EA on the year ahead

"We are disappointed with our holiday quarter and our FY09 performance. These results point to three conclusions, which are incorporated into our strategies going forward. In short, we need to start earlier and focus more.

"Second, in this environment, we believe our operating expenses are too high and need to come down. Third, the Nintendo Wii is even more important than one year ago. It is a clear leader in this cycle. In calendar year ’08, we were the number three publisher in this platform in both North America and in Europe, but we need to move further up on the charts.

Drive hits on our core

"We plan to match strong quality with strong marketing, particularly for our top 10 titles. Operationally, we expect to improve the way we go to market with our titles, starting earlier to create positive buzz and demand. Consistent with this strategy, we have made a decision to move titles including the Sims 3, Godfather 2, and Dragon Age for the PC from Q4 FY09 to FY10.

"With Godfather 2, we are moving it to Q1 FY10, providing a better launch window and more time for longer lead marketing. For Dragon Age, we are moving the PC launch to Q3 FY10 to coincide with the console launch giving us the opportunity to make a bigger splash…

Aggressively manage expenses

"As you know, we have been working to reduce our cost base given the uncertain macro environment, changing industry trends and our recent performance. We are planning FY10 operating expenses at approximately $2.1 billion, which is a $500 million decrease from previously expected FY10 run rate. This is a substantial expense reduction and is the consequence of tough calls on headcount, SKU count, facilities, variable spend, and CapEx. Eric will discuss the cost reductions in more detail.

Capitalise on Wii progress

"We have a spectacular slate for FY10, which will be supported by a Wii focused advertising campaign. We are starting FY10 strong with Tiger Woods PGA tour, EA Sports Active, EA Sports Tennis, Boom Blox 2, Harry Potter, and MySims Racing; all in Q1, and it gets better each quarter.

"We also want to drive our content direct-to-consumer. This is a strategic initiative that is very important for the long term. We expect over $500 million in direct-to-digital revenue in fiscal year ’10."

Source: SeekingAlpha

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