Earnings Call Transcript - EA Q4 2023

Operator, Operator

Good afternoon. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Electronic Arts Fourth Quarter and Fiscal Year-end 2023 Conference Call. I would now like to turn the conference over to Mr. Stuart Canfield, Senior Vice President, Finance and Investor Relations. Please go ahead.

Stuart Canfield, Senior Vice President, Finance and Investor Relations

Thank you. Welcome to EA's Fourth Quarter and Fiscal Year-end 2023 Earnings Call. With me today are Andrew Wilson, our CEO; and Chris Suh, our CFO; and Laura Miele, our COO. Please note that our SEC filings and our earnings release are available at ir.ea.com. In addition, we have posted detailed earnings slides to accompany our prepared remarks. Lastly, after the call, we'll post our prepared remarks, an audio replay of this call and a transcript. With regards to our calendar, our first quarter fiscal 2024 earnings call is scheduled for Tuesday, August 1. As a reminder, we post a schedule of upcoming earnings calls for the fiscal year on our IR website. This presentation and our comments include forward-looking statements regarding future events and the future financial performance of the company. Actual events and results may differ materially from our expectations. We refer you to our most recent Form 10-Q for a discussion of risks that could cause actual results to differ materially from those discussed today. Electronic Arts makes these statements as of today, May 9, 2023, and disclaims any duty to update them. During this call, the financial metrics, with the exception of free cash flow, will be presented on a GAAP basis. All comparisons made in the course of this call are against the same period in the prior year, unless otherwise stated. Now I'll turn the call over to Andrew.

Andrew Wilson, CEO

Thanks, Stuart. I hope all of you are well. I want to start by sharing how inspired and proud I am of our teams. Against macro uncertainty and constant change, we navigated the year with resilience and determination. Throughout fiscal year 2023, we showed the strength of our business, delivered for our players, and lived up to the promise of our values. To every EA employee, thank you. Over the fiscal year, we executed across our business, delivering high-quality games, launching 7 new releases, and providing over 450 content updates across 51 titles. Consumer appetite for interactive entertainment experiences is at an all-time high. And with our player network expanding to nearly 700 million, we delivered record engagement across some of our biggest franchises. EA is leading the future of interactive entertainment in a dynamic industry where new audiences, new technology, and new media trends are reshaping the world around us. Consumption of sports and entertainment is accelerating, and media trends are evolving. We see these transformations as immense opportunities to do more amazing things for our people and our players. As we look to the future, we're focused on delivering against 3 key strategies: building games and experiences that entertain massive online communities, creating blockbuster interactive storytelling, and amplifying the power of community in and around our games with social and creative tools. Executing these strategies across the modalities of play, watch, create, and connect will lay the foundation for long-term growth as we write the next great chapter of EA's story. Fiscal year 2023 was an amazing year for EA SPORTS FIFA, with the entire ecosystem producing incredible results. Console, mobile, and PC, both premium and free-to-play, delivered double-digit growth in net bookings, and FIFA 23 became the best-selling title in franchise history. Our interactive experiences are at the heart of global football culture and fandom and are a testament to a strategy sharpened by 30 years of passion, creativity, and innovation. Fiscal year 2024 stands to be another important year for EA SPORTS. We will build on the massive momentum in our global football ecosystem, delivering an expanded enhanced experience for fans, EA SPORTS FC. In April, we unveiled the brand identity and vision for EA SPORTS FC. By every measure, this was the biggest brand moment ever created at EA, reaching billions of potential players, generating thousands