Recommendations for Electronic Arts

625 Words3 Pages
1. I do not believe that my organization is particularly sensitive to the business cycle. There is some evidence to support this contention. The best year in terms of revenue for EA was 2009, which was in the depths of the recession. Also, the nature of the customer needs to be taken into consideration. While video games have a broad customer base, customers are not particularly price sensitive. Demand for the industry overall might be affected by the business cycle, particularly upswings in unemployment, but this can be overcome with hit games. Other electronics industries have demonstrated that a hit entertainment or electronics product can overcome the business cycle (Apple, Google, for example). EA is therefore subject as much to its own ability to create hit products and manage its costs than it is to the business cycle. EA's financial performance is far from stable, but the product life cycle is very important in video games, and is much shorter than the business cycle, so I feel that the product life cycle has more relevance to the company's financial performance than the business cycle. The flip side of this argument is that EA did see its revenues decline in 2010 and 2011. This could be evidence that the company is susceptible to the business cycle, but lags the GDP in performance. That is possible, because the company has a diversified portfolio of games. However, I believe that the (very) short product life cycle lends itself to a high level of fluctuation in
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