712515--5/23/2008--ELECTRONIC_ARTS

related topics

{product, market, service}

{property, intellectual, protect}

{customer, product, revenue}

{regulation, change, law}

{system, service, information}

{cost, operation, labor}

{operation, international, foreign}

{investment, property, distribution}

{acquisition, growth, future}

{personnel, key, retain}

{financial, litigation, operation}

{product, liability, claim}

{tax, income, asset}

{competitive, industry, competition}

Our business is highly dependent on the success and availability of video game hardware systems manufactured by third parties, as well as our ability to develop commercially successful products for these systems. Our industry is cyclical, driven by the transition from older video game hardware systems to new ones. As we continue to move through the current cycle, our operating results may be volatile and difficult to predict. If we do not consistently meet our product development schedules, our operating results will be adversely affected. Our business is intensely competitive and hit driven. If we do not continue to deliver hit products and services or if consumers prefer our competitors products or services over our own, our operating results could suffer. We have recently reorganized our business and operating structure. We may encounter a variety of issues in connection with the reorganization that could negatively impact our operating results, financial condition and ability to report our financial results. Technology changes rapidly in our business and if we fail to anticipate or successfully implement new technologies or the manner in which people play our games, the quality, timeliness and competitiveness of our products and services will suffer. The video game hardware manufacturers set the royalty rates and other fees that we must pay to publish games for their platforms, and therefore have significant influence on our costs. If one or more of these manufacturers change their fee structure, our profitability will be materially impacted. The video game hardware manufacturers are among our chief competitors and frequently control the manufacturing of and/or access to our video game products. If they do not approve our products, we will be unable to ship to our customers. If we are unable to maintain or acquire licenses to intellectual property, we will publish fewer hit titles and our revenue, profitability and cash flows will decline. Competition for these licenses may make them more expensive and reduce our profitability. Our business is subject to risks generally associated with the entertainment industry, any of which could significantly harm our operating results. If we do not continue to attract and retain key personnel, we will be unable to effectively conduct our business. Acquisitions, investments and other strategic transactions could result in operating difficulties, dilution to our investors and other negative consequences. If patent claims continue to be asserted against us, we may be unable to sustain our current business models or profits, or we may be precluded from pursuing new business opportunities in the future. Other intellectual property claims may increase our product costs or require us to cease selling affected products. From time to time we may become involved in other legal proceedings which could adversely affect us. Our business, our products and our distribution are subject to increasing regulation of content, consumer privacy, distribution and online hosting and delivery in the key territories in which we conduct business. If we do not successfully respond to these regulations, our business may suffer. If one or more of our titles were found to contain hidden, objectionable content, our business could suffer. If we ship defective products, our operating results could suffer. Our international net revenue is subject to currency fluctuations. Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition. Changes in our worldwide operating structure or the adoption of new products and distribution models could have adverse tax consequences. Our reported financial results could be adversely affected by changes in financial accounting standards or by the application of existing or future accounting standards to our business as it evolves.

Full 10-K form ▸

712515--5/23/2008--ELECTRONIC_ARTS_INC.