Electronic Arts Inc
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Electronic Arts Inc
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Good afternoon. My name is Ashley and I will be your conference operator today. At this time, I would like to welcome everyone to the Electronic Arts Q2 Fiscal 2022 Earnings Conference Call. Mr. Chris Evenden, VP of Investor Relations. You may begin your conference.
Thanks, Ashley. Welcome to EA second quarter of fiscal 2022 earnings call. With me on the call today are Andrew Wilson, our CEO, and Blake Jorgensen, our CFO. 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. And lastly, after the call, we will post our prepared remarks, an audio replay of this call, our financial model, and a transcript. With regards to our calendar, Fiscal Q3 2022 Earnings Call is scheduled for Tuesday, February the 1st.
And as a reminder, a week from that, we'll post the schedule of our entire fiscal year of upcoming earnings calls 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. And 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, November 3, 2021, 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. And now I will turn the call over to Andrew.
Thanks, Chris. I hope all of you are well and staying healthy. Let me begin with a big thank you to our teams who continue to work from home and do amazing things for our players. I also want to extend a warm welcome to everyone at Playdemic who are now officially part about Electronic Ops team. We're thrilled to have them on board adding to our continued strength in sports and mobile. Q2 FY '22 was the strongest second quarter in the history of Electronic Arts. We're growing with our leading franchises, new launches, and large services all performing well during the quarter and our acquisition are driving additional growth beyond our core business. With more than 500 million unique active accounts, we're connecting players all over the world to each other, to a more about favorite content.
As a result, net revenue, net bookings, and EPS were above our Q2 guidance. And we're now raising our full-year net revenue, net bookings, and EPS guidance for the second time this fiscal year. Our core strategy is built on full key opportunities. The creation of amazing games and content. Tools for the community to engage more deeply with our experiences. The aggregation and distribution of content and experiences to an aggregated audience across platforms, business models, and geographies. And harnessing the power of the social ecosystems in and around down gains.
As part of this, we are executing against 3 growth drivers in FY '22, expanding our blockbuster franchises, building on our leadership in sports, and growing live services across our portfolio. I'll focus my comments on these today. With our talented creative teams, powerful IP and platform rates, we continue to grow leading blockbuster franchises. Experiences like EA sports FIFA, Apex Legends, Madden NFL, Battlefield, and The Sims, are some of the most prominent and powerful properties in all of entertainment. Apex Legends continues to grow as one of the top franchises in the industry. A brand-new IP that has scaled to more than a 100 million players and is closing in on a billion dollars in net bookings annually. Season 9 and season 10 introspectively set new marks for the highest active players of Season one.
And Q2 was the biggest quarter of income spending in Apex that we've had to date. Apex is growing beyond the game as well. It was one of the most watched titles on Twitch during the quarter with more than a $130 million hours of season 10 content watched to-date, up nearly 40% from the previous season. As the success of Apex Legends continues, it demonstrates how we are building long-term ecosystems in and around our biggest franchises. At its core is outstanding gameplay. Embedded in an immersive world of law and characters that continues to expand. Seasons of new content and in-game events like the recent collection event, keep the experience fresh for new and returning players. We've introduced new experiences like the squad-based arenas and recently added a ranked mode.
The Apex Legends eSports ecosystem is growing as well. With the second year of Apex Legends Global Series now on the way. Apex is moving from strength to strength. And we will add to that when we bring Apex Legends to mobile platforms later this year. Battlefield, another of our blockbuster properties in beloved by tens of millions of fans. Ahead of our upcoming Battlefield 2043 launch this month, 7.7 million players participated in the Battlefield 2042 open battle in October, including 3.1 million during the early access period, which is the largest early access event we've ever had.
This is an opportunity to take an early version of the game still in development, bring in a large audience into the experience and test and learn ahead of launch. With a small squad for the game in our open beta, we brought players into the full scale, 128 player combats, and many of the only in Battlefield moments that make this franchise so special. The engagement and feedback from players also helped out teams with areas of the game play to polish and refine as we move towards launch. We've now revealed all three of the game’s pillars. [Indiscernible] 128 plan multi-play Income Quest and breakthrough modes. Battlefield portal, a new write-up play that has the community very excited to create their own Battlefield experiences and hazard zones with completely new squad focus combat and tactical gameplay that fans are going to love.
We're looking forward to play as getting to all of these experiences when the full battle for 233 game launches on November 19. Europe 0.22, we're continuing to grow our leadership in sports through new gains, acquisitions, and new areas of expansion. Our global football, or soccer for us in the North America franchise continues to be one of the leading game properties in the world, with approximately a 100 million players across all platforms in the first 6 months of the fiscal year.
