

 

 

 

 

 

SWOT Analysis

Strengths

Weaknesses

1.     
Incredibly varied Diversity of games on many different gaming platforms
2.     
Powerful Digital Presence
3.     
Internationally recognised
4.     
Great deal investment into R&D
5.     
Solid and stable Company Growth
6.     
Powerful position and market share

1.     
Production Costs of Games
2.     
Release dates lead to some unfinished games.
3.     
Games focused on very specific areas
4.     
Acquisition of other companies with different goals
5.     
Recent Decline in earnings

Opportunities

Threats

1.     
Complete online gaming Portal
2.     
Military training simulations
3.     
Maintain good relationship with Console creators
4.     
Interactive gaming products

1.     
Tough competition
2.     
Piracy
3.     
Legal lawsuits
4.     
Rise of mobile apps and games

 

Strengths

1.     
Diversity: Electronic Arts produces more video
games per year than most other companies on all platforms (1). They have a very
broad target market, they cater to all gender and age groups with a varied list
of games every year. EA has four main development sectors under its label: EA
Games, Sport, Interactive and BioWare.

2.     
Digital presence: Electronic Arts’ Digital net revenue
increased to $934 million in 2017 which represented roughly 61% of net revenue
in 2016(2). EA have their own online gaming portal, to distribution their games
online called “Origin” which allows gamers to purchase games digitally.

3.     
Global presence: Electronic Arts operates in over 35
countries. More than 200 million people worldwide play EA games regularly. They
also have a strong mobile and social presence.

4.     
Investment into R: Allows EA to launch games on
multiple platforms a lot faster and on a more consistent basis. EA’s R&D
venture is one of the reasons they are a top competitor for other companies.

5.     
Company Growth: Electronic Arts has experienced a good
growth in recent years. Only in the last couple of years has it begun to drop, with
a P/E ratio of 25.51.

6.     
Strong market position: EA is a strong brand name. It is
internationally recognised as one of the great gaming companies.

 

Weaknesses

1.     
Productions costs: EA depends on the console platforms
created by other companies which limit’s the overall capabilities of the game
performance. The console developers set their charges for distribution on their
platforms.

2.     
Release dates: EA like most game development
companies set game release dates, these deadlines are se long before the game
is released and any delay in parts of games can lead to them being unfinished
and unfinished games do not sell well. Yearly releases of certain games do not
allow for the quality and polished games that customers demand.

3.     
Specific target market: Some of EA’s major games cater more to
long-time fans of franchises rather than original and new.

4.     
Acquisition strategy: EA has a known to remove competition
via purchasing successful companies. Some are still successful today like DICE
and BioWare, however many companies have failed as a result. (3)

5.     
Decline in earnings: EA has recently experienced a small drop
in net profit from 2016 to in 2017 after an increase from 2014-2016, however it
is beginning to pick up again as of 2017. (4)

 

 

Opportunities

1.     
Online gaming: EA has its on online gaming site”
Origin” to try and emulate its very successful competitor “Steam”. However,
they relied on their own games and the site has very few third-party games
available. This means that to get most EA games you must have an online account
on Origin but would be more successful with a greater variety of third-party
games.

2.     
Training for the military: the advancement of technology means
that games are more realistic than ever, the US army uses many simulation games
to help train their soldiers. (5) EA can use this opportunity to help train soldiers
in a virtual world.

3.     
Strengthen Relationship with console
giants: Nintendo’s
new Switch console opens new opportunities. EA doesn’t supported a lot of games
on Nintendo console’s, meaning there is a large sector of gamers that they are ignoring
and they should release more  games on
Nintendo.

4.     
Interactive gaming products: Use of sophisticated motion control
technology and its leverage in being one of the most successful sports video
games developers to deploy a line of interactive sports toys which would have
all of the equipment necessary to develop the skills and engagement of young
gamers.

