Q2 2020 Earnings Call
Okay.
Good afternoon, My name is bringing D and they will be your conference operator today.
At this time I would like to welcome everyone to the electronic Arts Q2 fiscal 20 earnings Conference call Mr., Chris Evenden VP of Investor Relations you May begin your conference.
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Welcome to <unk> second quarter fiscal 2020 , adding school with me on the call today, Andrew Wolf said I'll see I am Blake Jorgensen, I'll see yard and see effort.
Please note that our FCC products at our earnings release are available at <unk> Dot com.
In addition, we have <unk> I think slides to accompany our prepared remarks.
Lastly, after the cool we will personal prepared remarks, an audio replay of this cool all financial model and the transcript.
With regards to Canada, our Q3 fiscal 2020 earnings call is scheduled for Thursday January just sat here 2020 .
This presentation at all comments include forward looking statements regarding future events at the future financial performance off the company actual events and results may differ materially from our expectations and we refer you to our most recent Form 10-Q for a discussion of risks that could cause actual results to differ materially from those discussed today I'd actually like also makes these things.
I talked I tried to 20, I'd 2019, and disclaims any duty to update them.
During this call the financial metrics with the exception of free cash flow will be presented on a GAAP basis. All comparisons made in the cost this quarter against the same period in the prior year that otherwise states.
Now I'll turn the call that actually [noise].
Thanks, Chris.
We continued a strong <unk> for 20 with an excellent second quarter I'll, let us EA sports titles are captivating, a growing global ply advice and deeper engagement in these titles and our ongoing live services fueled a continued momentum through Q2.
As a result, our revenue and earnings per share exceeded our expectations for Q2, we're raising our full year guidance today.
Electronic all three are focused on creating amazing new games and content offering lobs extended enhanced experience and reaching more players when and where they want to play Oh sure. A few highlights here, how we delivered against these focus areas during Q2.
First let's cover on new games EA sports is innovating for a growing audience of fans Madden NFL 20 is off to an outstanding stop growing year over year in player engagement units sold and ultimate team.
The excellent pool gameplay and first new experiences in franchise mode are delivering for our loyal fans well superstar expect is and they own your superstar Cairo mode are resonating with a broader football community with the launch that began earlier in the pre season and a second major beat at the NFL kick off weekend that brought more plays into the game with utilities.
Growth across the board in mind.
Unique flies was up 12% year over year in Q2 games played in franchise mode more than doubled to over 100 million in the same period and Madden Ultimate team plays a up nearly 20% year over year.
Madden competitive gaming season has kicked off as well a major tournament's are aligned to key moments in the NFL season, we have a groundbreaking virtual stadium rights partner and other major brands a partner with us throughout the Madden NFL 20 Championship series.
The innovation and fever, 20 is also deeply engaging things and bringing new plays into the franchise total plays in FY two up nearly 15% year over year in Q2 and with the addition of Volta Football Street suffer experience you to franchise flies have grown 7% year over year.
Enhancements to the coal gameplay and ultimate team are also reengaging more franchise veterans with unique place and FIFA ultimate team growing 22% over last year.
People applying more fee for than ever before we're total in guy matches up more than 30% year over year.
And as players continue to engage in the FIFA 20 experience an ultimate team. After 20 Global series is kicking off in November with millions that to compete in our unparalleled nine month worldwide E sports competition.
Last season more than 800 million minutes of FIFA is sports content will watch what sports is like out of that and others breaking new ground with us. This year, we're excited to reach and expanding audience with more bright content.
We also saw growth across our broader EA sports portfolio with innovations in NHL 20 delivery for hockey fans hockey Ultimate team grew year over year in Q2.
FIFA online and Korea had some of our strongest ever months on PC and we're also seeing growth in China.
If a mobile has been downloaded more than 250 million tons lock today. Following the launch of our lightest seasons that includes 650, new in game event. It was a very strong Q2 s EA sports and we're excited to build on that momentum throughout for 20.
Q2 also showed the strength of our ongoing live services in I picked legends, we continue to deepen our long term investment in the game and its community with each successive season of new content, we are building, adding to the experience and learning.
The first season in March we launched the Battle Pos.
And began the regular introduction of new legends in the second season in July we brought more content and not update right leagues and larger events.
The third season, which launched in October is our biggest yet with an entirely new map amazing events like the Halloween themed content in the game now and much more to come.
Weekly average player peaks in season, three out significantly above our season, two piece and we're continuing to bring new plays into the game I.
Hi, Thanks legend is a major long term franchise for us since launch improve significantly expanded the team working on the game and it continues to grow our pipeline of future content is packed with really fun experiences that will be delivered through upcoming seasons on a regular cadence of updates for the community.
With Yankees legends community now growing POS 70 million implies we're focused on expanding to mobile new platforms, and new geographies as well as launching and apex competitive gaming program that will shed details on soon.
The Sims four also continues to be an incredible long term lots of it with a growing audience monthly average plays are up more than 40% year over year in the Sims four and engagement across the franchise has led the seems to surpass $5 billion in lifetime styles.
Seems continues to be one of the great franchise in gaming and we have plans to bring new experiences to its amazing plays for a long time to come.
