To: The Economic Development Unit (EDU)
From: Example
Date: 09/11/2020
Subject: Features contributing to the success of contrasting business.
This report will compare two contrasting businesses, Electronic Arts, and Liverpool
FC. In this report, I will explore and assess their reasons for success, explore the
aims and objectives of both parties, the organisational structures, and how their
stakeholders influence and communicate with the businesses.
Electronic Arts Inc.
Electronic Arts is a company based on video game design. It is an American
developer, marketer, publisher, and distributor and is one of the largest video game
companies in the world. The company was founded by Trip Hawkins in 1982 and
was a ‘pioneer in the video game industry’. EA was originally a publishing house for
other company’s games but developed into creating in-house games such as Skate
Or Die. EA then started to buy out various developers, which excelled them to
becoming one of the largest publishers in the video game industry.
The founder, Trip Hawkins, had a sales strategy to sell directly to the buyers. This
was a challenge, as retailers were more interested in large and well-known brands
such as Atari. However, the then called ‘Amazin’ Software’ still thrived and earned
revenue of $11 million. Despite the success, many internal employees of ‘Amazin’
Software’ disliked the name, and after many meetings, they decided to change their
name to ‘Electronic Arts’. After 9 years as CEO, Hawkins left and formed another
fresh company called 3DO. After Hawkins’s departure, Larry Probst was there to
take his place. Probst Wanted EA to lead with integrity and principle and refused to
allow EA to publish any M-rated games, which had become more popular in the
industry. Major criticism was dished to Probst from the investors of the company and
the public. Under pressure that was steadily mounting, he changed his stance on M-
rated games and published its first M-rated game, System Shock 2, in 1999. This
made a new beginning for EA, signaling the rise of the company to become one of
the largest publishers in the industry.
5 years later in 2004, EA bought the exclusive license of ESPN and the NFL. This
meant they could use the companies in their video games exclusively. This was seen
as one of the largest deals ever made in the video game industry. EA then went on
1
, to purchase the license to NCAA football, further expanding the foothold they had in
(American) football.
EA capitalised on licensing deals. Yearly releases of Madden, FIFA, NHL, Tiger
Woods, and NBA live excelled the company. In 2007, Probst stepped down and
appointed John Riccitiello to become the new CEO. Electronic Arts excelled further
under Riccitiello. He went on to purchase game developers such as Pandemic
Studios, Mythic Entertainment, and BioWare.
Credit: https://www.giantbomb.com/electronic-arts/3010-1/
Electronic Arts, now worth $22.9 billion according to Forbes, which is a 12% increase
from just last year, is still developing and despite a lot of criticism from the press,
fans and competitors, they are continuing to expand and create new games, every
year.
How does EA make their money?
EA stands out from the rest mostly because of the deals they have set themselves
up with. Deals with Disney, sports leagues and players, and the rights to use
extremely popular shows/movies such as Star Wars and Harry Potter in their games
exclusively means that fan bases from all over the shop rush to the games produced
by EA. The versatility of being able to attract anyone from a Harry Potter fan to some
of the best footballers in the world gives EA an edge never seen before. EA
generates its revenue from video game sales and in-game purchases, more
commonly known as ‘micro-transactions’.
Revenue Contribution As of 2019:
Services ~ 68%
Product ~ 32%
Products refer to the revenue made from games themselves such as FIFA and
Madden. Considering EA is a gaming company that specialises in game creation and
distribution, it comes as a surprise that 68% of EA’s earnings in 2019 were from in-
game purchases.
In-game purchases or Microtransactions allows players to buy virtual goods with
micropayments. It is a small financial transaction that is made in digital games/apps.
These are paid after the initial purchase of the game, to usually better your
experience or give you a competitive advantage.
Services represent the revenue from downloadable content, subscriptions, and other
services that are generally accessed in-game. The segment’s contribution to the
company’s overall revenues was 68% in fiscal 2019.
2
,EA generated net revenue of $5.54 billion in fiscal 2020. This is higher than in 2019
and depicts a positive overall trend when compared to 2015’s revenue of $3.2 billion.
EA took advantage of the lucrative idea of introducing ‘Ultimate Team’ into FIFA and
NBA in 2009. ‘Ultimate Team’ is where you compete against other real-life players
and use the money from games to purchase players, or purchase packs containing
unknown players.
Ownership and liability
Electronic Arts is a public company. A public company is a corporation whose
ownership is mostly distributed amongst public shareholders through the free trades
of share exchanges. This is to initially raise capital for a business. Some examples of
public companies are Google, F5 Networks, and of course Electronic Arts.