of media hits within days and inspiring record positive sentiment amongst our players with the support of hundreds of partners, athletes, leagues, federations, and clubs. With EA SPORTS FC, we are building a fan-first future for global football, and we cannot wait to share more in July. Already, the world's permanent American football experience, Madden NFL, delivered an extraordinary amount of content in and around the game in fiscal year 2023, driving deep engagement and becoming the best-selling title in this franchise's history on console and PC. Madden NFL 24 will build on this excitement, offering even more fun and immersive gameplay. Our fourth quarter saw a resurgence in Apex Legends performance. Season 16, powered by massive game enhancements like a new class system, transformed the way core Legends played. Our strong community of players responded favorably, lifting peak engagement more than 20% from the previous season. The resilience of Apex Legends reinforces its unique position as an IP with the power to consistently entertain players as they play, watch, and compete in an evolving world. Throughout fiscal year 2023, Apex entertained an average of 20 million monthly active users. This player loyalty is fueled by responsibility to continuously expand and improve the player experience. No other game in the industry celebrates creativity and individuality quite like The Sims. This diverse and passionate community has fueled imagination and championed self-expression since its launch in 2014, growing to over 70 million players worldwide and counting. Our talented team at Maxis Studios is using the power of creation and connection to shape culture, developing new experiences for The Sims 4 to take entertainment to unimaginable heights. To continually inspire the world to play, we are focused on blockbuster storytelling. Our history and leadership of bringing together culture-defining IP with interactive entertainment creates incredible opportunities to build an unrivaled portfolio bolstered by powerful collaborations. These are fundamental ways to bring more players into our global network through the lasting power that only blockbusters can deliver. Just 11 days ago, we delivered on this priority with the launch of Star Wars Jedi: Survivor. This incredible game has received widespread positive reviews, earned an 86 Metacritic score on console, and has been called a Game of the Year contender by multiple press outlets. Our dev teams are working with the community around some high-end PC specs. And beyond this, it has been a strong launch. Within the first few weeks, millions of players have joined Cal Kestis and BD-1 in a rebellion against the empire. Star Wars Jedi: Survivor is storytelling at its finest, which is central to the game's success and to our creative collaboration with The Walt Disney Company and Lucasfilm. The game is pure blockbuster entertainment, and fans have embraced the story of our Jedi games as a central part of the Star Wars saga, demonstrating how great interactive entertainment can grow and deepen the fandom of an incredibly powerful IP universe. Games are the social networks of the future. To amplify the power of community, we are innovating across a set of social and creative tools in and around our games. Our strategy is to help players make new friends, build their social network, and create community. These in-game social experiences were rolled out in FIFA 23. Among players that are interacting with a new feature set, engagement increased over 150%. Our data shows these innovations are driving results in our business and confirming what we know to be true: having more friends and building stronger friendships in our network leads to more time spent playing and connecting. As a cornerstone of our priorities for growth, we will continue to implement these tools across our portfolio. With a strong close to fiscal year 2023, we are executing on our core strategies, and our focused investments are positioned to drive results across our content and services pipeline. We remain committed to capturing our biggest opportunities and delivering long-term value in our business by doing more amazing things for our players and communities. Now I hand the call over to Chris to provide additional details on our business.

