Morales EBM assignment 3

Entertainment Business Model: Nine Elements of the Business Model 1
A Business Model Analysis for
Electronic Arts: Need for Speed franchise
Student: Andry Morales Montes de Oca
Instructor: Carol Wonsavage
Full Sail University
EBM Assignment 3: Nine Elements of the Business Model
September 20 th, 2020

Table of Contents Pag.
1. First Four Elements Analysis …………………………………… 3
2. Last Five Elements Analysis ………………………………….... 8
3. Conclusion ………………………………………………….……. 18
4. References …………………………………………………….…. 19
5. Appendix …………………………………………………………. 23

Analysis of the First Four Elements of The Business Model Canvas.
When I was a child, I used to play Need for Speed until my mom shut down the pc for
me. I love cars since then and dream with upgrade one of them to the point in the game.
While most of the other ricing video games only occur on racetracks, this game drifts a
story about some cities secret, the underground races. A whole subculture that only a
few know very well.
Besides my passion for cars and my childhood experience, the video game is a great
product that has been producing and upgrading for a long time. The product is well
finished and always causes an impression for its great features and graphics. This is the
classic story of the hero that always catch the consumers’ attention. The underdog
becomes a king of the city by racing. One step at the time to the top.
As a franchise of Electronic Arts, Need for Speed represents one of the bigger
companies in the gaming industry. Creator of Battlefield, FIFA, Madden, UFC, NBA and
so many others, it is an icon into the entertainment industry as well.
Although I’m not particularly interested in the gaming industry for my career goals it is
important to keep an eye on. According to Koksal, 2019, in Forbes magazine, the
gaming industry can reach over $300 billion by 2025. This is one of the fastest-growing
entertainment industries in the United States (Ltd,2020).

Background
Electronic Arts Inc. (EA) is a global producer of digital entertainment. The company was
founded in 1982 in Redwood City, California. With more than 30 million registered
players EA generated $5.98 billion at its first fiscal quarter ended June 30th, 2020. It is a
record for the company and was archived while most other businesses are barely
surviving through the COVID pandemic (Electronic Arts Reports Strong Q1 FY21,
2020). This makes EA the second-larger gaming company in America and Europe.
Other EA brands are The Sims™, Madden NFL, EA SPORTS™ FIFA, Battlefield™,
Need for Speed™, Dragon Age™, and Plants vs. Zombies™ (About EA, 2020). EA
Games directly competes with other console manufacturers such as Sony, Microsoft,
and Nintendo.
Need for Speed (NFS) is a racing video game franchise under the EA umbrella. The
NFS series has been developed since (1994) but the better now are NFS Underground
(2003 and 2004), NFS Most Wanted (2005), NFS Nitro (2009), NFS Hot Pursuit (2010),
NFS Rivals (2013), NFS Payback (2017) and NFS Heat (2019). The new release in
2019 by Ghost Games bring hope for the next of NFS (NFS Heat Arrives on November
8th, 2019). The most sold NFS also includes in the “US Platinum Videogame since
1995” is NFS III equal to 1.7 million units sold, NFS High Stakes equal to 1.21 million
units, NFS Underground equal to 3.0 million units sold, NFS Underground 2 equal to
3.74 million units sold (only overcome by Madden NFL), NFS Most Wanted equal to
1.24 million units sold, and NFS Hot Pursuit 2 equal to 1.16 million units sold (Tang,
2020).

Customer Segments
The video game solves the need for relaxation and entertainment from the home's
comfort. With more video games coming online, they have become a good system to
socialize. During COVID times gaming has become more popular as a way to stay safe,
relaxing, and share activities with loved ones.
 Males between 13 and 54 who like car racing video games: 85% of males
who play video games in the United States are between 13 and 54 years old and
they are about 60% of the gamers (Statista, 2019).
 Females 18-35: The most liked to reach a female that plays are between 18 and
35 years old. According to Statista, 2019 about 70% of the female gamers are
between these ages.
Value Proposition
The people who play the game are connected by the passion for fast cars. The problem
is they are very expensive and tuning one is even more. By playing the game they
connect with that emotion while also compete for rewards. Things that in reality are
illegal or most are no able to do it.
 A high-quality graphic video game in a unique environment: Most cars video
games compete on racetracks that result in very boring after a while. They also
repeat the graphics over and over. NFS is different, to use as an example, in the
last series they recreate Palm City with astonishing details over the road. But the

