EA's dice roll with Battlefield Hardline pays off, results beat Wall Street

Electronic Arts' risky revamp of its shooting game Battlefield helped it clinch a strong close to its fiscal year.

The game maker took two big gambles with the popular franchise's newest installment, Hardline, which was released in March. It delayed the game from last fall, when it has historically competed head-to-head with market leader Activision's Call of Duty. But more dramatically, EA also changed its formula, moving players from the front lines of war to a setting in Los Angeles, where cops and robbers face off in the streets.

The game received generally mixed reviews, with aggregator Metacritic saying reviews gave it a 73 out of 100. (Metacritic is a part of CBS, which also owns CNET.) But the game still proved to be one of the biggest successes for EA in the last year. Hardline was the top-selling game in the US when it launched in March, according to industry tracker NPD. Combined with continued growth of the company's sales over the Internet for its annual sports games like the FIFA soccer series and Madden football games, EA reported fiscal fourth-quarter results Tuesday that were well past Wall Street estimates.

EA said it's pleased with the success so far, but mere sales aren't enough. Games need sustained popularity over months and even years to be truly successful these days. Like other large game makers in the industry, EA is transitioning away from games that are delivered as finished products burnt onto physical discs to online services largely delivered over the Internet. Game makers creating titles for smartphones and consoles alike now encourage customers to play games for months and years on end, spending real money on expanded storylines, new capabilities and other items.

"We have people playing FIFA, Madden, NHL all year long," Blake Jorgensen, EA's chief financial officer, said in an interview. "It's become a lifestyle more than just a game." EA says Battlefield 4, which came out in October 2013, still has 5 million daily players. By comparison, Activision said 3.5 million people were playing its highly anticipated space-age shooting game "Destiny" shortly after it was released last year.

Players increasingly buy their games not from retailers like Amazon, GameStop or BestBuy, but directly on PlayStation or Xbox game consoles, where they also spend money on additional storylines, multiplayer features and other add-ons.

Of EA's $4.3 billion in sales last year, after some accounting adjustments, a record $2.2 billion came from Internet sales both of full games and add-ons. Sales from EA's growing library of titles for smartphones and tablets also hit a new record, ringing up $524 million for the year.

The company is not without its challenges. EA reported that profit fell in its fourth quarter ended March 31, dropping 17 percent from the same time a year ago to $125 million. Sales dropped as well, down 2 percent to $896 million, due mostly to the delay of Battlefield Hardline. (The previous installment launched in October 2013.) EA has only just begun releasing its string of planned add-ons that will help the title accumulate more money over time.

Investors seem unfazed, especially considering EA's fiscal-year profit was up 50 percent to $806 million and sales jumped 26.3 percent to $4.3 billion. Shares of EA stock are up almost 5 percent in after-hours trading. The company's stock has more than doubled in the last year to around $60 a share and is approaching a 10-year high.

All eyes on Star Wars

For its upcoming year, EA is preparing for what could be one of its largest-ever game launches. On November 19, the company will release a much-anticipated sequel to the Star Wars Battlefront franchise, currently in development from the same studio that produces its Battlefield shooter series. The game offers players the ability to participate in the large-scale battles of the movies and books as commandos on the ground or pilots in the skies

One month after that game's release, the latest film installment, "Star Wars Episode VII: The Force Awakens," arrives in theaters. The timing is intentional, and so far it's working. Battlefront's first trailer video has earned nearly 17 million views on YouTube over the past two weeks. (The film's latest trailer, released at the same time, is coming up on 50 million). Like its newer titles, EA will treat Battlefront as a game that can be built out long after its release.

"The beauty of Star Wars is that there's almost unlimited content out there," Jorgensen said. "That's going to grow with the new Star Wars movie out in December."

EA executives also noted in a call with investors Tuesday that it may stop supporting older consoles, such as the Xbox 360 and PlayStation 3, with the release of Battlefront, which is confirmed only for newer game hardware. That has stalled the company's expectations for the title, which it projects will sell as many as 10 million copies.

Also on the company's docket for the upcoming year is a revival of its Need for Speed racing franchise for later this year and a sequel to the popular free-running action game Mirror's Edge for 2016.

When adjusted for items like stock-based compensation and deferred revenue, EA reported profit of 39 cents a share on sales of $896 million. That beat analysts' estimates of 25 cents a share on sales of $850.2 million.

Update at 3:30 p.m. PT: Added details from earnings call.