EA Sports FIFA 22, which launched at the very end of Q2, is off to the strongest start in franchise history. The innovation and our new Hot promotion technology revolutionized gameplay and has inspired, engaged in growing the community. Total players were up 16%, and [Indiscernible] franchise players are up nearly 50% year-over-year from launch. With net bookings also up significantly year-over-year from launch. We're seeing growth across the game with Ultimate Team engagement up 15% year-over-year, and more players coming into Volta and career modes.
There is strength in all areas of our global football franchise, including Mobile, will later this fiscal year, will bring new modes, new features, and improved gameplay that FIFA Mobile, creating our most rewarding mobile football experience today. For nearly 30-years, EA SPORTS has been driven to create the best global football franchise in the world. Moving forward, we're in a position to drive greater growth in line with the continued expansion and popularity of the sport.
With the talent of our development teams, our robust portfolio of more than 300 license part including the Premier League, UEFA, CONMEBOL, the Bundesliga, LaLiga, Serie A, the MLS, [Indiscernible], and many more. And our expertise in growth areas including e-sports and mobile. EA sports are ready to activate across the full spectrum of the football world. We have opportunities of new modalities of play, and new social experiences that will bring more fans together. As the sport grows, we have opportunities to expand cultural and lifestyle experiences through brand partnerships and content that our fans want more of in and around the game.
And we will continue to lead with the most innovative games on more platforms bringing the full breadth of the sport to the forefront from grassroots football to more of women's league teams and clients. We are more confident than ever about our broad future football and we will grow our franchises leadership with our partners around the world. We are continually investing in innovation, creativity, and all benches to bring EA SPORTS games close to the heart of real-world sporting fans. Engagement in Madden NFL '22 has grown each week of this NFL season as players jump into the refreshed Franchise Mode and Madden Ultimate Team to connect and compete with their friends.
We've grown the implementing business year-over-year as F1 2021 when Codemasters continues to bring in more players and keep fans engaged in one of the most intense F1 [Indiscernible] in years. NHL 22 launched in October, just as the NHL season began. With a new next-generation console experience delivering a dramatic new visual and gameplay leap for hockey fans. With a portfolio that now spend global football, American football, basketball, hockey, baseball, golf, UFC Fighting, and racing. No other entertainment provider in the world has the reach across top-level leagues, teams, and partners as EA SPORTS. We have a unique opportunity to bring together these properties and passionate [Indiscernible] enabling social connections through more innovative experiences and content.
Expanding a live service across our portfolio, particularly in mobile, is our third growth driver for FY 2022. In Q2, we closed the acquisition of Playdemic, creators of the massively successful Gulf clash mobile games. We're looking forward to combining our strength to continue the success of Gulf clash as a live service and bringing the clash mechanic to more of our sports franchises where our [Indiscernible] expertise will enable us to create some great new experiences. Our EA Mobile teams also continue to derive success in launch services, including Star Wars Galaxy of Heroes, which surpassed 100 million players last-to-date in Q2. Through the collective talent of the Glu Mobile, Playdemic, and EA Mobile teams.
We have built a powerful mobile [Indiscernible] of organization within a year. This group is shortly for accelerating growth in our portfolio. More than 15 top mobile live services, as well as introducing new experiences that takeout powerful IP, including Battlefield in the expanding mobile audience. The opportunities in front of us are exciting. We feel great about the position we are in with strong leaders, including our new Chief Operating Officer, managing Company-wide operations, creative leaders joining our management team, and our new Chief Executive Officer leading our efforts to grow social ecosystems. All supporting our 19 games as we drive growth in the next year of interactive entertainment. Now, I will turn the call over to Blake.
Thanks, Andrew. We had a strong beat this quarter, primarily driven by our live services led by Apex Legends and FIFA Ultimate Team. We closed our acquisition of play day at the end of the quarter, adding both a highly profitable Mobile title and Butte trend for new sports titles in our broad portfolio. We delivered net revenue of $1.83 billion and net bookings of $1.85 billion. Net bookings were $126 million above our guidance, making it our largest Q2 ever. And more than doubled the level of last year's. We're raising our guidance again for the second time this year based on our confidence of our franchises and live services through the remainder of the year.
EA SPORTS FIFA 21 performed exceptionally well through its product cycle, with engagement in its last couple of months [Indiscernible] very significantly on FIFA 20. Keeping fans engaged, drove strong retention from FIFA 21 into FIFA 22. We're off to the strongest start ever with the new title. Full game sales, and FIFA Ultimate Team are both up double-digits year-on-year based on the first three weeks of sales. Apex Legends net bookings were up over 150% year-on-year. There was some benefit from having 2 collections of that this quarter, but even so the underlying growth rate is clearly extremely strong. Apex has delivered over $1.6 billion in net bookings life to-date, and we're well ahead of our expectations for the year.