We're also reaching your milestones as we seek to bring great games and services to more players on more platforms. The launch of EA access on Playstation four signally grew our subscriber base through the course of Q2. We also announced this morning that applies to bring EA access to steam on PC, adding a fourth platform, where players will be able to connect and get.
The benefits and value of assets for Sun service.
This is a unique and exciting partnership with valve that will enable us to bring PC players in the steam and origin communities together, having more place connect throughout games whenever and wherever they want to play will be a continuing focus for us we look forward to sharing more announcements about other platforms in the coming months.
For holiday quarter of Fr 20, we're delivering great new games and content across our portfolio.
The irreverent you plants versus zombies battle for Naperville launch two weeks ago to price from fans and critics and we're looking for the holidays for this family friendly game.
In early November need for speed. He arrived for racing fans blending Street racing by day, an underground racing by not all with a deep customization that fans expect plays have been getting products through the new need for speed each Judy mobile App launched this summer with have already customize molded 7 million cars, which can be loaded straight into the.
Game launch.
Then on November 15 style was Jed I fall in order arrives worldwide. This game is coming to market at such an amazing time from the launch of Star Wars galaxies age at Disney theme parks. So the upcoming Dizzy plus series the main delorean to ongoing games like Galaxy of heroes, Battlefront too and the old Republic to the.
Culmination of the Skywalker saga in the upcoming film Star Wars. The rise of Skywalker. This is a year. Unlike any other for hundreds of millions of Star Wars fans out there.
The one fantasy that many of those fans have been telling us. They want is to experience. The journey of becoming a July I was set to deliver that with jet artful an order. The response team have been important at passion into creating this new game in partnership with Lucasfilm with characters Oldham you at a story that is now an authentic part of the Star Wars Universe.
It's going to be a thrilling adventure supply and with more than 140 million views to date of trials and video sort of game. The community is eager to jump into Star Wars jet I forward order in just a few more weeks [noise].
The holidays will also be a busy season for plays in a lot of services battlefield four plaza, we ought to jump into the expansive new Pacific data. A major addition that again that includes new factions maps weapons and vehicles starting to dates from now and an Opex legends out EA sports franchises the Sims four.
Anthem and Star Wars, Battlefront to our communities will all have new content and new experiences to dive into during the holiday quarter.
Looking further ahead I want to share a few thoughts in it for 21 and our plans for the continued growth of electronic Arts.
We reach a massive global audience applies without games today, and we have a core business fuel by Lob services that continues to grow next year, we will build on that with.
A full slate of new EA sports experiences, including new titles that we are adding to our exports portfolio new consoles are always an opportunity to drive more innovation in our EA sports games as our fans are eager to begin experiencing a new generation apply.
That will include our plans for Nbn lives with great support from the EPA and the MBS plays Association, we had been working on an innovative new direction for our game timed with the old style weekend and experience design around new wife applies to engage connect and create through basketball now with greater understanding of the new platforms and what they can power bringing.
Motion connection accessibility and play creatively the forefront we feel we can go so much further with the new design. So we've decided not to ship and be a lot game fytwenty. Instead, we're expanding our vision for EMEA alive and continue to work closely with our EMEA in MBK plays Association partners on this new project that will share more details on next.
Yes.
I live services will grow.
We'll continue to grow and enhance the experience in a major franchises were expanding our apex legends teams deliver our content plans revpar 21, and will reach new audiences through mobile and across Asia.
We have ongoing growth expectations for the Sims for when you expansions and own new ways to engage and grow the community.
Battlefield franchise and his community are also a major focus for us I will add new content and new ways to play battlefield five if what 21.
Targeting new innovation that will be unable by nexgen platforms and a growing installed base on the new consoles next battlefield battlefield game is set for 22.
Also plans for new experiences that we've not yet announced for next year, MUTA autos and new IP for multiple platforms, introducing new games will always be at our cool and we look forward to exciting plans with unexpected new titles in if why 21.
We will also be driving new opportunities connect with multiplies through expansion of our subscription services new platforms cloud gaming and more we're confident in the continued growth of our business at electronic out through for 20, 521 and beyond we have a big holiday quarter ahead of us and we're excited to continue a strong year.
Now I'll hand, it to a level of like thanks, Andrew the strong results this quarter illustrate the power of our focus on live services in our core franchises games are evolving and the way people play them is changing we had great launches for both FIFA and Madden and the quarter story is dominated by lives services that engage.
Players over extended periods of time live service strength and ultimate team the Sims for apex legends and FIFA online drove performance significantly above last year. Our report our results on a GAAP basis, then use our operational measure of net bookings to discuss the dynamics of our business.
Compare this quarter's results to historically reported non-GAAP measures. Please refer to the relevant tabs at our downloadable financial model.
He is net revenue was $1.348 billion above our guidance by $33 million operating expenses were $675 million $4 million lower than our guidance GAAP operating income was $268 million compared to an operating income of 258 million a year or.
Ago and resulted in an earnings per share of $2.89 29 cents better than our guidance as a reminder, $2. An 11 cents of the earnings were driven by the tax benefit we disclosed previously underlying profit was much stronger than we had expected driven by increased sales lower operating expenses and.
Richard Digital mix.
Operating cash flow for the quarter was $37 million up $163 million from last year. The increase was driven primarily by higher profit and faster collections operating cash flow for the trailing 12 months was $1.748 billion $290 million above last year.
