Gaming Industry: Managing and Financial Innovations Analysis

This report provides an analysis of managing and financial innovations within the gaming industry, focusing on Electronic Arts' FIFA franchise. It covers background information, cost analysis using consolidated cash flow statements, and forecasting game prospects based on income statements fr...Read More

Running head: MANAGING AND FINANCIAL INNOVATIONS
Managing and Financial Innovations
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Table of Contents
Introduction......................................................................................................................................2
Discussions......................................................................................................................................2
Describing the Game, along with background Information........................................................2
Describing the cost analysis.........................................................................................................3
Forecasting Game prospect according to the Income Statement.................................................3
Analytical Evaluation..................................................................................................................4
Recommendations............................................................................................................................4
Reference.........................................................................................................................................6

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Introduction
It can be easily inferred that video gaming industry hails itself as one of the fastest
growing across software industry. Gaming engines partnering with the software developers are
inferred as one of the major activity in the present era of gaming business. Moreover, some of
the major contributions of the partners may be clearly inferred with developers of the software,
big cats in the technology and also music composers to some extent (Cotta and Leonardo, et al.).
The significant nature of the opportunities for the gamers needs to be inferred in terms of the
increasing nature of the competition from the other developers. The present discussion relates to
FIFA. The unique aspect of the gameplay can be ascertained with the official team/player
license, graphics and uniqueness in the gameplay. However, the company faces a lot of challenge
from the other genres of game in this category such as PES by Konami and Dream League
Soccer (Lobel and Adam et al.).
Discussions
Describing the Game, along with background Information
FIFA is depicted as one of the flagship gaming titles released every year by Electronic
Arts (EA Sports). The first release of the game was seen in 1993, which consisted of the official
license from the game. In terms of the recent instalments of FIFA 18 and FIFA 19, it has
considered various types of the licensed teams like Serie B, Spanish La Liga and German
Bundesliga. The USP of the game lies in the life like experience for the various types reasons
such as graphics, game pad rumble effect and commentary. The recent instalment of the title
supports native 4K resolution, official league, replication of the characters along with featuring
of online gameplay with FIFA Ultimate Team (FUT). Furthermore, the regular players of the

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game are seen to make use of the different type of the skill moves in the game like real field.
Some of the most notable moves featured in the game are depicted in terms of juggling, flick ups
and fake shot (Breuer et al.).
Describing the cost analysis
The interpretation of the cost has been done with evaluating the consolidated statement of
cash flows. Moreover, the use of the investing activities can be directly considered with the
investing activities which has increased in the last three years. The increase in the operating
actives can be seen with $ 1,692 in 2018 and $ 1,578 in 2017. Moreover, the company has taken
proactive initiatives to improve the financial position. The present rise in the net cash from the
investing activities can be clearly inferred in terms of $ (484) in 2016, to $ (759) in 2017 to $
622 in 2018. However, in terms of concerns of the company the tax authorities have withheld the
employees from developing of the game therefore the company needs to bear higher prices to
renew this permission (Rehbein, Florian et al).
Forecasting Game prospect according to the Income Statement
The financial analysis of the game has been conducted using the income statement of the
company and the same was analyzed for the last three years. The trend period taken for the
analysis was the year 2016, 2017 & 2018 and the performance of the company in the trend
period was analyzed for forecasting the same regarding the future prospect of the company. The
growth of the operating profitability for the company from the year 2016-2018 was around 20%.
The rise in the net profitability for the company on the same ground rose by around 10% from
the year 2017-18. Sustainability in the income and the growing profitability of the comp0any are
some of the crucial factors that were identified while evaluating the income statement of the
company (Vogel and Harold). The sustainability in the income statement of the company with

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rising profitability is expected in the future trend period forecasted for the company (Lisa et al).
The operating expenses of the game is expected to remain sustainable as per the trend growth
rate shown. The revenue for the game is forecasted to be increasing because of the adoption and
availability of the game in various kind and categories. The revenue sources for the company
game will be primarily because of the various kind of services provided by the company and the
increasing market share of the company. The same would help the company grow its operating
profit and in turn the net profitability for the company.
Analytical Evaluation
The analytical evaluation of the financials for the company was done, which included
analyzing the profitability ratio for the company and the sustainability of the operating profit for
the company. The net profitability ratio for the company increased by about 4% from the year
2017-18. However, if we look at some of the key ratio, which explains the return, generated for
the shareholders that is the return on equity and return on assets for the company has not shown a
much favored growth rate for the company. The current ratio and the quick ratio for the company
has improved for the company, which shows that the company liquidity position in terms of
meeting its current obligations stand out better (Kang and Raehyouk). The efficiency ratio for the
game has not shown a much improvement from the year 2017-18. The asset turnover ratio and
the average receivable turnover ratio for the company has decreased from the year 2017-18.
However, the company is expected to perform better in the future prospect as the market share of
the company increase and the sources of revenue generation by the company is expected to
increase seeing the various kind of offered products and services (Tim et al).

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Recommendations
The financial performance of the company has been stable and increasing but the
efficiency of the company in terms of the utilization of the total assets and capital and is
expected to increase as the operating income of the company increases. The increasing market
share and introduction of various kinds of products and services by the company are some of the
crucial factors that will determine the future prospect and growth of the company.

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Reference
Vogel, Harold L. Entertainment industry economics: A guide for financial analysis. Cambridge
University Press, 2014.
Uechi, Lisa, et al. "Sector dominance ratio analysis of financial markets." Physica A: Statistical
Mechanics and its Applications 421 (2015): 488-509.
Kang, Raehyouk. "DEALING WITH SPORTS DISPUTES IN THE OLYMPICS: PREVIOUS
CASES AND FUTURE PROSPECTS." International Sports Law Review Pandektis 11 (2015).
Rees, Tim, et al. "A social identity approach to sport psychology: Principles, practice, and
prospects." Sports medicine 45.8 (2015): 1083-1096.
Lobel, Adam, et al. "Gaining a Competitive Edge: Longitudinal Associations Between
Children’s Competitive Video Game Playing, Conduct Problems, Peer Relations, and Prosocial
Behavior." (2017).
Cotta, Leonardo, et al. "Using fifa soccer video game data for soccer analytics." Workshop on
Large Scale Sports Analytics. 2016.
Breuer, Johannes, Michael Scharkow, and Thorsten Quandt. "Sore losers? A reexamination of
the frustration–aggression hypothesis for colocated video game play." Psychology of Popular
Media Culture 4.2 (2015): 126.
Rehbein, Florian, et al. "Video game playing in the general adult population of Germany: Can
higher gaming time of males be explained by gender specific genre preferences?." Computers in
Human Behavior 55 (2016): 729-735.

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