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This excerpt taken from the ERTS 10-K filed May 30, 2007. Development
of Our Games
The console, handheld, PC and online games we publish are
developed primarily by our EA Studios, while the games we offer
for cellular handsets are developed primarily by third parties.
In addition, through our EA Partners group, we team with other
game development companies to assist them with the development
of games on our behalf. For the fiscal years ended
March 31, 2007, 2006 and 2005, research and development
expenses were $1,041 million, $758 million and
$633 million, respectively.
Table of Contents
EA
Studios
We develop packaged goods games internally at our development
and production studios located in the United States, Canada,
England, Sweden, Germany, Singapore and China. We invest in the
creation of software tools to more efficiently develop games for
multiple platforms. We also make investments in facilities and
equipment that allow us to create and edit video and audio
recordings that are used in our games. Employees whom we call
“executive producers” are responsible for overseeing
the development of one or more products or
“franchises” (a series of sequeled or related
products). We also engage third parties to develop games on our
behalf at their own development and production studios.
Following our acquisition of JAMDAT Mobile Inc. in February
2006, we merged our existing cellular handset software game
development and publishing business into JAMDAT’s to
establish our EA Mobile business. We engage third parties to
develop games for cellular handsets on our behalf at their own
development and production studios and, to a lesser extent, we
develop cellular handset games internally at our development and
production studios located in the United States, Canada,
England, Romania and India.
We develop online games and content internally at our
development and production studios located in the United States,
Canada and Singapore. In fiscal 2007, we acquired Mythic
Entertainment, Inc., a developer and publisher of massively
multiplayer online role-playing games. We also engage third
parties to develop online games on our behalf at their own
development and production studios.
In fiscal 2007, we generated approximately 65 percent of
our net revenue from games developed by our EA Studios that were
initially released during the year, as compared to approximately
73 percent in fiscal 2006. Excluding titles developed for
cellular handsets, during fiscal 2007 we released 32 EA Studio
titles compared to 31 EA Studio titles in fiscal 2006. In fiscal
2007, we released over 190,000 stock keeping units, or SKUs (a
version of a title designed for play on a particular platform),
for cellular handsets.
Co-publishing,
Distribution and Third Party Development
Through our EA Partners group, we team with other game
development companies to assist with the development of their
own interactive software games, which we then publish, market
and distribute. We refer to these types of arrangements as
“co-publishing”. For example, in fiscal 2007, we
signed a co-publishing agreement with NAMCO BANDAI Games America
for Hellgate:
Londontm,
which is being developed by Flagship Studios.
We also distribute interactive software games that are developed
and published by other companies. An example of one of our
recent distribution products is
Half-Life®
2: Episode One, which was developed and published by
Valve and distributed worldwide by us.
We also engage third parties to develop games on our behalf.
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