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5 Things Electronic Arts Inc. Management Wants You to Know

Video game giant Electronic Arts posted strong fiscal second quarter results , beating both its own guidance and analyst expectations. Yet shares fell following the release, as its outlook may not have been as optimistic as investors anticipated. During the subsequent earnings call, CEO Andrew Wilson, CFO Blake Jorgensen, and COO Peter Moore commented on a number of trends affecting the business. Below are five of the most important quotes from that discussion.

A different strategy for mobile games

The bulk of Electronic Arts' business continues to come from more traditional gaming platforms -- consoles and the PC. But Electronic Arts does have a respectable mobile business. Mobile games generated around 10% of its revenue on an adjusted basis last quarter. During the call, Wilson discussed a strategic shift the company made this quarter and how it affected one of its more popular mobile titles:

Madden NFL Mobile launched a full-game update this year instead of a new app download. The result was a seamless experience for players, which increased retention and resulted in game sessions up more than 300% over last year.

Demand for EA Access is rising

Last July, Electronic Arts announced EA Access, a digital subscription service that gave Xbox One owners the ability to, for a flat monthly or annual fee, play a collection of older Electronic Arts titles. EA Access subscribers also get a discount on new releases and early access to upcoming games. However, Electronic Arts has not offered up exact subscriber figures, instead lumping it with its subscriptions and advertising revenue. That figure contracted slightly on an annual basis last quarter, from 91 million to 83 million on an adjusted basis, but EA Access may not have been responsible for that decline. During the call, Wilson commented on the service's growth in general:

EA Access is accelerating. The subscriber base more than doubled in the last two quarters. We've added five new games to The Vault this year, and we're excited about what we're learning as players engage through this service. These titles ... are giving us strong momentum moving into the holiday season.

On guidance

Electronic Arts raised its guidance for its full fiscal year, but its revenue outlook fell slightly short of analyst estimates. Mirror's Edge Catalyst was expected to debut in Electronic Arts' fiscal fourth quarter, but it has been delayed until May, shifting it out of the fiscal year. During the call, Jorgensen explained Electronic Arts' outlook:

Due to our continued strong performance, we are again increasing our full-year outlook. The open beta for Star Wars: Battlefront was exceptionally well received by players. Consequently, we're raising our unit forecast for sell-in during fiscal year 2016 to approximately 13 million units. This is partially offset by increased FX headwinds and our decision to move Mirror's Edge Catalyst into fiscal 2017.

The popularity of full-game downloads is increasing but not in every region

Electronic Arts' console games are its largest segment by revenue. Console games are still sold primarily on physical discs, but in the past, management has expressed its interest in eventually converting entirely to digital. Owners of modern consoles have the option to download games rather than buy a disc. During the call, Jorgensen commented on the trends the company is seeing in full-game downloads.

Our new titles in the quarter averaged around 20% full-game downloads with the exception of FIFA , which skewed lower [because of its European popularity]. ... In terms of the full-game downloads, a couple things to remember; we still sell [PlayStation 3 and Xbox 360 games], and [gamers who own those consoles] are typically doing full-game downloads [less often]. ... Second, our [second-quarter] business, particularly FIFA , is skewed heavily toward Europe, and two factors bring down full-game downloads ... in Europe. One is bandwidth speeds in some countries. And two is many retailers in Europe, particularly in Great Britain, use FIFA as a way of driving traffic into the store, and they like a physical copy to help do that. We're seeing very strong full-game downloads continue in North America. ... [For PC games] we see full-game downloads there roughly 75%. ... We believe in the full-game download opportunity for us going forward.

Battlefront 2 in 2016?

Electronic Arts will release Star Wars: Battlefront on Nov. 17. It should be one of the most popular games released this year. Could it become an annual franchise for Electronic Arts? During the call, Wilson commented on that possibility, suggesting that it probably wouldn't be the case but that the company's commitment to Star Wars is only just beginning.

Around Star Wars and annualization -- again, what we have talked about is we have a long-term partnership around the Star Wars license, and we expect that we will launch many titles as part of that long-term relationship. ... We still have 6 million people engaging regularly in both Battlefield 4 [released in 2013] and Battlefield Hardline [released earlier this year]. ... We think about our business not just as a launch business, but as a large service and relationship business that we factor in when it's appropriate to launch new things. ... Certainly, expect more Star Wars titles from us, but no decision made as to specific timing as yet.

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The article 5 Things Electronic Arts Inc. Management Wants You to Know originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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