Christopher Suh, CFO

Thanks, Andrew. And hello, everyone. Our fiscal year 2023 results again demonstrated the fundamental strength of our portfolio, the resiliency of our live services business model, and our ability to execute in a disciplined manner. We again outgrew an uneven market, took decisive actions to sharpen our focus, and finished the year with a very strong fourth quarter performance. Our fiscal year was highlighted by significant milestones across our portfolio. In the 6 months since launch, EA SPORTS FIFA 23 has surpassed lifetime sales of EA SPORTS FIFA 22. Apex Legends continued to engage players around the world, and following our decision to make the base game free to enter in October, The Sims hit historic engagement highs with tens of millions of new players in the community. Throughout the year, we continued to take deliberate actions to focus our company and align our business more closely with the strategic priorities that Andrew outlined, culminating with the actions we announced in late March to rationalize our games portfolio and optimize our real estate footprint. As a result, in the fourth quarter, we recognized a charge of $155 million, with the remaining charges to be recognized during the first half of fiscal 2024. For the fourth quarter, net bookings were $1.9 billion, up 11% or 15% in constant currency. Our results exceeded our expectations and reached a new fourth quarter high, driven by a record live services performance and strength in full game. EA SPORTS FIFA significantly outperformed as net bookings grew 31% year-over-year or up 37% in constant currency. Apex Legends also delivered a stronger quarter than anticipated as players returned for Season 16 in our fourth anniversary collection event. Our live services net bookings were $1.6 billion, up 9% or 13% in constant currency, significantly outperforming our expectations as EA SPORTS FIFA live services delivered a record quarter. FIFA Ultimate Team net bookings grew 20% year-over-year or up 26% in constant currency and saw all-time high engagement. FIFA Online 4 was up 62% or 71% in constant currency, and FIFA Mobile grew triple digits year-over-year and reached its first $100 million net bookings quarter. Apex Legends saw improved performance following a competitive third quarter, rebounding to a low single-digit year-over-year growth quarter in constant currency. The Sims 4 exceeded expectations as a new expansion pack and free base game updates resonated with the growing community. Our mobile business, excluding the strong FIFA mobile results, stabilized and delivered in line with our expectations. Our strategy is focused on enhancing player experiences by connecting our largest brands across platforms, delivering blockbuster mobile experiences, and optimizing our portfolio for profitable long-term growth. We delivered fourth quarter net revenue of $1.9 billion, up 3% year-over-year. Operating expenses were up 5%, excluding our fourth quarter restructuring charge. Our people costs increased as we continue to invest behind our portfolio, and we also saw higher marketing spend to support new releases. These increases were partially offset by prudent management of other variable spends. Now let me talk about our full year performance. Our net bookings were $7.3 billion, down 2% or up 1% in constant currency, outperforming uneven market conditions and industry headwinds in mobile. Our net revenue was $7.4 billion for the year, and diluted EPS was $2.88. We generated $1.6 billion in operating cash flow and returned over $1.5 billion to shareholders. Now let me turn to the outlook. Our fiscal year 2024 outlook reflects many of the trends we saw in fiscal year 2023. We expect engagement across the portfolio to remain very healthy, and our highly recurring live services business to show great resilience again. We continue to operate in a competitive market with changing macro conditions. As such, we will continue to be focused, deliberate, and disciplined as we execute against our strategic priorities. For FX, if rates remain unchanged, we expect a headwind of nearly 2 points for net bookings and 6 points for underlying profit growth, net of hedges relative to last year. We expect fiscal 2024 net bookings to be $7.3 billion to $7.7 billion, roughly flat to up 5% year-over-year or up 1% to 7% in constant currency, built on a strong foundation of our evergreen live services, growth in our massive online communities, the introduction of EA SPORTS FC, and blockbuster story points through Star Wars Jedi: Survivor. We expect EA SPORTS FC to deliver low single-digit net bookings growth, building on its momentum growing again on top of a record fiscal year 2023. We expect cost of revenue to be $1.7 billion to $1.8 billion, reflecting gross margin expansion, driven by a mix of revenue across royalty-bearing licenses, platform, and digital. We expect operating expenses to be $4.3 billion to $4.4 billion with continued focused investments in our business to drive long-term growth. As a result, we expect underlying profitability to grow faster than net bookings. We expect operating cash flow of $1.7 billion to $1.9 billion and capital expenditures of around $275 million, which would deliver free cash flow of about $1.4 billion to $1.6 billion. The business continues to be a strong generator of cash. We expect to continue to repurchase stock under our current authorization, which expires in November 2024. We expect fiscal 2024 net revenue to be $7.3 billion to $7.7 billion and earnings per share of $3.30 to $3.81. Now moving to our outlook for the first quarter. We anticipate net bookings for Q1 to be $1.5 billion to $1.6 billion, up 15% to 23% or up 19% to 27% in constant currency, primarily driven by full game sales of Star Wars Jedi: Survivor. For the first quarter, we expect net revenue of $1.8 billion to $1.9 billion, cost of revenue to be $350 million to $370 million, and operating expenses of approximately $1.07 billion to $1.09 billion, resulting in earnings per share of $0.98 to $1.14. Our business is in a strong position propelled by strong brands, massive online communities, blockbuster storytelling, and evergreen live services. Our efforts over the last year to align our teams more closely with our key priorities have led to a more focused scope of work, which will help us deliver on our multiyear growth aspirations. Now I'll hand the call back to Andrew.

Andrew Wilson, CEO

Thanks, Chris. Interactive entertainment is at an inflection point. The industry is expanding; the number of players is expected to grow significantly over the coming years. The audience is becoming more diverse with cultural and generational trends accelerating content consumption. Engaging this expanding player base means reaching them on devices everywhere through disruptive technologies. For EA, these transformations represent opportunities to grow today and over the long term. We have the best talent in the industry to execute against our long-term strategy. It's through their passion and creativity that we will continue to deliver on our mission to inspire the world to play. We are focused on bringing more amazing games to more people around the world, inspiring them to build community, celebrate shared fandom, and have joyful experiences. The future of entertainment is interactive, and no team is better equipped to lead this transformation than EA. Now Chris, Laura, and I are here for your questions.

