Digital growth offset by decline in physical sales

EA posts Q1 revenue of $955 million

EA revealed its earnings for Q1 2013 today, with revenue dropping from $999 to $955 million compared with the same period last year.

The earnings call was dominated by a discussion of the company’s plan to transition into a digital only business model, focusing on free-to-play and subscription services.

The company said that while margins for physical goods were around sixty or seventy percent, those for digital could be as high as ninety percent.

This difference has been key in keeping the company afloat in the changing market, but growth in digital has not yet been enough to offset the troubling decline in physical goods.

Distribution alone saw a decline of $100 million from the same period last year, and physical publishing fell from $647 to $592 million.

The company is excited about its progress in the digital market, posting revenue in that sector of $342 million; a growth of over $100 million year over year.

Though earnings for the year are expected to be down, the company does not feel that this will meaningfully effect overall guidance, due to lower operating costs and a tax rate identical to last year.

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