Capital expenditures for the quarter were $27 million, resulting in a free cash flow of 10 million.
Our earnings slides for further cash flow information.
During the quarter, we also repurchased 3.3 million shares at a cost of $306 million, leaving 674 million available in our buyback program.
Our cash and short term investments at the ended the quarter were $4.9 billion.
Now I'd like to turn to the key drivers of our business this quarter.
Total net bookings for the quarter were 1.277 billion up $55 million on the prior year and $47 million above our guidance performance over guidance was driven by broad strength across our portfolio with notable growth in live services net bookings did that digital bookings were.
$790 million up 24% on a year ago period, and a new record for the second quarter driven by growth across numerous live service offerings as well as an increase in full game digital downloads digital net bookings represented 78% of our business on a trailing 12 month basis compared to 16.
9% in the prior year.
Looking at each of the components of this year's digital for this quarter is digital net bookings in turn live service net bookings were up 50% year on year to $493 million. Another new Q2 record. The increase was driven by apex legends ultimate team in Madden FIFA and NHL.
Well, the Sims four and FIFA online, partially offset by a tale of battlefield one DLC.
EA access is off to a great start on Playstation.
Ultimate team that bookings grew strongly this year year over year for both Madden and FIFA.
Even adjusting for the fact that Madden had an extra week in the quarter, both Madden and FIFA benefited from early access sales on Playstation through EA access both were up double double digit percentages over last year, notably given that we launched Volta football and fee for 20 and immediately became the number two mode in the.
Game behind only ultimate team weekly average users for FIFA Ultimate team still grew 15% year on year.
Mobile delivered net bookings of 122 million down 20% year on year driven by aging titles.
Segment outperformed our expectations driven by new content Star in Star Wars Galaxy of heroes.
For mobile China, FIFA online for mobile Madden mobile and Star Wars Galaxy of Heroes. All grew this quarter and subsequent to quarter end Star Wars Galaxy of heroes had its second biggest day ever.
Full game PC and console downloads generated net bookings of $175 million, 11% higher than last year. Another Q2 record.
The digital portion of Madden sales increased nine percentage points year on year to 51% FIFA launch just days before the ended the quarter, but based on the first three weeks of sales. It was about 34% digital up from 29% in the comparable period for FIFA 19.
Overall, 50% of our unit sales were digital rather than physical measured on X. box, one and Playstation four over the 12 months prior to September Thirtyth.
This compares to just 42% a year ago.
Turning to guidance our expectations for full year GAAP revenue is $5.41 billion and earnings per share of $9.57. As a reminder, four or $5.74 of this is driven by the tax benefit we disclosed previously.
We expect operating cash flow about 1.6 to $5.050 billion above our prior expectations. We continue to anticipate capital expenditures of around $125 million, which would deliver free cash flow of about 1.5 billion.
With regards to business drivers, we've raised our net bookings outlet for the year to 5.1 to 5 billion.
Life services remained strong and we continue to expect apex legends and the Sims to both delivered net bookings in the 300 to 400 million range, we're not passing through the full beat primarily as the FX headwinds has increased significantly and we pushed NB a live 20 and responds VR metal avanir.
Idle out of the year together these headwinds amount for two approximately $100 million against our original expectations for net bookings.
For the third quarter, we expect net revenue of $1.51 billion cost of revenue to be $482 million and operating expenses of $733 million.
Opex is up year on year, driven by the negative adjustment to variable compensation a year ago. This results in earnings per share of 92 cents for the third quarter using the diluted share count of 295 million shares.
We anticipate net bookings for the quarter to be $1.94 billion. This is up 21% year on year, driven by lives services, particularly apex legends and ultimate team and because we've had we have two launches in the quarter. This year versus one last year. We released the launch trailer for Star Wars, Just Star Wars, Jed I follow.
In order to this morning, and the early reaction appears extremely positive we're extremely excited to bring this action title to Star Wars fans on November 15th and continue to model sales in the range of six to 8 million units, we're modeling need for speed heat to perform similarly to previous titles in that franchise with unit sales of three to 4 million units.
Looking further ahead I'd like to expand on the view Andrew gave you into our fiscal 2021 slate, we're doubling down on live services combined with our core franchises were investing in apex leisure legends as our shooter in fiscal 2021.
We expect to drive growth in all of our major live services next year, including Ultimate team apex Legends FIFA online and the Sims and we continue to grow our subscription business. We believe apex growth will be driven in part by the continued expansion of content and by the launch of the service on new platforms geographies and on low.
Mobile.
As Andrew noted the Sims is now a 5 billion dollar franchise for us and it continues to grow driven by new content and new platforms mobile growth will be driven by the ramp of our new plants versus zombies title sports on mobile, including FIFA mobile in Asia, and apex lesions offset by aging titles elsewhere in our portfolio.
Yes.
With regards to additional product launches in fiscal 2021, we will add at least one more sports title to our annual slate will launch middle Avanir VR title will deliver some exciting re masters of fan favorites, including the command and conquer game, we've already disclosed and we have two new unannounced EA partners titles.
Coming from third party developers. In addition, we have other unannounced titles in the for 21 slate, we will give you specifics near the time.