To launch an original IP and steadily building into a franchise of this magnitude is exceptional. And I would like to recognize the respond team for their creativity, deep understanding of the player base, and for their excellent execution, which can be seen again this week with the successful launch of seasonal level. Although we continue to watch closely, we have not seen a slowdown in engagement or stand on our games as countries such as the UK emerged from lockdown. Digital represents 62% of full game units sold through on a trailing 12-month basis, up 6% points from last year.
The strong digital mix for full game sales aided by growth in live services, pushed underlying gross margins significantly above last year's. Operating expenses, which include recent acquisition costs, came in slightly below our expectations. So now turning to guidance, we now expect fiscal 2022 GAAP revenue to be $6.925 billion, cost of revenue to be $1.848 billion, and earnings per share of $2.03 up from our original expectations of $1.34. Remember that this EPS calculation does not factor in future buybacks under our 2-year $2.6 billion share repurchase program. We are raising our net bookings guidance for the year by $225 million to $7.625 billion.
This is driven by outperformance so far this year plus ongoing strength from Apex and FIFA and just under $100 million from 6 months of Playdemic. This is partially offset by pressure on some of our Mobile titles, including product changes and IDFA impacts and some moves elsewhere in our portfolio. Our expectations for Battlefield are roughly unchanged from the time of our last call. We started the year already forecasting strong organic growth, and now we're $325 million ahead of that, having raised guidance twice. More specifics are in the downloadable model we post on our website.
We have also raised our guidance for operating cash flow by $100 million to $1.95 billion, with capital expenditures reduced to around $200 million this year, which would deliver free cash flow of about $1.75 billion. See our earnings slides and press release for further cash flow information. As noted last quarter, capex is at an elevated level for a couple of years as we invest in our employee work environments and new offices around the globe. For the third quarter, we expect GAAP net revenue of $1.75 billion, cost of revenue, would be $625 million, and operating expenses of $1.1 billion.
This results in an earnings per share of $0.02 for the third quarter. Remember GAAP EPS is driven by GAAP revenue deferrals, which is a very large number in Q3. We expect Q3 Financial 2022, net bookings to be $2.625 billion, up over 9% on last year's Q3, which it should be noted, included last year, the launch of FIFA21, that was the large quarter ever for Q3 of the Company's history. The games and live service teams are driving continued growth in our franchises. And we have Battlefield launching in just over a week. Our broad portfolio of games and live services position us well for a strong holiday season, with growth drivers in place for this year, next year, and beyond. Now, I'll hand the call back to Andrew.
Thanks, Blake. The holiday quarter is always an exciting time. We're looking forward to delivering amazing entertainment and connecting hundreds of millions of players around the world through each other throughout games and live services in the months ahead. I'm going to take the opportunity here to say thank you again to our incredible teams at electronic apps. Their commitment to creativity and innovation in service applies is second to none. And every day it is inspiring to work alongside such talented and dedicated people. It's been a strong year to date, and we're confident in our plans to drive continued growth in the years ahead. Now, Blake and I are here for your questions.
If you would like to ask a question at this time, please [Operator Instructions] Your first question comes from Mike Ng with Goldman Sachs.
Hey, good afternoon. Thank you for the question. I just have two. First, I was just wondering if you could provide us an update on your outlook for some of your new Mobile titles like Apex Legends and Battlefield, and then second, I was just wondering if you could offer some thoughts on the FIFA license, how aggressively will you negotiate for that, and what are some of the contingencies that you have planned for that one. Thank you.
Let me start with Mobile and then I'll let Andrew answer the FIFA question. We have not put in to our guidance virtually any revenue for either Apex Mobile or Battlefield Mobile this year. Apex Mobile is currently in test in multiple countries around the world. And we never quite know exactly what we're going to get out of test markets, but we're very pleased with the progress so far, which means we could bring it out earlier, but I would say that most of it is really focused on next year, which we think is a positive since this year is so strong. It will continue to help next year. And I would put Battlefield in that same category.
Yes. And I would just cover up. The metrics that we're getting out of those games continues to be very strong. And so, we continue to be confident about the opportunity around both of them. And with respect to license negotiations, I would start by saying, we have great relations with all of our partners, all 300 of them, including FIFA. As we think about the future of football, we think the future is very bright. We are positive and very fabric of the cultural football globally and important part of fandom for football, and when we got to interact with hundreds of millions of football fans, they tell us they want more cultural brand involvement from across the globe. They want more modalities of play inside the game, which go beyond just straight 11 on 11 football. They want more digital experiences outside the game, eSports, NFTs, broader sports consumption. And they want us to move really, really quickly. And so, I would tell you as we think about the future of football within is very bright, we're going to work with our global collection of partners that will still best enable us to do that. And we'll continue our conversations with each and every one of them to the extent that they are aligned with that objective.