Operator, Operator

Our first question will come from Andrew Uerkwitz with Jefferies.

Andrew Uerkwitz, Analyst

I have a question regarding June and then a broader inquiry. Chris, could you help clarify the guidance for June? A year ago, you had one title, but now for the June quarter, you have five. There's also strong momentum in live services. Is this a conservative estimate? Is there anything in the live service momentum that suggests a slowdown? Any additional insights you could provide about June would be appreciated.

Christopher Suh, CFO

Andrew, are you referring to our guidance for Q1?

Andrew Uerkwitz, Analyst

Q1, yes. Yes, sir.

Christopher Suh, CFO

Yes. Right. So specifically, our guide in Q1 is driven really by the performance of our live services business. And as you pointed out, we have some year-over-year things on new launches that are driving that performance.

Andrew Uerkwitz, Analyst

It seems like five games should generate more than a couple of hundred million dollars, right, if I'm calculating correctly? Or is it just in? Go ahead.

Christopher Suh, CFO

No, sorry. And we're happy to sort of take you through sort of line by line on that. But it is relative to the size of the launches, I think, that you're referring.

Andrew Uerkwitz, Analyst

Got it. Okay. That's great. Yes. And then just kind of big picture, some of the trends that I think you saw in the previous quarters around kind of weakness in smaller titles, I think you guys or some of your peers called out this idea that gamers are kind of coalescing around the biggest titles. Are you still seeing that? And then secondarily, and maybe more importantly, how has that impacted where and how you invest in future titles?

Andrew Wilson, CEO

Thank you for your question, Andrew. I believe it's a relevant topic. We currently observe two trends in the marketplace and consumer behavior. One trend is more immediate, while the other has longer-term implications. Historically, when there's softness in consumer spending or macroeconomic uncertainty, we notice that consumers tend to gravitate towards the most prominent brands and recognized products. This behavior stems from their reluctance to spend on new or less familiar options. Brands like FIFA, Madden, and The Sims have consistently performed well during such times. However, this is just a temporary phase. We anticipate that as consumer spending improves, there will be chances for new brands and titles to emerge. Nonetheless, we believe that the shift towards broader social ecosystems within gaming will remain significant. While we are fundamentally a games company, the concept of what constitutes a game is evolving. The elements of play, watch, create, and connect are central to our strategy, with connection driving the future of our business. As we consider the development of our franchises like FC, The Sims, Battlefield, and Apex, we envision them as platforms for content that support long-term engagement across these four areas. We expect this approach to be more enduring than the current economic climate. We're also dedicated to investing considerable resources into creating engaging games and experiences for large online communities. While we're excited about launching new projects like Jedi that present remarkable interactive narratives tied to established IPs like Star Wars, a significant portion of our investment will focus on fostering those expansive gaming experiences. Additionally, we see potential for growth through social and creative tools, both within and beyond the gaming environment, with a particular emphasis on EA SPORTS in the upcoming year.

Operator, Operator

Our next question comes from Benjamin Soff with Deutsche Bank.

Benjamin Soff, Analyst

Just wanted to dig in a little bit on the expectations for FC. Obviously, you guys had a record year for the franchise, and you're expecting low single-digit growth in the upcoming year. So I just wanted to better understand the drivers there and if you see any challenges or execution risks that you go through the rebrand.

Andrew Wilson, CEO

I'll touch on this broadly, and I'll let Chris kind of talk a little bit more on the details of how we're forecasting and planning. First and foremost, we're coming off an extraordinary year. Football as a sport is growing globally. We think the World Cup did great things for continuing to grow the sport broadly and the fan ecosystem around the sport. I think what we've been able to do with our football franchise is really become central to the fabric of football culture, and the results that you are seeing are really demonstrative of that importance that we play in that fan football culture. My belief and my belief all along has been that as we move through this rebrand, and certainly as we talked about in the prepared remarks, this rebrand was probably the single biggest rebrand moment in the history of the company and almost certainly the most successful by a fairly wide margin. We've never seen this kind of consumer energy and this kind of positive consumer energy around a launch of this nature, particularly for a business that we've been in for 30 years. And so I continue to believe that moving through this rebrand actually presents us extraordinary opportunities for growth, and I've talked about this before and the context of what we can do for the player broadly, how we can extend the play, watch, create, connect experience, how we can extend the relationships that we have with commercial brands that are equally valuable in football fan culture over time. As we move through this year, and you see what we're doing in the context of the game experience, and what's going on around that, we feel very bullish and very confident around growth opportunities in our football business. But we're coming off a pretty big year, and it's a pretty big comp, and so I'll hand off to Chris to kind of talk you through how we're thinking about that.