Overall, we expect to drive growth in net bookings and underlying profits for fiscal 2021.
We will provide formal guidance on our Q4 call as usual growth in fiscal <unk> fiscal 2022 will be led by new and very exciting battlefield title.
I introduced the quarter by discussing how player preferences of change the way, we build and deliver games, we're investing in games that people play for longer and engage with much more deeply for example, the number of matches plate and FIFA per player has grown nearly 10% year on year, and we expect Volta to grow Thats still further.
Similarly, the time spent playing matches in Madden NFL is up by almost two or one third.
We expect this strategy and focus will continue to drive growth and profitability for the company through the remainder of this year and beyond.
With that I'll turn the call back to Andrew.
Thanks like.
It's a great time deposit interactive entertainment industry. The excitement is rather community for new experiences and innovation shows have games more than any other forms of entertainment can bring people together.
And that people from every corner of the will bring that passion to play connect compete and share through games, making that possible is what drives every single one of us at electronic up.
Amazing gains on the core about business growth, we have a powerful and diverse portfolio of games across genres fulfilling a breadth of motivations for applies from escape in style was gendrive full in order to competition through EA sports to social connection and battlefield, five and more creativity fuels, our future and ask studios have.
Many more new experiences in development.
The it motive new projects at Dallas, Viawest matters, and criterion, New mobile titles, New titles EA Sports you Indian third party develop a titles all that we'll continue to excite and grow our global audience.
Lot of services extended enhance the experiences of those games apex legends FIFA. The seems full galaxy of heroes and more about top franchises have throbbing global community spending hundreds of millions applies.
I've been pioneers in this space building on use of expertise and access to deliver continuously evolving experiences fueled by new content in game event and fan requested updates competitive gaming adds another dimension to the experience to play and watch and we're building that out strength with more of our franchise is set to into east.
It's in the coming months as players around the world play their favorite gains for longer periods of time robust lab services will continue to be a vod continued to be vital to the experience and a growth driver for our business.
Reaching more plans on more platforms is always a key driver for us new consoles cloud gaming and more platform choices will continue to expand the addressable audience. We're thrilled we bring the EA instinct communities together through the EA access subscription and we're working rigs more platforms in the near future as cloud again can you did it.
Well up through project Atlas, we at testing Gan streamed on public cloud infrastructure to ensure we are at the forefront of this developing space.
We're also very excited to continue working with our first party partners on the new platforms, where we'll be well position to deliver some outstanding new experiences beginning next year.
With some of the most talented creative and passionate teams in the industry. We are building momentum I focused on making great games and live services for multiplies around the world has never been stronger now like a here for your questions.
At this time she would like to ask your question. Please press Star then the number one on your telephone keypad.
I just started the number one we will pause for just a moment to compound the kuni roster.
Thanks.
And your first question comes from the line of Eric Sheridan would you be yes.
Thanks for taking the questions maybe two if I can on on the web services commentary just want to make sure. We're understanding the key messages on how much of the doubling down on live services has to do with existing franchises.
How we should think about the keep some investment.
Make against new franchises, where you see pockets the industry, where you could extend into live services and broaden out portfolio looking out over the next couple of years, that's number one and Andrew on your comment on EA Sports I'm, just curious what you mean by the central to broaden out the portfolio there as well we saw headline today about.
I see a impossible compensation of athlete. That's an area, where you guys have historically had success going back to football title from years ago, how should we thinking about the opportunity around broadening out sports as well. Thanks, so much guys.
So let me take a lesser one service one first Eric.
So we have invested heavily in live services over the past 10 years, obviously, we're seeing the benefits of that today with titles like.
Ultimate team across all our sports on the sense, obviously apex is a new lives service, which we will invest heavily in to try to continue to grow that business. We view that as annual shooter franchise, effectively and we're trying to build that as a 10 year business not a one year or two year business. So we're very excited about the roadmap that the.
Respond team has put in place.
Beyond that obviously FIFA online in Asia is critical we're now seeing as we move from FIFA online three to people online for in Korea rapid growth, we're still operating both platforms on why three add on load for in China and over time, we'll move to a single platform there but were we see.
Like we're out of the was on the bad comp from last year and so we're starting to see good growth there and we're looking at how do we extend live services across every single one of our title that can be successful or more successful than what we see on our sports titles and Sims in apex.
That includes titles like battlefield titles, the actual genre like anthem and you will continue to see improvements across that and we're excited about where that can go. It is how people want to play games. It is where we think we have a skill set that is different than many of the other game companies and we think we can continue to be very success.
Well there.
On on the fourth point there a number of sports games that we've worked on all developed a published over the years similar sports we are seeing strong resurgence and strong growth.
And we are investing back into its an area of key strength for us as a business and I would say sports teams have demonstrated an ability to to truly engage a global population of sports fans.
With respect to NC double play sports in general, Yes, we have been being in that business before as well.
We sold the news today as did you we had fed into the NGL polite working group.
That news today was was new to us we still digesting. It we would anticipate that there was still a number of things that would have to happen over the over the coming years before we would be able to get back into that business, but certainly we're watching closely.
Next question.
Your next question comes from the line of Michael Olson with Piper Jaffray.
Hey, good afternoon.