Great. Thank you, Andrew. Thank you, Blake.
Next question is from Andrew Uerkwitz with Jefferies.
Thanks [Indiscernible] I just have 2 questions for you. The first one is, how should we think about Apex Legends, live services, and maybe even a comment or 2 on Battlefield live services as we head through the holiday and into next year. Or is it just a matter of more content, better efficiency on monetization, or how should we think about live services there?
What I talked about in the prepared remarks is that the Apex Legends team has really been very thoughtful and deliberate about the development and the building of this live service and the community support since the very beginning. And it starts with core gameplay. And what we've seen them be out to do with bringing more players each and every season. And kind of our weekly active in our monthly active players is grown throughout the cycle so far. They add new models of play, to things like ranked mode and arenas.
They add new events that are important and more deeply engage the community. And so, I think that as we think about live service on a go forward basis, you should expect that thing to continue to be thoughtful and deliberate. They'll continue to build out modalities of play, they'll continue to create more content, but also really work with the community-on-community level in events which really drive the most engagement over time. And we continue to be very confident this is going to be a really, really strong global franchise for us for at least a decade.
Got it. And then just a second question, Andrew, just high level, you're pretty forward-thinking CEO when it comes to technology. How do you see things like play-to - earn opportunities within the video games space? There seems to be a bit of an argument on whether that's good or bad for gaming.
Anything that brings more people in and engages those people for more time in a context with the extent that I think it's a good thing over time. I think that is the very foundation of our live services. I think the play-to-earn or the NFC conversation is still really, really early. And there's a lot of conversation and is at some level a lot of hype about it. I do think it will be an important part about the future of our industry on a go-forward basis. But it's still early to figure out how that's going to work. I feel good about our position with respect to that.
I mean, as a Company, we have been leaders in the creation of digital content that has real collectible value in the embedding of that content as part of large services and what we know about collection over time is that collectability is far more valuable to the collector, where the collected item has utility. And I think that in the context of the games that we create and the live services that we offer, Collectible digital content is going to play a meaningful part in our future. So still early to tell, but I think we're in a really good position and you should expect us to think more innovatively and creatively about that on a go-forward basis.
Awesome. Thank you so much guys. Thank you.
Your next question is from Doug Creutz with Cowen.
Hey, thanks. In your commentary, you alluded to some softness in the mobile market. I [Indiscernible] if could you just talk a little bit more about what you've seen, some of what your peers have important numbers that would suggest there was some sequential softening in the market. Do you think it's done the IDFA? Do you think there's different dynamics and playing with pandemic restrictions, easing in mobile versus console? Any color you can give would be helpful.
I think when we -- sorry.
Sorry go ahead. Andrew. Go ahead. No, you can go ahead.
I was going to say I think that when we look at across our mobile portfolio, we feel like we're in a really good position on a go-forward basis. We've got strong teams, got a strong IP, we've got a huge network of players, and we've got global reach. And we're already seeing the value of that when you think about our ability to offer EA IP for Glu Mobile folks, or our Playdemic folks to start thinking about new and interesting experiences.
I didn't think we've seen some softness in some of our games, particularly those that rely a little bit more needs acquisition. I think that will work through that over time. Again, creative talent, great IP, huge network applies in global reach allowance work through that and find a path through that. But net-net, I think that there is a little idea phase. But nothing that has us concerned about our ability to continue to grow our Mobile business overtime.
And [Indiscernible], I would say don't underestimate that in any -- I mean, we did 4 acquisitions in one year. There are always challenges to integration of acquisitions and sometimes those challenges are done we changed plans inside the businesses. There are things that we may not have anticipated or fully understood. And so, some of that is impacting -- none of it is troublesome, none of it is long term in our mind, and we're doing a great job in the integration it just happened also quickly. You can't plan on exactly when acquisitions are going to happen.
And we're very excited about the Glu team and the Playdemic team as Andrew mentioned in his comments. And I think going forward, we're in a really good position and I think for us the biggest opportunity is, and this is an obvious one and that is, how do we take our existing sports licensors and the talent that the Glu's and the Playdemics have in the sports side and drive new sports products through that talent base and -- or have them help our talent drive better products across those licenses. And it's a huge opportunity for us, obviously in FIFA, but also in Madden and PGA and other areas where we can either augment their games, add to their games, or add new games. And so that's why we're so excited about the acquisitions and not all that worried about any short-term softness in the business.
Very helpful. Thanks for taking the question.
Your next question is from Alexia Quadrani with JPMorgan.