Christopher Suh, CFO

Yes. Thanks, Andrew. Exactly as Andrew said, we're seeing an incredible year for FIFA. We talked about it extensively on the call. Actually, FIFA for the full year across all platforms grew 20% this year in constant currency, and that's off of '22 that also grew double digits. And so the momentum in the business has been fantastic. As we look forward into the launch of FC, as Andrew said, we're really focused on the player experience and making this a great experience. We're pleased to be able to grow the business again off of 2 consecutive years of double-digit growth.

Benjamin Soff, Analyst

Okay. Great. And then just one on the guidance. I think last quarter, you talked about mid-single-digit operating income growth. And if I'm doing my math right, I think the midpoint of your guide implies more of a low single-digit growth rate. So first of all, is that correct? And what changed? And is it FX or maybe something else?

Christopher Suh, CFO

Yes, sure. As we gave the guide at the beginning of Q4, we went through a number of planning assumptions that we shared with you in terms of what we saw in terms of player engagement and the quality of games and execution. I would say the biggest difference between now and then is, honestly, the performance that we had in Q4. We had an incredibly strong Q4, exceeding our own expectations on a number of fronts that we talked about in the prepared comments. As we look forward into '24, our outlook and our planning assumptions for '24 in many cases remain unchanged in the sense that all the things that we focus on, which is the quality of games, execution, and delivery of our resilient live services, those remain quite stable and consistent and unchanged. I would say that the comp is just quite a bit higher.

Operator, Operator

Your next question comes from the line of Matthew Thornton with Truist Securities.

Matthew Thornton, Analyst

Could you provide some insights on Star Wars Jedi: Survivor? Specifically, how is it performing compared to its predecessor, and what should we expect from that title for the rest of the year? Additionally, regarding mobile, we have The Lord of the Rings game launching in the first quarter. How significant do you think that will be for the full year? Moreover, it seems like the mobile market is starting to improve or stabilize. Can you share more about what you're observing in that area as we approach fiscal '24?

Andrew Wilson, CEO

Yes. On the Jedi piece, and I'll let Chris touch on Lord of The Rings, maybe Laura can give you a little bit more color on the launch of that and what we expect. On Jedi, again, we're overjoyed. We made the bold decision to move the title 6 weeks to give the team the opportunity to really get to the quality of games they wanted. And of course, as you heard in our prepared remarks, the quality has been very, very strong, and many are proclaiming it going to be a game of the year contender. Certainly, playing it and speaking to people who are playing it, it represents incredible storytelling in the Star Wars universe. So I think we're building on where we were with Jedi: Fallen Order, and it's certainly been a very strong launch for us. It was very early. I think we're 11 days in at this point. We're in a different kind of market dynamic, but I would tell you it's pacing very strongly against our expectations and against Jedi: Fallen Order.

Christopher Suh, CFO

Great. The only thing I'd add to what Andrew said about Star Wars is that exactly as we said, we're incredibly excited about the launch. This is a title that we expect to contribute to our financial performance for a very long time. And so we're in early days. In terms of The Lord of the Rings mobile launch, again, another title we're very pleased with in terms of the quality of the game and the expectations around it. We are being modest and prudent in terms of the underlying implied financial performance within our guide, consistent with what we've talked about in terms of launches of some of our other titles over the last couple of quarters.

Operator, Operator

Our next question will come from the line of Clay Griffin with MoffettNathanson.

Clayton Griffin, Analyst

I have a question about Apex. I noticed that Overwatch is trying its first IP crossover collaboration. Please correct me if I'm mistaken, but it seems that Apex hasn't really pursued this approach. I'm interested in your thoughts on the advantages and disadvantages of potentially exploring that avenue. I'm not sure if it aligns strategically with Apex, but I want to understand your broader goals for Apex regarding monetization and engagement in relation to such activities.