Talked a lot about what's coming in fiscal 2001, I thought it might just be helpful to summarize fiscal 21, and how you kind of comp incremental titles launching fiscal twentys. So just kind of rattling through it growth for apex legend.
The online in Asia will grow.
And that team for both men and grow Sam's I'm not sure. If you are implying growth there not a new sports title command and conquer and be a live gears of war VR two new partner titles and maybe a couple of other titles that you can't announce right now that that sound correct. There was there anything on Mr. Guiding correct, yes, now and we were employing growth first.
Comes as well we continue to grow that title every year for the since it was shipped what seven years ago and that we feel as that continues on they've got to really robust plan for continued growth.
And there maybe some other re masters that we do along the command and conquer line.
We just haven't announced yet but that we believe all that yields is pretty exciting fiscal 21 and effectively what we're doing is giving you some guidance on fiscal 2002, knowing that a battlefields coming then and remember the goal of battlefield for 22 is to really take advantage of a larger install.
All base of the new consoles, bringing out battlefield next year, where the new console basis Ferret fairly small doesn't really give justice to the potential the title and so thats part of our driver and moving the title into fiscal 2002, So think about it as multiyear growth model that we just tried to lay out for people.
And we're pretty excited about it.
Okay, and then just a follow up on that it sounds like you're implying apex margins will grow and then fill and kind of some of the whole that not having the battlefield will create I know, it's hard to quantify but kind of qualitatively how much of the growth in apex next year is dependent on getting the game approved in China, and having success of the title on mobile as well.
Yes, so we did it's hard to predict when you get approval in China. So we don't know so I would assume that apex China.
Console PC game is probably the tail end of the year, if not even the following year. We think we've got a faster pace on mobile globally ex China. So we would hope to see that end the year as well sometime during the year really depends on how long we keep it in soft launch, but we're obviously.
Only.
Including those as we think about growth, but the bulk of that growth is probably 22 versus 21 will really start to gains gain traction there.
Thank you.
Your next question comes from the line of Alexia, Alexia Quadrani with JP Morgan.
Thank you this is David on from Alexia.
Within your line services results is it possible to quantify at all the contribution.
From subscription in the quarter and maybe how should we think about the trajectory of subscription going forward just following the partnership we announced this morning. Thanks.
Yes, I mean subscription is I mean like services. So large that subscription is still a relatively small portion of that we are.
Around 5 million subscribers now and have grown much faster on the Sony platform than we did in the early days of the Microsoft platform. Obviously, there are more cancels out there now so that helps it but.
The Sony platforms grown well beyond our expectations and we're very excited and theyve been a great partner for us.
As Andrew mentioned, we're continuing to drive subscriptions across as many platforms. As we can we want to go where the gamers play and clearly that was the driver of valve.
The valve.
Steam approach, what we found is that subscribers engage more and spend more money at the end of the day.
Why it's such a great business model, they're very sticky they tend to stay in the subscriptions longer and.
Well, they're looking for great content and they find games they've never played before and then start to monetizing those games and Thats. The reason were so optimistic about it but it's still a relatively smaller portion of the overall business because.
Obviously, though in the quarter almost $500 million of revenue the big dominate or is there are apex and ultimate team.
And followed by the Sims and FIFA online.
In Asia, but.
It is it continues to be an important part of the overall Sun life services business.
Okay. Thank you.
Your next question comes from the line of Eric Handler with MKM partners.
Thank you very much and I appreciate all of the details you guys have given on the.
On the call. So far a couple of quick things, hoping you can help out with.
One thing that was not mentioned.
Was titanfall, three and has that been sort of integrated now into.
Apex legends is that still being looked at as a separate title.
It's certainly could be a separate title in the future worse, we really want to keep the team hyper focused on apex, because we see there's so much opportunity there but.
So I can't give you a sense of if and when it will come but we're still still at great. Brandon, We certainly won't forget about it down the road.
Okay and then two other quick follow ups when you talk about doubling down on live services for next year, you've obviously been focusing on line services for awhile, but is anything changing.
With regards to the amount of spending that you guys are doing or anything financially with the model.
As you do that as you double down on these lies services.
Yes, I think that there's really three core changes.
One is what what we're seeing fly is one apply and engage more again over the last 24 to 36 months or even a little longer than that you've seen us focus deeply on live service and drive engagement into our games.
And you saw that through last year, and we're seeing that pay off this year and so as we look forward, we're seeing plies events, even greater intention to spend more time into those gains and so this really is to on a broad changes one is just how we develop.
The coal features inside that game.
We're doubling down on those types of features that allow plays to fulfill those pull motivations that drive a lot of service social interaction competition self improvement creation, those things that really drive a lot service business and then we're doubling down on the teams.
In terms of development and marketing in terms, how we bring those things to market and what you've seen this year is a willingness for us to do things slightly differently. If you take what we did with Matt initiate we launched again early on and we hold that held another whole set of content for different audience and marketed that differently and toggle that differently release that.
Kickoff and we're seeing tremendous success as a result of that and so not only when we build a double down on the actual development of the feature set we're also going to be speaking and communicating in marketing content differently to game as across the board.
Part of it is changing the talent mix. So we're bringing more people that have live service expertise I think theres, probably known in the world that as better life service expertise than we do in sports, but you need to make sure you're bringing talent that can support a team like apex.