Thank you. This is David on for Alexia. Just with Battlefield. Maybe you could discuss the key learnings from the data. How much should we read into participation for the early access period of indicator of demand. And I wonder if you just had a comment on the risk of if any, of releasing the game a week part of Black Friday? I think this was somewhat of a challenge for the game in 2018.
Yeah. So, I think that on balance, the feedback from the beta was overwhelmingly positive. There were some conversations around some elements of the beta, which is not unnatural innovator. And we will be able to take that feedback around those elements -- those constructive elements and really implement that in the game. And again, I think what we had talked about with the community is, it was an earlier build of the game that we used for the beta as the team continues to work, and tune, and polish the final build for the game. So, we feel really good about that. I think when you think about the early access numbers and engaging numbers overall, you should read that as tremendous demand.
The game is very appealing, the setting is very appealing, the modalities of play, the innovation and creativity that does, and the other things to work on that game -- have put into the game is something that the community's receiving very, very well and is really, really excited about. I wouldn't read too much into the week before Black Friday, I get that on a calendar basis, that looks the same as Battlefield 5. I would tell you though needing the Battlefield 5, we did not see the level of demand we're seeing now.
We did not have the level of innovation and again that we have now. We didn't have new platform technology driving a high-fidelity gaming experience that we have now. And so net-net coming out of the beta, we feel very good about player demand, the team has been working very hard on tuning and polish and filing the game where we feel really good about the game that the committee is going to get to play on day one. And the team also has wonderful plans for the future large service. That stuff where there's notion of [Indiscernible] nearly engaging our players deeply in the ability to create their own Battlefield experiences. And so, we feel very good and confident about the future Battlefield at this stage.
Yeah. The other thing I would -- I'd remember about Black Friday is that in years past there may have been 5 times more games in the marketplaces that will be this year. We already know that many games have been postponed, and so the calendar is nowhere near as crowded. Which means the need for discounting is nowhere near as high.
Second is, and more importantly is that, as we talked about, we're now running over 60 plus percent digital downloads and a game like Battlefield cues even more to PCs, which means the download numbers going to be even higher. And what that Allows us to do, is make short-term price changes if we need to, but we don't have to cut big deals with retailers like we used to do historically. And I think that will bode well for us from an ability to sell through a lot of games, as well as not have to discount those games dramatically.
Thank you.
Your next question is from Colin Sebastian with Baird.
Thank you and good afternoon. A couple from me as well. Apex performance looks really strong. The season updates are driving a lot of usage and monetization growth, but I'm curious beyond those updates and the Mobile extensions. Is it fair to say that you don't really see a need still for a bigger refresh or sequel to either Apex or the Legacy franchise? And then secondly, I might have missed it, but I didn't see commentary on Fiscal '23 growth in the release, which I think you had included last quarter. Thanks
And I'll let Blake the second part.
Yeah. That's what I'm about to say.
We continue to believe. Again, I go back to respond as a team, have been very deliberate and thoughtful about developing and building this franchise and nurturing and growing the community and their engagement over time. And I actually -- I think we're just at the beginning, I think there's such tremendous upside, and all that we're doing both in the existing experience on existing platforms and as we expand the Mobile. But again, I have nothing to announce today. But when you think about the broader ecosystem of experiences, we plan to offer, I wouldn't discount the notion of adding more modalities of play or even more tradition modalities of play to that experience, overtime.
And I would just note following the number of characters that are now in the game versus on day 1 are dramatically different and just gives you a sense of how that game is continuing to evolve, not to mention the ways to play, the modalities, land, the maps and so forth. On the 23 questions, I think, you know this, because we've been talking about just business for a long time. We typically don't even start talking about 23 until our third quarter, and we don't really give guidance until the end of our fourth quarter. What I will tell you is we are very optimistic about '23 and that's possibly what we're trying to signal today in that optimism and excitement.
And I think the thing to remember is over 70% of our business is in a lot of services, and that comprises things like Ultimate Team, Apex, Mobile, The Sims. It is questioning the special sauce of what we do. It is bringing people together, make sure that they're part of a social network, and then continue to serve them content that keeps them engaged in what they love. And that is different than many other companies in the industry. We've always tried to help people understand about the breadth of our franchises. And when you think about live services in combination with our sports franchises, which have come out every year at the same time basically, for -- mainly the life of this Company.
And we 've built incredible live services around those sports franchises, which makes it a much safer business model than having to go build something from scratch and hope you get it out on time. And when you then broaden that across The Sims and Mobile titles. And then add live services to new titles like Battlefield that don't have real life services today, you have a much more stable and growing business for the future. So, we're very confident in growth for next year independent of any one title because of that live service component of our business. And we're very excited about what that means going forward, and the ability for us to continue to add and evolve those live services to be even bigger over time
Thanks guys.