Andrew Wilson, CEO

Yes. I think what you've heard from us, and certainly the performance in Q4 is testament to this, is Apex is one of the strongest franchises in our industry and certainly one of our strongest franchises when we talk about content as a platform, a game experience as a platform. Apex is certainly front and center as we think about our business model. We have a substantial player base with incredible retention. As is the nature of these free-to-play environments, there are ebbs and flows. What is unique to Apex is its ability to engage and re-engage through those ebbs and flows. We're going to continue to invest in the IP broadly, both geographically and from a platform perspective, extending play, extending story. For what it's worth, I don't think anything is off the table. As we think about game IP today, it's kind of like comic book IP of 20 or 30 years ago. The opportunities for us to continue to grow and expand and stretch the nature of the experiences that we're able to offer to our global player base over the next decade and beyond is unfettered.

Operator, Operator

Our next question comes from the line of Mario Lu with Barclays.

Unidentified Analyst, Analyst

Can you provide any insights on your mobile revenue outlook for fiscal '24 as reflected in the guidance? Additionally, regarding EA SPORTS FC, I noticed in the slides that you anticipate low single-digit growth for fiscal '24 bookings for the title. Do you expect any margin benefits that will positively impact the bottom line now that the FIFA license is no longer in play?

Christopher Suh, CFO

Let me address your first question. I'll start there and then I sort of missed the first part of your second question, so if you could repeat that here in a second. But in terms of the mobile growth for next year, our expectations are that the mobile business in aggregate will be down year-on-year after FY '23, a large part of that related to the decision to sunset the Apex mobile title, and so that obviously is in the comparable for '23. It won't be in the comparable for '24, and that's a big piece of the mobile business revenue performance expectation for '24. Can you go ahead and repeat your second question? I missed the first part of it.

Unidentified Analyst, Analyst

Yes, yes. Got it. So are you guys just expecting any sort of margin benefit that will flow down to the bottom line without the FIFA license for EA SPORTS FC?

Christopher Suh, CFO

Got it. Okay. It's FC. I missed the part which game you're referring to. Thank you for that clarification. As we think about the transition to FC, we really are focused on the player experience and making this transition a great one for our fans around the world. We are going to invest behind that across our brand, rebrand launching as well. As you think about the total economics of the business, I would not anticipate it being materially different year-on-year.

Laura Miele, COO

Mario, I want to provide some additional context regarding our mobile growth and our future outlook. Over the past decade, mobile has expanded from $11 billion to $106 billion globally, a remarkable increase. However, the industry has often chased this growth with a focus on user acquisition at any cost. We believe that approach is no longer viable. The economics were unsustainable, and the industry was concentrating on the wrong metrics. Our focus now is on profitable growth, where we give equal importance to both the top line and bottom line in relation to market and business dynamics. While it's easy to highlight top-line growth, our recent management strategy has demonstrated a significant increase in mobile profitability across our portfolio over the past two to three years. For example, Glu's profitability improved threefold from fiscal year '22 to fiscal year '23. We are committed to continuing to grow our business profitably. Additionally, Andrew has highlighted the importance of our connected ecosystem and communities, where mobile will play a vital role. Our success with FIFA shows that players engaging with FIFA HD on mobile generate considerably higher daily average revenue compared to those playing on a single platform, illustrating the significant role mobile can play in our overall ecosystem.

Operator, Operator

Your next question comes from Eric Sheridan with Goldman Sachs.

Eric Sheridan, Analyst

And maybe if I could go back to ask another big picture. One, obviously, there continues to be a lot of debate in the industry about distribution and content companies and vertical versus horizontal scale in the industry. Andrew, I want to know as we get deeper into 2023 and even against some of your longer-term thoughts, how are you thinking about scale, both from a distribution standpoint and from a content creation standpoint and how that factors back into possible capital allocation for the company over the medium term.