Support battlefield teams, so forth. So thats important because the account mix is very different and we've been successful recruiting some fabulous people into those teams will continue to focus on that.
Great. Thank you very much appreciate it.
Okay.
Your next question comes from the line of Stephen Ju with.
With credit Suisse.
Okay. Thank you so Andrew I'm, just wanted to dig in a little bit more in terms of decision, making process that went into battlefield.
Stepping a year here, so and so I wonder whether this is a conscientious decision to shift the direction of the franchise or is this more of a resource constraint decision.
And should we still be thinking about this franchise is something that is still a two year or maybe even a three year cycle release or maybe more like a perpetual service like what you may have been intending to do with.
Thanks.
Good question. So its don't have that resource constraints outside that upfront, but it wasn't very full full through decision for us and there was a few factors that came into play out in the first is that we still see a burgeoning opportunity with battlefield five and as I talked about in the prepared remarks, we're about to launch a whole new.
Neither of war with the Pacific data and the team is still really thinking about how they can continue to drive that service on a go forward basis. So we think there's opportunity still inside the battlefield five experience as it was built a device launch service from the beginning.
The second is we now effectively have an annualized shooter apex legends and we see tremendous growth opportunity that can continue to engage.
As we talked about in prepared remarks, now have a 70 million players and as Blake talked about we have opportunity to take that into other regions and other platforms and we think there's a tremendous growth opportunity on that and want to make sure that we give that the time.
Got it deserves and then third as we thought about building for the next battlefield battlefield has always been cutting edge, leading edge. Both in terms of visual fidelity, adding gameplay, adding multiplay apply and as the team really began working against that.
It became apparent to us that.
Launching into the next Gen platforms was going to offer tremendous opportunity for innovation, but we really wanted to give the installed base some opportunity to grow and believes that the in combination with the first two things I talked about lodging battlefield and fight 22 is a really strong move for us in presents us with an opportunity for strong to use of.
Growth in terms of the overall franchise direction.
I don't think you should read into these that dramatic change in franchise direction other than it will be driven around large service as of this as is the nature of out industry now it will be cutting edge. It will be high fidelity. It will be doing things in the context of multi play and social play and competition that battlefield at this point have not done.
And we do believe it will be a really really exciting title for 22.
Things Stephen is a lot of investors I don't think.
Fully appreciate the depth of our catalog business as Andrew mentioned is battlefield five we want to continue to have that as a critical part of our catalog.
You all might be surprised but we have sold over 33 million copies of Star Wars, Battlefront, one and battlefront two combined.
That's a huge tail for our business going forward and so we're very conscious as to how we think about staging.
When our games come out and I think people get used to the annual cadence of sports, which works really well in sports, but we want to be careful on some of these other franchises that we give them the long life that they deserve inside our business and can generate great returns for us over a long period of time.
Thank you.
Your next question comes from the line of Robert Berg with Berenberg.
Hi, Thanks, I'm really looking dig deeper into votes on some of the early trends you may be seeing that seek interested in two areas. I guess, the first is clearly you've seen X and ultimate team Capesize in the period, how much time.
Spending in votes.
Versus your expectations is it any any more or less I'm also interested in the appeal if any if some of the vanity items have you noticed particularly interesting customizing any thoughts on setting coins here.
A quick follow on question, if I can really strong.
Ultimate Cnpad growth, but.
In your opinion with any of its due to vote or just general underlying growth. Thanks.
There was a lot in there.
I will I'll do my best first we're very happy with Volta again, and what we've talked about over the years is our objective around Alfie the franchise more broadly is really to think about see for as a platform and how do we build features that attract new audiences to the game, we did that with that.
Journey with story mode for a number of years, we did that with the World Cup content last year, and we're doing that with volt to this year with express purpose of bringing new fans into the gain and reigniting the passions of lapse fans, who maybe not a flight feature for some time.
As a result of that fee as we talked about in the bread Remoxy bolsters. The second most plight mode in the game and so and games across the board engagement across the board is up and FIFA. So we're very very happy about that.
In terms of what impact that has an ultimate team. What we do continue we discover is the ultimate team as a mode with these core motivations of collection and competition and social interaction at the very cool often iweb plays ultimately find they spending most of that time and so even.
As we will apply it into the game around the journey, even as we will applies into the game around the World Cup content last year and even as we bring plays into the game around volt to this year, we do see a positive impact that has on ultimate team over time as players come together with their friends and engage in what is one of them.
As fun parts of the fee for experience and so our expectation is that it will continue to drive that growth that ultimate team. The all the work done an ultimate team in of itself drove growth, but the combination of that in bringing new fans through Volta.
Effectively drove.
Ultimate team performance you should expect that we'll continue to think about alpha franchise and our Madden franchise. In these why around building new modes that bring people in and helping them find their friends in the mode. They love than most.
Okay. Thanks.
Your next question comes from the line of drew Crum with Stifel.
Hey, guys. Good afternoon. So you guys have talked extensively on the audience metrics for a pack.
And you noted the weekly players were outperforming close to season, three launched versus Susan too.
Can you comment on monetization trends, you're seeing there maybe that gives you some conviction around growth and fiscal 21, and then I guess separately could you update us on your plans with Google stadia. Thanks.
