Electronic Arts

Blue Whale’s published research and conclusions focus exclusively on the merits of a Company’s business model and future growth prospects. The research and conclusion does not consider the valuation of a Company and therefore does not constitute an investment recommendation.


As the global millennial group grows in prominence, expenditure on “experiences” and “lifestyle” continues to accelerate. Traditionally, spending on experiences and lifestyle involved activities such as going to the cinema, participating in group activities, or going to the gym. However, one of the largest areas of experience expenditure is that of ‘gaming’. The gaming industry has been steadily growing since the early days of arcade games, through the advent of the first games consoles and into the digital era and now boasts a global community of over 2.2 billion ‘gamers’, generating $100 billion dollars in global revenue last year (2016) for the industry. Generation Z look set to accelerate this trend further with most statistics suggesting they are even keener gamers than their millennial predecessors.

One of the biggest producers of games is Electronic Arts, or EA. Whilst you may not be immediately familiar with EA, it is likely that you will have heard of FIFA, the NBA and Star Wars. EA owns the gaming rights to these popular franchises – such as FIFA and the ‘Madden’ NFL games – and each have a growing band of fiercely loyal customers.

But in addition to the growing popularity of gaming with millennials and generation Z, it is the huge potential of game developers to utilise new online digital platforms to grow sales that should interest investors. Through these platforms, game developers now have the ability to generate additional sales beyond the initial download of the games. For example, if you are playing the FIFA football game on PlayStation or Xbox, you will likely end up in “Ultimate Team Mode” where you can use real-world currency to improve your team and gain an advantage over your fellow gamers. This all leads to greater revenue generation for the game developer.

What is more, the ability to distribute content directly through online gaming platforms (such as Xbox and PlayStation), rather than having to produce physical incarnations of the game (like CDs and cartridges) sold through multiple high-street retailers greatly reduces costs and boosts profitability.

EA has declared a ‘commitment to digital’, with the express aim of maximising profits through a combination of additional in-game purchases and the reduced costs associated with no longer needing to produce physical games. As the gaming community and expenditure continues to grow rapidly, EA looks well placed to significantly grow sales and earnings over the coming years.

For those that wish to see our research on EA, we have prepared a downloadable PDF containing detailed analysis on the company. The PDF can be accessed below.