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EA Prepares For Worst-Case Scenario With League Lockouts

EA Prepares For Worst-Case Scenario With League Lockouts

May 4, 2011 | By Frank Cifaldi

The potential NFL and NBA season lockouts -- combined with the lack of either a World Cup-specific FIFA game or an NBA title -- add up to what may be a challenging year for EA Sports.

According to the company, these factors lead to what it is estimating as a "$250 million revenue challenge" in fiscal 2012.

"While still projecting strong profitability and a very good business in fiscal 12, we did note and would note that there's about a quarter of a billion dollar challenge that needs to be overcome in that business," said EA CEO John Riccitiello in a Gamasutra-attended conference call.

With the NFL in particular, EA is planning its business "conservatively," with a guidance that assumes the lockout will happen.

"We plan the business down about one third, $85, 90 million bucks, on the principal that there's a lock-out for the season," said Riccitiello. "That's a worst-case planning assumption, we expect it to do better if there's a season."

Riccitello did add that the company's partnership with the NFLPA "largely facilitates pocket protection" in a "downside scenario," meaning that its contract takes the possibility of a lockout into account.

The April 2010-released FIFA World Cup generated over $100 million in revenue for fiscal 2011, the company reported.

This adds significantly to the potential of unfavorable comps for its sports business in fiscal 2012, as a similar title will not be released in 2011. However, the yearly FIFA franchise title will continue as normal.

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