Your next question is from Martin Yan with Oppenheimer.
Hi, good afternoon. Thank you for taking my question, I have 2. Number 1 is on FIFA or sports games with collection elements. In general, how do you think about maybe maintaining the value of player investments and making their annually investments into the micro-transactions [Indiscernible] during over, perhaps on longer time? And I have a second question.
Do you want to give us a second question then we'll answer them?
Sure.
We'll, answer them both.
So, the second question is on your -- maybe our detailed rationale of elevating the studio GMs to executive leadership team. I think that's quite unique for a AAA publisher, and maybe help us understand what are the benefits and what exactly they will do to, in their decision--making and how they are getting involved with the executive leadership team.
Both really good questions. I think of that -- as we think about digital collectibles, particularly our sports games, again, in different across different franchise. And so, collectability has different value over time. And collectability games like FIFA, and Maden and NHL is really built on driving value through the traditional sports season. I think your question is, is there an opportunity, particularly as we think about NFTs and other digital ecosystem to expand that value over time. And the short answer to that is yes. And the slightly longer answer to that is, we need to work and make sure we continue to appropriately tune and balance the experience for our players.
And we're always looking to give our players more value in the experiences they enjoy. And you're seeing that based on the growing engagement in the game and a growing spending that -- they're getting that value. But we will continue -- as we have evolved the Ultimate Team experience over the last decade, we will continue to look for ways to add value for our players. To your second question around elevating studio GMs, for me it's a very pragmatic choice. When I think about the growth vectors for us as a Company inside of our industry, there is extraordinary games and content.
There were tools to more deeply engage the community, there will be aggregation and distribution of that content on aggregated audience. And there is an ecosystem born out of the engagement content, but exist beyond the [Indiscernible] gaming experience. At the end of the day, every one of those value drivers stops with the games and the content that we create. And so, for me it was really saying to our creative leaders. I want to make sure that you are in a strategic conversation, is going to help us drive growth as a Company. I think it is a very central strands of DNA of who we are.
They have demonstrated unbelievable leadership in our Company in support of our employees and in support of our fans and in the creation of amazing games and content. And this is a recognition that the next buys of growth of this Company are going to be born out of innovation and creativity across those 4 vectors but it will all start with that content. And as the leaders of the teams that create that content, I thought it was important to have them in the conversation.
Got it. Thank you, Andrew.
Next questions from Clay Griffin with MoffettNathanson.
Thanks. Good afternoon. I wanted to come back to Battlefield. You've talked about there being a strong free-to-play component within Battlefield ultimately. So, I guess, putting aside the Mobile extension, do you have a better sense of what that might look like now or do you need to see the engagement with the various game modes, I guess post launch and [Indiscernible]?
Yeah, when we think about all of our games and our big blockbuster franchises like Apex, like FIFA, like Madden, like Battlefield [Indiscernible] we're always thinking about innovation and creativity at its core, how do we build that out into modalities of play? How do we think about that across platform? How do we think about the extension those experiences and business model is 1 piece of that puzzle? I think when we look at our Battlefield franchise today with the knowledge that it probably makes sense to have a free-to-play component to that overall ecosystem in the future.
Job number 1 was truly a reinvention of the action shooter category and I think that's what they have seek -- sort of do. And that's what they've achieved through this 128-plan multiplayer [Indiscernible] expansion, deeper engagement in creativity to portal mode, and innovative new modes in and around the game. I think the next page of that is going to be the launch of the Battlefield Mobile total. And then as we continue to expand that -- and that in itself will serve tens of millions of players. I think as we ever think about further expanding apply those over time, free-to-play will make sense for the franchise, but it's not the focus right now.
Great. And then I guess, if you look at Battlefield historically, I guess my sense is that the community has as a general rule, not always maybe embrace cosmetic customization to the extent we've seen in other games. I guess, the question is, is that a fair assessment? And if so, I guess how do you think about monetization without reverting back to a DLC type monetization mechanic that might fracture the player base?
Yes. I'm not sure the notion of not being engaged in cosmetic content, is a fair assessment. I think that I don't feel premium, some number of years ago was kind of an innovation in the category that really extended the game experience out. 12, 18, 24 months. I think we saw deep engagements from the community in that. I think what we also sold out which we didn't get all of the community to engage deeply in that. And some parts the community want to engage in kind of a different profile. And so, we did away with premium, we've been kind of working with the community since then on different ways to extend and enhance the experience through live service. I feel good about what the team has planned now, I feel like it gives everybody in the community, which is probably bigger than 40 million players right now, an opportunity we extend and enhance their experience and engage.