Sure. So I'll start on the first one of than Andrew can talk about Google.
So I think the key as you're thinking as we're seeing positive monetization trends were excited about where it where it is going and that's why we reiterated where were but what our original guidance was.
The key with.
Apex as any live service is.
Test and learn test and learn so as Andrew described we are continuing to add new events in each season to try to understand the spending patterns at what people like to spend money on and how much they'll spend and will then tune those events overtime. So there's going to be holiday themed events like the Halloween event.
Thats going on now.
Going to be competitive style events, there are going to be gameplay style events and then events associated with new characters are as you saw in this season, a new map.
All of that is along the lines of continuing to try to grow and build the number of players. The weekly average users the frequency of play and the monetization that falls out of all those combined together.
And that there's a process that we've done over the last 11 years and ultimate team and I think we've gotten pretty good at it and we're pretty excited about how we're doing that with with.
Capex, so more to come but I think we're heading in a very positive path there.
On the stadia.
Okay on the on study no updates right now on study we've got some all things coming both in terms of our own test of a running as part of project Atlas and on the public infrastructure that were being very happy about and with some other cloud partners, who were launching some things and then after this in future.
Okay. Thanks.
Your next question comes from the line of Mario <unk> with Barclays.
Hey, guys couple of questions one off the fun and one on mobile so glad to hear that FIFA ultimate team bookings is still expected to grow double digits next year.
And you mentioned, both as a number two known but I don't believe you currently monetizing that mode. As all the cosmetic items can only be earned by plane mission spending money. So is there a possibility in the future.
Include a battle path or some friendly monetization mechanism and is known as well.
And then and then on mobile any overall thoughts on partnering with overseas companies like Tencent, North and east to help develop your mobile titles and would that be included in your bucket of two titles from third parties next year.
Yes.
So on Volta, Yes, we're seeing.
Strong engagement in.
The visual content and the aesthetic content.
We don't have a focus on the monetization of that content this year.
As we as we have done over the years. The first objective is to attract new implies I.
I think we've done that very well so far the second objective is to drive drive deeper engagement of that fly advice overtime and then typically once you put those two things together it ultimately drives monetization, but that's not that's not our focus this year.
And just a couple of clarifications on your second question. So we said double digit growth in the quarter.
For FIFA not for next year I don't know what we're doing for next year. We're very excited that we can continue to grow it. That's what we said, but we didn't give any sort of sizing on any of the products for next year.
I will say that the double digit growth is a healthy double digit growth I'm not talking about 11% here.
We're or 10%, we're talking about healthy double digit growth across both FIFA and Madden and we're very excited about the continuation of that.
And we but we were just reporting on that and in the quarter.
And in terms of the other two titles those our third party console PC titles, we were speaking of not mobile titles, but you should assume that obviously for.
Apex mobile in China, we would use a third party and I think as we've said, we're considering using a third party for apex mobile globally.
Because obviously there could be some ability to too.
I have some economies of scale there by using one partner maybe.
Great. Thank you.
Your next question comes from the line of Ryan Gee with Bank of America.
Hey, guys. Thanks for taking my questions two quick ones if I may.
If you look at revenue from package goods in full game downloads looks like that was down a little bit year over year.
Guys did report FIFA and Madden were up nicely into double digits. So can you just explained the disconnect between.
Sales of new games revenue being down and some of your new releases being up year over year was there any pressure on asps or was the catalog weaker and that's the first question.
Yes, so followed.
Yes, so full game downloads is actually up year over year, 11%.
So to 175 million from 157, a year ago.
The strength and that was driven by Madden and FIFA remember, there's only a few days and FIFA.
And remember as well FIFA, we did not ship Gen. Three FIFA. This year. The first year, we've stopped selling genthree FIFA. So you can imagine there was some downward pressure on gen. Three we also added PS four into the subscription and so you can imagine there was also some people playing.
FIFA through the subscription and soda still see growth with those factors is pretty impressive.
We are seeing obviously.
Some of the older titles, probably are dropping off even though they tend to sell well as full game downloads, but they're always an age on those so something like a.
FIFA 18 that someone might still buy as a full game download because they wanted the World Cup mode. You are seeing less of that but overall, we saw growth across all the core franchises led by FIFA Madden.
Okay. That's helpful. As it sounds like maybe is more helpful for us to look at subscriptions plus package goods revenue plus full game downloads revenue because people are shifting in and out of each bucket year over year. So maybe that's a better way to look at your business going forward.
Yes, I think the other thing to remember is.
We're now over 50% of front of full games being sold digitally.
I have to imagine that if you're a retailer out there you are buying less full games and historically the business was built on you sold in a huge amount of games and then those sold out over a long period of time anew oftentimes had to support that with marketing.
Our sales reserves that business has changed dramatically retailers are either buying less or maybe not even in business and that's because people are buying things digitally but that flattens the sales curve in some way for some of these games.
I think you'll see that across the entire industry not just not just with us.
Okay, Great and then just my second question is related to Dyson battlefield, so they're not going to have a title next year is it fair to assume that they will still have something for next year. As you think about the star Wars Battlefront franchise, if that could be some project for next year and why would any project that you you do have next year would you not.