Electronic Arts is an incorporation, this can be seen in the company's name,
Electronic Arts inc. An incorporation is a legal entity where the ownership is arranged
into shares. A shareholder of EA has no company responsibilities and potential
losses are limited to the value of a stock turning to zero. Incorporating a business is
one of the best ways to protect personal assets. A corporation can carry on
business, own property, incur liabilities, and sue/be sued. A corporation is
responsible for its debts, as it is a separate legal identity.
Who owns electronic arts?
The CEO of Electronic Arts is Andrew Wilson. He was elected CEO on the 17th of
September 2013.
Here is the organisational structure of
EA, to visualise how things are run
behind the scenes. Credit
The total number of employees under
EA is 9,800 as of 2020.
3
, EA is a horizontal organisation. There are only a few levels of command, including
board, sectors, and employees. The advantages of a horizontal structure are that it
emphasises on an employee-centered approach in the workplace, with emphasis on
teamwork and collaboration. This is important for EA as it is project-based. Each
functional area focuses on a different aspect, but they all come together to create a
product such as a new game. This will help EA reach its Aim of taking creative risks
and listening and responding to their customers. Creativity will come from all angles
of the structure, and if customers want something, the shorter structure will enable
new ideas and important customer needs to the top managers and CEO to allow
these changes to take place.
Aims and objectives
Aims of EA
Be bold - Go big | Take the right risks | Back our bets | Lead
Think Players First - Listen and respond | Deliver beyond their expectations | Build
lifetime players
Create Quality and Innovation - Deliver products and services that surpass
expectations | Be relentless about improving quality | Take creative risks
Act with Integrity - Do the right thing | Trust others and support their decisions | Be
transparent
Be Accountable - Deliver on commitments | Always do what we say | Play our
positions | Deliver and reward results
Learn to grow - Work hard, play hard | Develop yourself and others | Measure your
improvement | Share knowledge generously
Sector
Electronic Arts are in the ‘Video Game’ industry. The video game industry is involved
in the development, marketing, and distribution of video games. The industry
employs thousands worldwide. The industry generated $134.9 billion annually
worldwide in 2018, which self-describes the power and popularity of the industry.
The video game industry in 2020 has a worth of an estimated $159.3 billion. This is a
9.3% increase from 2019. Current forecasts are estimating the video game sector
will be worth $200 billion by 2023.
4
From: Example
Date: 09/11/2020
Subject: Features contributing to the success of contrasting business.
This report will compare two contrasting businesses, Electronic Arts, and Liverpool
FC. In this report, I will explore and assess their reasons for success, explore the
aims and objectives of both parties, the organisational structures, and how their
stakeholders influence and communicate with the businesses.
Electronic Arts Inc.
Electronic Arts is a company based on video game design. It is an American
developer, marketer, publisher, and distributor and is one of the largest video game
companies in the world. The company was founded by Trip Hawkins in 1982 and
was a ‘pioneer in the video game industry’. EA was originally a publishing house for
other company’s games but developed into creating in-house games such as Skate
Or Die. EA then started to buy out various developers, which excelled them to
becoming one of the largest publishers in the video game industry.
The founder, Trip Hawkins, had a sales strategy to sell directly to the buyers. This
was a challenge, as retailers were more interested in large and well-known brands
such as Atari. However, the then called ‘Amazin’ Software’ still thrived and earned
revenue of $11 million. Despite the success, many internal employees of ‘Amazin’
Software’ disliked the name, and after many meetings, they decided to change their
name to ‘Electronic Arts’. After 9 years as CEO, Hawkins left and formed another
fresh company called 3DO. After Hawkins’s departure, Larry Probst was there to
take his place. Probst Wanted EA to lead with integrity and principle and refused to
allow EA to publish any M-rated games, which had become more popular in the
industry. Major criticism was dished to Probst from the investors of the company and
the public. Under pressure that was steadily mounting, he changed his stance on M-
rated games and published its first M-rated game, System Shock 2, in 1999. This
made a new beginning for EA, signaling the rise of the company to become one of
the largest publishers in the industry.
5 years later in 2004, EA bought the exclusive license of ESPN and the NFL. This
meant they could use the companies in their video games exclusively. This was seen
as one of the largest deals ever made in the video game industry. EA then went on
1
, to purchase the license to NCAA football, further expanding the foothold they had in
(American) football.
EA capitalised on licensing deals. Yearly releases of Madden, FIFA, NHL, Tiger
Woods, and NBA live excelled the company. In 2007, Probst stepped down and
appointed John Riccitiello to become the new CEO. Electronic Arts excelled further
under Riccitiello. He went on to purchase game developers such as Pandemic
Studios, Mythic Entertainment, and BioWare.