Why that makes sense for them, but it doesn't bifurcate or trifurcate the community anyway. So, I think that this is a great community. I think they're a core community. I think the franchise and beloved amongst them. I think what we're seeing, even having been out of the market for 3 years, is demand and appeal continues to be incredibly high. And I'm excited about what we're going to launch with again, but I'm even more excited by the plans the team has taken and grow and expand that experience for global player.
Great. Thanks for that.
Your next questions from Mario Lu, with Barclays.
Great, thanks for taking a question. My question is on previous pack. In the pack, I believe roughly 1/3 of Ultimate Team players for payers. So, any color you can share on how the payer conversion has improved via this new mechanism and secondly, do you think this method of monetization is specific to player pack or can it be transferred to other titles like into Apex packs for example?
I don't have specific metrics on Pike conversion that I can share today. I'm going to say what we have seen in the combination of all of the new advancements we did in Ultimate Team, including one element which is the preview products. We've seen higher engagement and higher monetization overall. And as we've rolled that out, what we've seen is that we've converted a different level of spender or a different type of spender on the comics to preview packs. And so, what's clear to us is this is a really fun and new and innovative and creative way throughout our growing play [Indiscernible] engage with the most popular mode in the game.
And we'll continue to evolve and offer new things. And as I said earlier, we're always trying to figure out a way to offer new place of value for our players, and new reasons for them to engage and connect with their friends through the experience. On the notion of could -- evolve into other areas. I think the shortage that is absolutely. I think what we're seeing is that the surprise and delight of the traditional surprise mechanic continues to be something that is really fun and rewarding for this pond apply base. And then there's another group applies -- want to think differently about how they extended enhance their experience.
And you should expect that we will take the learning from FIFA across the portfolio and learning from elsewhere in the portfolio, things like our Mobile business, and things like Apex Legends, bring that back into our sports franchises. So, part of the benefit of having the breadth and depth of the portfolio that we have across sports and action and lifestyle, and having 0.5, billion implied in our network engaging deeper in the experiences that we offer is that we get tremendous learning across the portfolio and we're going to look to continue to do great things for our players as we learn from franchise-to-franchise.
Great. Thanks, Andrew.
Your next question is from Eric Handler with MKM Partners.
Thank you, very much and good evening, 2 questions for you. First on Apex Legends. I'm curious, a little over a year or so ago, we -- you started to talk a little bit more about localization for the game. Wonder if you could give us a little update there and how that's impacted the engagement, or bookings, or whatever. And then secondly, I think it's been a couple of quarters since we've heard much about The Sims Franchise. Wonder if you could talk a little bit about what's happening with that franchise. Is it still on a growth trajectory and where are you seeing innovation there?
Hey, Andrew?
I thought you might grab that one, Blake, sorry,
We know. you
Guys
Normally I just pointed him across the table, or he points at me. The Apex Legends, I'll start there, and to Andrew can talk a little bit about The Sims. We continue to work on how and why Apex works in certain markets. And there are certain markets, that it is unbelievable the strength of the franchise, where we haven't really done much of it than localized the language. Japan is a great example of that. And so, the team has been working hard, particularly on the Mobile build of the game to be able to localize it more to how people want to play the game in those markets. And then you want to be careful that you don't bifurcate the game in too many ways, but there may be some ways cosmetically or beyond language adjustments to make the game more powerful in those markets.
And you should have seen that soon, that's an ongoing process. It is hard to see and hard for us to carve that out as part of the financials. But trust that part of the reason that the business continues to grow as that we are doing that, you'll see much more of that as the mobile build, starts to go broad in the world where we're entering markets, where people have not played the game on console or PC because those aren't available to them.
And so, part of the markets that we're testing right now, are those types of markets where this is a new game for them, and so we're watching very closely as to how people play that, react to that, do they have positive or negative reactions to certain characters, for example, of certain types of gameplays. And that's part of why we want to take our time to make sure we test the Mobile build around the world because that's where it's the most powerful and where the most upside exist.
Yeah, and on The Sims again, The Sims is one of the great franchises about industry and exists in a category where we have very little competition as lost doll category. The Sims continued to do well with all engagement metrics up year-over-year. with Q2 bookings were up 32% year-over-year. In July, we released colleagues leading our 11th expansion pack, which quickly became one of the most popular packs we've ever done, Android performance. Well above our internal focus to the franchisees.
So, I guess I think this is a growing player base in the seams, the franchise's continued to grow. And I would tell you, again, we had a lot to talk about other than The Sims today. We'll come back and share more in the future, but that team continues to think about how to grow that franchise. Even more than this a -- in a category and with a player base that is very different from the rest of that portfolio.
Thank you very much.
Next question is from Steven Chu with Credit Suisse.