I want that to benefit from the new console launches as you mentioned that battlefield snicks or would you might call. It will benefit from a larger installed base and why wouldn't you just hold titles out everything until fiscal 2002.
Yes, so I think thats a couple of things going on that one is we're not announcing anything else that das is doing in in specifics for them.
But you should imagine with a number of lots of supply that we continue to support those.
And Blake talked earlier about the ongoing strength of battlefront too and I referenced the ongoing strength of battlefield five.
As we think about.
Balancing the portfolio around titles launch next year and titles that we will get the greatest boost of light around what we have seen is a greater propensity for sports game flies to black across both generations of title and we've seen that lift and some of the things that we really want to do in the battlefield franchise as.
It relates to the new fidelity.
It will really show up well inside of a battlefield game, we'd like to have a deep instill vital so it really come down to balancing a whole range of different things across our portfolio, but we feel very good about the opportunity to grow the business next year and how to battlefield title and it's like 22 that will grow their well and deliver on what our fan expectations will be for battlefield game.
We'll next gen platforms.
I appreciate it thanks guys.
Your next question comes from the line of Michael Inc. with Goldman Sachs.
Hi, Thank you very much for the question and for the color for fiscal 2022, I just had two if I could on the first is just on Maddin could you comment a little bit about.
How Matt and compares to FIFA from.
Gauge ran 10 content and monetization perspective, and whether you see the opportunity you close the gap there in the next few years and second with rises Skywalker being the last Star Wars movie until 2022.
Can you talk about how the timing of theatrical content content affects your starwood strategy going forward if at all thank you.
So the Madam metrics.
Our actually very similar to the feet FIFA metrics with one exception that demanded metrics monetize better than FIFA, because it's primarily a us based sport.
And FIFA is very global and so you obviously have economic differences so the ARPU effectively as higher in the us, but the number of people who play ultimate team are very similar the number of people who spend and ultimate team are very similar and the timing of how people play relative to the sports season with similar.
The other thing that that that FIFA has a man doesn't as a fee for the longer season, right you get a full nine plus months, where you're not getting it that long of a season in madden, but we've done a good job of extending the events post the Super Bowl to try to keep people engaged around the combine and draft that all those things.
That transpire and we're stretching that engagement out and so but you know even with hockey we see similar patterns across the ultimate team. It's really at the end of the day. The revenue was driven by one the size of the game, obviously FIFA larger because it's a global game and too by the local economics around how.
Much people are willing to spend relative to their overall spend patterns.
The second question on the on the Star Wars piece, so while the rise of skywalk at is the lost in this particular films that.
Disney had talked about having extraordinarily robust plans around that franchise over time, what we talked about was demand to lorient coming with Disney plus the new movie.
And galaxies edge in theme parks and so our expectation is that in partnership with Disney We will get the benefit of the ongoing plans around the continued development.
And provision of great content experiences for Star Wars fans for many years to come.
Great. Thank you very much.
And we have time for one final question. Your question comes from the line of Mike Hickey with benchmark company.
And you right cool great quarter, guys. Thanks for taking my questions.
Yes, two last quarter blades.
Little bit more.
Granularity on.
Good players.
Nine weekly accuracy.
You could update that it sounds like Tyler just wanted to fund.
On your three to 400 million per year.
Let's move to reiterate it can you give us some perspective, where you can be within that range is sort of set the stage for growth for fiscal 2001 quick follow up.
I can't give you any more than the range, but I'd just remind people that three to 400 million as a small portion of 5.1 to 5 billion. So don't over index on it because if it was three quarter versus 3.75, 375, or 400, I don't think thats going to make or break here.
In terms of the user profile I think Andrew mentioned that was very similar weekly average users still in that eight to 10 million range, we're very happy with that that's extremely robust and.
One of the largest games that we've ever seen inside our portfolio and that continues on track.
It's a very engaged to commit community and you'll continue to see us add things that drive engagement like sports and obviously more content and we're we feel like it's tracking as we would it felt.
Good.
Second question.
As you sort of give us a perspective of 20 122 full school didn't assume from bio ware.
From Bioware.
Or star Wars acuity.
Star Wars related IP gains and development console PC over the next couple of years.
Well, we should just assume that like expire.
Bio wagon tag.
Any thoughts on that studio post on thumb.
Looking at feature releases. Thank you.
Yes, I mean, you should assume that Theres no dragon age.
After we've talked about it publicly that it's in the works it probably comes.
After fiscal 2002, but you know we typically don't give multiyear guidance. This early in the year or multiyear guidance period. So I don't want to start getting 23 guidance now that I've sort of hit on 22, but.
You should assume it's out there and plans are underway for that product as well as some other products or some other disney stuff that might drop into our star wars stuff that might drop into 22, or maybe even earlier, but more to come on that we're still highly engaged.
Around the Disney license believe it or not we are close to a $1 billion on Star Wars, the old Republic revenue from the start of its history. So.
You know if that business. It just keeps keeps on going and we like those types of businesses and we're going to continue to layer those in and clearly star Wars is part of that process.
Thanks, Brian .
Thank you everyone, we'll talk to everybody either between now and the end of next quarter or the end of next quarter.
This concludes today's conference call you may now disconnect.
Mm Hmm.