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Strong console sales boosts demand for Electronic Arts games
Electronic Arts Inc, publisher of the "FIFA" and "Madden NFL" video games, posted better-than-expected quarterly profit and revenue, helped by growth in digital revenue and strong sales of its sports titles.
Shares of the world's second-largest video game publisher rose 3.9 per cent to US$50.30 in extended trading.
Consumers lapped up heavily discounted older generation version of consoles such as Microsoft's Xbox 360 and Sony's PlayStation 3 in the holiday season, which in turn boosted sales of EA's game titles. "We did not anticipate as a strong market as there was in the Xbox 360 and PlayStation 3 market and there was some discounting I believe going on the marketplace in November and December," Blake Jorgensen, EA's chief financial officer, told Reuters.
That led to a 62 per cent jump in EA's games made for such consoles in the third quarter ended December 31, while the other area of growth for the company was in sales of mobile phone games, which rose 26 per cent.
EA has benefited by offering its popular PC and online games on mobile devices, a high-margin "freemium" model in which games are available for free, but are monetized via advertising or charging gamers for additional features.
Jorgensen expects "a lot of rapid growth" through the freemium model over the next three to four years.
EA has already made smartphone versions of its top-selling games, Madden NFL and FIFA, whose latest console and PC versions were the third and tenth most sold titles in the United States last year, according to NPD.
EA's total revenue rose nearly 40 per cent to $US1.13 billion in the quarter, split almost equally between its digital and packaged goods businesses. "I think that EA has underperformed in the past, but right now its outperforming the industry, particularly when it comes to margins and things like that," said Arvind Bhatia, an analyst with Sterne, Agee & Leach.
EA's net income was US$142 million, or 44 cents per share, compared with a loss of US$308 million, or US$1 per share, a year earlier.
On a non-GAAP basis, the company earned US$1.22 per share on revenue of US$1.43 billion.
Analysts on average expected a profit of 92 cents per share, on revenue of US$1.29 billion, according to Thomson Reuters I/B/E/S.
EA forecast a fourth-quarter profit of about 22 cents per share, below analysts' average estimate of 26 cents.