Okay. Thank you. So hey, Andrew and Blake. So, it's kind of building on the Apex Mobile commentary just now. Just wondering if you can give us an update on a more granular level on the cross pollination or polonization, I guess, between your newly acquired Mobile development studios with the EA brands. I think we're all very an ago to watch expand a FIFA audience to 2 billion plus. Given the footprint of football, football slash soccer. So just I understand to do no harm for the newly acquired studios where you have to be thinking about the multiple iterations, FIFA, or I guess UFC, as it might be known in the future. So just an update if you if you can, on what you might be doing in terms of the integration there.
Great question. Again, it's still relatively early for these integrations. And Playdemic is really, really early. But what I would tell you is, as we've thought about this, we really think about it across 3 vectors. Which is the core credit teams and how to best get value there and we have built a single Mobile organization out of our EA Mobile teams Playdemic and Glu on the Jeff Koppers, who is an industry veteran but has more than a decade in Mobile leadership. And is really rethinking and building a strong forward-looking strategy around Mobile for us. The second element is IP, and when we did these acquisitions, we talked about both sport and lifestyle. TAP Sports, baseball, Golf Clash, Design Home, Covet Fashion, FIFA, Madden, UFC, hockey, The Sims.
And so, part of what was going that before is we start to think about the integration. We have gone through; we're working on seems to -- we were working on this thing. It probably doesn't make that much sense to build that game when you can take that engine on apply it to the FIFA business, the TAP Sports engine, or the Gulf clash engine to football -- European football or American football. And we're in that planning phase right now and I would say the teams themselves, they're are really excited to take that core underlying technology and really apply to franchises that have global reach and global strength. The third is just kind of our network at play and how we start to work across that.
Glu has a tremendous advertising engine. And we're starting to think about how to tight that advertising engine across our client network into our other products. We're already starting to see the benefit. And then things like reach, we've already been able to launch TAP Sports, Baseball into Japan. And so, some early wins in what is still an early phase of integration. But I'm really encouraged by what Jeff is doing as the leader of this business, what I think we're going to get out of Mobile -first talent on global portfolio of IP, a network of half a billion players and global reach. And I think you should watch this space because there's lots of great things coming over the next 12, 24, 36 months in the place of Mobile.
Thank you.
Your next question is from Jamie Pass with Berenberg.
Thanks for the question. I was actually going to ask a couple of things that Marden, been covered now. So, 1 question remaining, which is stay with commentary from results when your peers about the potential for wage inflation among developers overcoming yet, could you just give a bit of color on how you're thinking on the cost side, are you worried about increasing headcount and the potential cost associated with that?
I'm sorry.
Yes.
Go ahead Go ahead. Sorry.
I was just going to say we always spend time thinking about that and trying to manage it as best as possible. I think there's no doubt that there's going to be some wage inflation. The bulk of what you, if you're looking at our P&L, the bulk of what you see in terms of increases in Apex are due to the fact that we brought new people into the Company through acquisitions, as well as through new hires. I don't see a substantial wage inflation pressure, but we're always conscious of it and trying to manage that.
Okay. Thank you.
And I will just say I think we are committed as an organization. We're very thoughtful with that compensation for all of our people to ensure that we keep pace with the market, and they are fairly rewarded for the amazing work they do. And so far, we have been able to do that really well. And I think we'll continue to do that in the future.
That's very clear. Thank you.
Your last question is from Andrew Marok with Raymond James.
Thanks for taking my question. One on the content cadence for Apex. So, response's been clear about their intention to limit crunch and is settled int the quarterly season releases. Is 1 season every 3 months a magic timeframe for players and for respond? Or is it the case were stepping up could potentially increase the velocity of season launches? Thank you.
It's an ongoing question. I think there is no straight answer to that. I think there's a lot -- we've got a lot of questions to the response engines are very inception of Apex Legends launch. As I continue to say, that team is being very deliberate and very thoughtful and works very closely with the community. They have in fact staffed up dramatically. They've got more people in LA, they've going another team in Vancouver that continues to work on the game and grow and develop more content.
I would say I think this team more than just about any other team in our Company and perhaps the industry, they have a very deep understanding of the player base and the community and they are building for the long-term. And so, the short answer is, could we deliver more content? Possibly. Does that make sense? Maybe. But what I do is I trust that team to be very close to [Indiscernible] thoughtful about how they build and develop that content over time, and that will mean sometimes that every 3 months, sometimes that it will be longer and some time it will be shorter.
But what we have seen them do and demonstrate now since the very inception is their ability to maintain player sentiment, to be a hard the best talent into their organization and continue to grow the business over time. And I think that they will continue to do that for many, many years in the future. So, with that, we'll wrap up the call there. Thank you, everyone for joining us and for great questions. Be well, and we'll speak with you again next quarter. Have a great day. Bye So,
This concludes this conference call. Thank you for participating. You may now disconnect.