Credit: https://www.giantbomb.com/electronic-arts/3010-1/
Electronic Arts, now worth $22.9 billion according to Forbes, which is a 12% increase
from just last year, is still developing and despite a lot of criticism from the press,
fans and competitors, they are continuing to expand and create new games, every
year.
How does EA make their money?
EA stands out from the rest mostly because of the deals they have set themselves
up with. Deals with Disney, sports leagues and players, and the rights to use
extremely popular shows/movies such as Star Wars and Harry Potter in their games
exclusively means that fan bases from all over the shop rush to the games produced
by EA. The versatility of being able to attract anyone from a Harry Potter fan to some
of the best footballers in the world gives EA an edge never seen before. EA
generates its revenue from video game sales and in-game purchases, more
commonly known as ‘micro-transactions’.
Revenue Contribution As of 2019:
Services ~ 68%
Product ~ 32%
Products refer to the revenue made from games themselves such as FIFA and
Madden. Considering EA is a gaming company that specialises in game creation and
distribution, it comes as a surprise that 68% of EA’s earnings in 2019 were from in-
game purchases.
In-game purchases or Microtransactions allows players to buy virtual goods with
micropayments. It is a small financial transaction that is made in digital games/apps.
These are paid after the initial purchase of the game, to usually better your
experience or give you a competitive advantage.
Services represent the revenue from downloadable content, subscriptions, and other
services that are generally accessed in-game. The segment’s contribution to the
company’s overall revenues was 68% in fiscal 2019.
2
,EA generated net revenue of $5.54 billion in fiscal 2020. This is higher than in 2019
and depicts a positive overall trend when compared to 2015’s revenue of $3.2 billion.
EA took advantage of the lucrative idea of introducing ‘Ultimate Team’ into FIFA and
NBA in 2009. ‘Ultimate Team’ is where you compete against other real-life players
and use the money from games to purchase players, or purchase packs containing
unknown players.
Ownership and liability
Electronic Arts is a public company. A public company is a corporation whose
ownership is mostly distributed amongst public shareholders through the free trades
of share exchanges. This is to initially raise capital for a business. Some examples of
public companies are Google, F5 Networks, and of course Electronic Arts.
Electronic Arts is an incorporation, this can be seen in the company's name,
Electronic Arts inc. An incorporation is a legal entity where the ownership is arranged
into shares. A shareholder of EA has no company responsibilities and potential
losses are limited to the value of a stock turning to zero. Incorporating a business is
one of the best ways to protect personal assets. A corporation can carry on
business, own property, incur liabilities, and sue/be sued. A corporation is
responsible for its debts, as it is a separate legal identity.
Who owns electronic arts?
The CEO of Electronic Arts is Andrew Wilson. He was elected CEO on the 17th of
September 2013.
Here is the organisational structure of
EA, to visualise how things are run
behind the scenes. Credit
The total number of employees under
EA is 9,800 as of 2020.
3
, EA is a horizontal organisation. There are only a few levels of command, including
board, sectors, and employees. The advantages of a horizontal structure are that it
emphasises on an employee-centered approach in the workplace, with emphasis on
teamwork and collaboration. This is important for EA as it is project-based. Each
functional area focuses on a different aspect, but they all come together to create a
product such as a new game. This will help EA reach its Aim of taking creative risks
and listening and responding to their customers. Creativity will come from all angles
of the structure, and if customers want something, the shorter structure will enable
new ideas and important customer needs to the top managers and CEO to allow
these changes to take place.
Aims and objectives
Aims of EA
Be bold - Go big | Take the right risks | Back our bets | Lead
Think Players First - Listen and respond | Deliver beyond their expectations | Build
lifetime players
Create Quality and Innovation - Deliver products and services that surpass
expectations | Be relentless about improving quality | Take creative risks
Act with Integrity - Do the right thing | Trust others and support their decisions | Be
transparent
Be Accountable - Deliver on commitments | Always do what we say | Play our
positions | Deliver and reward results
Learn to grow - Work hard, play hard | Develop yourself and others | Measure your
improvement | Share knowledge generously
Sector
Electronic Arts are in the ‘Video Game’ industry. The video game industry is involved
in the development, marketing, and distribution of video games. The industry
employs thousands worldwide. The industry generated $134.9 billion annually
worldwide in 2018, which self-describes the power and popularity of the industry.
The video game industry in 2020 has a worth of an estimated $159.3 billion. This is a
9.3% increase from 2019. Current forecasts are estimating the video game sector
will be worth $200 billion by 2023.
4