Andrew Wilson, CEO

Great question. As you might imagine, we spent a great deal of energy thinking through this puzzle. I think on balance that what we have done as a company over the last 40 years has navigated various distribution modalities from cartridge to disk, floppy disk to cartridge, cartridge to disc, disc to digital, digital to live service. Our expectation is that we'll continue to evolve, and we think we're at the forefront of that, particularly as you think about our live services business. When we think about scale broadly, I think there are 3 core elements to scale. One is the scale of our network, the number of players that we interact with each year and each month. As we talked about in the prepared remarks, we've just hit 700 million, which is an extraordinary amount of people and represents some of the greatest scale in and around our industry. The second area of scale, of course, is meaningful IP. What we've discovered over time is that our biggest brands continue to get bigger as we invest in them and this year as we take more ownership over our football brand with FC, but certainly, FC, Apex, The Sims, Battlefield, Need for Speed, and so many of our great brands, there's a level of portfolio scale that gives us optionality for the future that most in our industry or entertainment broadly, just simply don't have the benefit of. But there's another element of our business that I think is the most important, and that's our people. The scale of teams that we have that can deliver titles and content and live services year in, year out and has continued to do that through the ebbs and flows of our industry and the dramatic consumer trend changes and distribution changes and platform changes. Many other companies have tried. Not many have succeeded, as it turns out. As we look to the future and see that interactive entertainment is becoming a more and more important part of entertainment broadly, I think that our team scale is actually one of our greatest strengths. Our ability to launch the number of EA SPORTS games and updates every year, our ability to take Apex to 200 million people, our ability to take The Sims to 70 million people, and our ability to bring Battlefield back in an entirely new way in the future and reinvent and rethink what Skate might be as a consumer connection platform around Skate culture. There are very few companies, if any, in our industry or entertainment more broadly that can do that at the scale that we can do it. It's inherent in who we are as a company. We invest deeply in it, in the culture of our organization in really supporting creators. As we move forward in entertainment, the combination of our network, our IP, and, more importantly, our teams gives us the kind of scale that means that we have unbelievable opportunities for growth and certainly opportunities for success as we embark on what will be a new competitive marketplace.

Operator, Operator

Your next question comes from the line of Stephen Ju with Crédit Suisse.

Stephen Ju, Analyst

Okay. So Andrew, as I hear you talk about the connected ecosystem as well as blockbuster franchises, it seems like the complexity to develop a really successful franchise is only ratcheting higher. And hence, there is probably a higher level of risk around all these projects as well. So do you think you will allow development teams in, say, the nonsports games, not longer lead times to make sure the quality is high and the risk to franchise damage is minimal?

Andrew Wilson, CEO

Yes. I think it's a great question, and I go back to some of the comments we made earlier, which is as we think about the notion of a game, the definition is evolving pretty dramatically. When we think about time for development, it's not just the creation of a world or the development of characters or the telling of a story. It's really about how do we build this as a platform that drives long-term live service business over a 10-plus year period. As we think about supporting and investing in and growing our creating capabilities, our development capabilities, and our studio capabilities, that's really where we're investing meaningfully. On balance, yes, we will give them more time, and we will let them evolve how they build and what they build and how they launch their games over time. It's really not just about the complexity of games. It's really about the changing nature of what it is that we're building, but more importantly, the changing nature of how we derive value from that development over the long term. Where we once built games in 1 year or 2 years and then monetize them over 5 weeks or 5 months, now games as a platform are taking longer, but the benefits are exponentially greater. What we're seeing out of FC; and what we're seeing out of Apex; what we're seeing out of The Sims, which again launched in 2014, is meaningful return over a decade's long life cycle. As we set ourselves up for the future, that's going to be a meaningful part of how we invest in our company, how we invest in the content and service that we provide to players, and how we support our development teams to do that.

Operator, Operator

Your next question will come from the line of Mike Hickey with Benchmark.

Michael Hickey, Analyst

Just two for me. First one, just how you're thinking about industry consolidation, assuming acquisition deal gets brought here, what you think the implications are for the broader industry and on consolidation, Andrew? Second question, not intended to be a softball question here, but curious on AI and development, thinking about opportunities, challenges, winners, losers. It seems like you guys have been very proactive here. Already starting to see the success of AI on development, but just curious what you're doing today, the success you're finding, early learnings and how you think about a step-up growth opportunity over the long term.