 

 

 

 

Threats

1.     
Piracy: Piracy is a major threat to any of
the entertainment industry. The gaming industry is not an exception.

2.     
Lawsuits: Lawsuits have been filed against in the
past and it has damaged their reputation severely. In 2004 a lawsuit was filed
in claiming that EA employees were paid poorly for long working hours. An
action case lawsuit in 2013 claimed that EA had issued incorrect statements
about the capability’s their game Battlefield 4. (6)

3.     
Competition: The competition in the gaming
industry is large. Ubisoft, Activision, Microsoft are serious competitors even small
gaming companies like ProjectRed are not to be underestimated.

4.     
Apps: Mobile gaming is already a large
sector of the industry and is still growing, EA are aware of this, but competition
from the many gaming apps such as “Angry Birds” is a problem.

PEST Analysis   

Political

Economical

1.     
Government regulations
2.     
Brexit

1.     
Income
2.     
seasonal video game demands

Social

Technological

1.     
Demands of gamers
2.     
Violent video games debate

1.     
Technological upgrades

 

Political

1.     
Government regulations: Government regulations vary from country
to country. The creative rights recommended age ratings are all controlled carefully
and are different in certain areas and must be kept in mind.

2.     
Brexit: As Britain is leaving the EU the
standard’s and laws for gaming may change compared to the EU, this will force
EA to revaluate their market in Britain.

 

 

 

Economical

1.      Household income: The changing lifestyle of people has to be considered, as EA’s target
market is varied mainly focusing on the working class the price of games must correspond
to match this, game prices have to go up and down with the average person’s
income.

2.      Seasonal video game industry: Games are generally released as specific times of the year
such as Christmas and summer to achieve the most out of release dates Horror
games for example are best released around Halloween.

 

Social

1.     
Changing demands of gamers: The demands of games vary from month
to month and year to year, gamers always want something new to excite them and
all gaming company’s must change and adapt to appease these demands even games
that are released regularly such as FIFA are updated to keep up with modern
trends.

2.     
Contrasting views on violent video
games: The argument
for and against violent video games has limited and restricted certain aspects
of violence across all games, while having some merit these restrictions force
EA and other game company’s change or remove sections of their games before
release. (7)

Technological

1.     
Progress of technology: As technology progress games will
appear better looking and smoother to play, likewise games must take advantage
of this change to stay on top or be left behind.

 

 

 

 

 

 

 

Recommendations

(1)  
EA
appeals to many different demographics however it appeals to the smaller
“hardcore-gamer” side to increase value it would be more beneficial to appeal
to the more “casual” gamer.

(2)  
While
the investment into R has led to quick game release on multiple
platforms, strict deadlines and trying to accommodate the variety of platforms
leaves many published games unpolished and not of very good quality, it is in
my recommendation that they either remove such strict deadlines or release
games on a select few platforms instead.

(3)  
The
acquisition of smaller companies should be limited and used only in special
circumstances, some business can’t produce the same quality of product under
different management.

(4)  
Military
Simulation should be considered with greater detail as some aspects of these
very realistic military simulations can be incorporated into consumer based
games to improve quality.

 

Conclusion

EA is a quality business with many avenues open to it for the
future with greater care given to consumer needs, less constricting deadlines
the quality of games and future value will improve significantly, while less
thought should be put into acquiring companies to cover their short coming’s,
rather their management should consider fixing their faults internally rather
than externally.

 

 

 

 

 

 

 

 

 

References

(1)  
https://www.ea.com/games   
( 10 Games
alone this year)

(2)  
Electronic
Arts Reports Q4 FY17 and Full Year FY17 Financial Results (http://investor.ea.com/releases.cfm?ReleasesType=Earnings )

(3)  
https://kotaku.com/an-updated-list-of-studios-ea-has-bought-and-then-shut-1689498614

(4)  
https://www.marketwatch.com/investing/stock/ea/financials

(5)  
https://gcn.com/Blogs/Emerging-Tech/2013/01/Military-step-up-training-game.aspx

(6)  
http://ie.ign.com/articles/2014/10/22/judge-sides-with-ea-in-battlefield-4-class-action-lawsuit

(7)  
https://greengarageblog.org/10-primary-pros-and-cons-of-violent-video-games

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