An Inside Look at EA’s Social Games Business as Zynga’s IPO Awaits

As part of Electronic Arts’ first-quarter earnings report today, it shed some light on the company’s social games business on Facebook, which is both up and down at the same time.

The videogame maker, which does not break out revenues for Playfish, the social games division it acquired two years ago, said revenues are starting to ramp, but that the number of users playing its games are flat or down.

In a response to a question about Playfish revenue, EA’s CEO John Ricitiello said during the company’s conference call today, “I would say it’s a one-win and one-loss situation, which we are trying to turn into a two-win category in the next six months. We have not seen the growth in DAUs (daily active users) that we would have liked to see with the last couple releases.”

The company said monthly active users from its social games totaled 32 million, which is far lower than the 52 million it registered in the year-ago period.

Some of that churn has to do with a change in Facebook’s policies that turned off the ability to market games to user’s friends, but even still, EA has been aggressive at rolling out new games, leveraging some of its core intellectual property, such as Monopoly and MLB Superstars.

“DAUs are flat,” Ricitiello said. “But we roughly doubled our revenues. We are moving revenue up sharply. That’s a good thing. … We’ve learned the right lessons around monetization.”

EA Sports President Peter Moore also joined the call today to talk about its three sports titles on Facebook, consisting of Madden, FIFA and World Series Superstars games. He said the average revenue among paying users for those titles has hit $56 in accumulated spending, which is higher than revenue the company receives from players on consoles.

However, Moore acknowledged that the percentage of paying users is in the low single digits.

While this information is not exactly earth-shattering, it provides a small look into the company’s business as it tries to evolve from shipping games in cellophane to pushing out titles to multiple digital platforms, spanning PC, social and mobile.

Plus, the company’s investments in social will grow as it integrates the acquisition of PopCap games into its business. Ricitiello said he sees complementary aspects of the two company’s businesses. While PopCap games has been better at gaining users on Facebook, EA has been better at monetizing them.

“We think there will be strong synergies with their IP,” he said.

Going forward, it will also be important to compare EA’s performance to Zynga, which has registered for an initial public offering.

But there’s not a lot of overlap in the way the two are reporting results. While Zynga discloses its revenues, it does not report how individual titles are performing or the average revenue per paying user. It also admits that a very small percentage of its users pay for items inside its games, but doesn’t provide an exact figure.

Here are two slides from EA’s financial presentation today that break down its digital revenue by platform and by type.

On the first slide, social games revenues are part of PC revenues (in red), which shows it was the fastest-growing segment during the first quarter compared to the same period a year earlier.

On the second slide, social revenues are part of the Free-to-Play category (in purple), which shows that it was also the fastest growing segment in the first quarter, jumping 32 percent over the same period a year earlier.


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