Andrew Wilson, CEO

Yes, those are great questions. I'll address the first part and then pass it to Laura to elaborate on the AI aspect. Regarding consolidation, I understand this is a common question I encounter, though I'm often limited in what I can share. I don't have clarity on the fate of Activision and Microsoft. We remain Microsoft's largest partner and are the leading publisher on their platform. The outcome of that deal is not critical to our operations. We believe we possess the necessary scale, network, intellectual property, and talent to navigate the future and remain competitive, irrespective of that deal's result. Looking ahead, I do foresee some level of industry consolidation in entertainment, and I hope we can become a significant player in that landscape, given our valuable assets in the entertainment sector. However, at present, our position remains strong regardless of that deal’s progression. We have a robust strategy and promising opportunities that will allow us to maintain our status as the top publisher on the Microsoft platform. As for AI, I believe our industry stands to gain significantly. AI will enhance our efficiency in what we already do and enable us to create even more as we enhance our talented teams. This can lead to more entertainment for an audience eager for our content. AI also has the potential to empower our players and fans to generate content within our universe, presenting substantial opportunities for us. We are aware of the concerns surrounding AI, particularly fears about job displacement, which have been common throughout history with each technological revolution. Our hope is that AI will follow the same trajectory, creating more opportunities in the long run. We are committed to ensuring that our employees benefit from this transformation and can take on more tasks. Additionally, concerns regarding data ownership and the outputs of AI models are pertinent. With our 40 years of experience, we have an extensive data repository to draw from, and Laura will provide more insight on that topic. Finally, there is the issue of malicious use of AI. Our strategy is to collaborate with others in our industry, technology sector, and regulatory bodies to ensure that laws evolve alongside AI advancements, protecting our consumers, players, and fans from harmful actions enabled by AI in our field.

Laura Miele, COO

Yes. Mike, great questions. Andrew, you framed it, framed the AI picture incredibly well. There's a few things I can add. Clearly, AI has been a cornerstone of innovation for years, and we have a rich history at EA with AI. I mean, as we look at this next wave of innovation and technology, we see it to be a powerful accelerator for key areas in our business. As Andrew mentioned, we are incredibly optimistic about our unique competitive advantage given our scale and our data. Inputs into AI models will create differentiation, protecting our data for having protected IP that we can create generative content from. We have a rich library and history of assets. We really like how we're positioned. Keep in mind that we have great partnerships, and we talked a lot about FC today. We did a partnership with La Liga, and there's Hawkeye data that we're able to use in our game that is not going to be available in an open public marketplace. Again, we really like our position and the advantage that we have given our history and who we are. We are thinking about the advantage of this next wave of technology as the accelerator in game development for players and player experience, and then as we also think about truly live services at scale. So in game development, you would imagine the velocity of content, creative iteration is going to be advantaged greatly by having really smart content tools. Andrew mentioned creator content, lifelike animation, real-time text to speech for players and what that will mean for them and the experiences they have. As we think about live game support at scale, there's going to be some really great imagery detection, issue detection, economic modeling that we're going to be able to apply as we continue to grow these connected ecosystems. We are pretty optimistic and excited and inspired about this new wave of AI. Again, we have a rich history of it, and we're very optimistic about the years ahead and what it means for our business.

Operator, Operator

Our final question will come from the line of Doug Creutz with TD Cowen.

Douglas Creutz, Analyst

Just wondered if you could give an update on how the various projects that are associated with the Battlefield IP are progressing and maybe how that plays into some of the things you said earlier about giving your big franchises time to gestate so that they're great when they come out.

Andrew Wilson, CEO

Yes. I mean, we don't have any date announcements or future announcements, if that's the question, certainly this time. What I'd say is I think we've put together an extraordinary creative leadership team. I know we've got the team gathering this week in Sweden. I had a call this morning with some of the leadership, and they're very bullish on how that's progressing. I think we've got extraordinary confidence in that team and extraordinary confidence in the progress they're making against the future of that franchise. I come back to we're not just building a game; we're building a platform, content as a platform, to drive live services over the decades to come. As we continue to move through this process and it becomes appropriate, we'll share more about the future of Battlefield. But it is firmly implanted in that first pillar of our strategy: building games and experiences that attract and entertain massive online communities across platforms, across business models, and across geographies. We think that Battlefield is going to be a meaningful part of our future. We'll share more time and share more as time progresses.

Operator, Operator

That was our last question. Thank you for being with us. Thank you again to all of our extraordinary teams who delivered an unbelievable Q4 in the face of some macro uncertainty. We've set ourselves up for a very, very strong FY '24. And of course, congratulations to the Jedi team for having just launched an extraordinary blockbuster inside one of the biggest IPs on the planet. See you all next quarter. And that concludes today's meeting. Thank you all for joining. You may now disconnect.