most beautiful come during the night version of the game, where every detail
about light and shadows is covered. The same work is over the automobiles that
include a large list of 123 well-branded cars.
 Easy Access: Thanks to the internet today is easier than ever to buy a product
and access it. All it needs to have access is to purchase the copy only by a debit
or credit card and access by opening an account on the platform. Also, there are
old fashion CDs to download in your device.
 Support on diverse platforms: By downloading the right copy the customer has
support pretty much on any console. This includes Xboxes, PlayStations, and
PCs (Electronic Arts, 2019).
 A bunch of series such as Rivals, Most Wanted, Payback, and Heat: The
product has been in the market since 1994 and now is available 24 series. Every
one of them has been upgrading and changed the story a little bit. This brings a
bunch of choices to pick from regarding everyone's style and taste.
Channels of Distribution
There are several channels of distribution for this product, but the most frequent is the
internet.
 Official EA website at ea.com: By subscription on the official website
customers can download the app and play online through the internet. This is a

little new way to get video games but is very popular and has been gaining
addicts.
 Retail stores: GameStop, Walmart, Target, Best Buy are only some examples
but there are multiples others. The problem is they only sell tangible products
(CDs). The price change according to the store and the console that you play
with.
 Online stores: Amazon, eBay, Microsoft Store, these are other channels of
distribution that usually are less costly than stores.
Customer Relationships
The company release upgrades and different versions since 1993. This allows fans to
engage every time that a new series comes out. This has built a subculture around the
game where people feel identified.
 Need for Speed- Official EA website: The official site is a platform where
customers can research all previous and the last series. They also can learn
about the game and features of all cars includes in the video game. It teaches
the fans how to customize a car and how it looks like after many upgrades. They
provide some additional information and news, and finally offer the product over
several platforms (Electronic Arts, 2019).
 Social Media: Twitter, Facebook, and a YouTube Channel: The social media
connect with the youngest. This is a spot for people to bring content and debate

about the game, gamers, and any other subject associate with the series.
Facebook page has gathered 18.7 million followers while the YouTube channel
has 110.1 million views and 1.25 million subscribers (Need for Speed, 2019).
 Merchandise: During the NFS Payback development the production team works
closely with ASOS a British online fashion and cosmetic retailer to create a
unique look and style for each character. All the stuff was then available to the
public through the official site and online retail. This was an incredible motion to
emotionally connect with fans. They could dress up like their preferred video
game character (Electronic Arts, 2017).
 Tech Support: At the official page Need for Speed bring technical support.
Under the “Need Help?” subtitle pops up options and links for further issues and
questions. These are the most frequent problem that players face. There is also
a link to the AE web for personal and direct support (Need for Speed, 2019).
Analysis of the Last Five Elements of The Business Model Canvas.
Key Activities
These are the activities that allow the company to develop, distribute, and sale the
product. It is the day to day actions that keep the company running.
 Game development and improvement: To develop a high-quality video game
like Need for Speed is expensive. This always requires a huge crew to produce it
and a considerable amount of time. Usually, it has three stages pre-production,
production, and post-production (Stefyn, 2019).

 Creation and maintenance a platform: After created the platform it still needs
to be upgraded and maintain. This requires staff as well that keep up with player
issues and solve any problem. This includes a customer services department,
data collection, and repair physic devices.
 Sound design: NFS is well known for its good music selection. Every series has
its soundtrack selection and is updated. For example, the last series NFS Heat
use more Latin music like “Gente de Zona” since the environment is Palm Beach
in South Florida. To be able to use this music, the company needs a great
relationship with Latin labels. Other sound effects are created in studios.
 Motion capture and kinetics: In 2006 Nintendo release what has become a
trend. Wii console started a revolution in motion- control video games. Video
game developers use motion capture and kinetics to produce more actives
games. Actives video games have been introduced in rehabilitation programs
associated with a sedentary lifestyle improving exercise capacity (Parent, 2018).
 Purchase Rights: Every time the game is updated, and a new series come out
there are new cars to include. These cars are real and each of these is owned by
a company that has rights over features and trademark. The game developer
company has to buy the rights to use it in the game.

 Marketing: Without a good marketing campaign even, the greatest work can fail.
Is necessary a strong marketing campaign long before the release of any game.
This guaranty that the target will meet the actual product when it is released.
Marketing includes advertising, selling, and delivering products to consumers and
other businesses (Investopedia, 2020).
 Administration: Several activities are performed under this category that
ensures and maintain business. It is the day to day company activity and gains
equal relevance than the rest. Some of the major duties are recruit new
members, handle payrolls, organizing meetings, management of office
equipment, and handle internal and external communication amount many
others.
 Keep up with intellectual property: NFS franchise relies on a combination of
copyright, trademark, patents, trade secrets, and license agreements to protect
from piracy, unauthorize copying, and other forms of intellectual property
infringement.
 Sales and distribution: These are where the revenue comes from. The sale is
the ultimate goal of any business. Sales activity is highly connected to customers'
emotions. The mains distribution channels are online and retail store distribution
(Electronic Arts Inc., 2019).
Key Resources

Below will find the resources that are needed to develop a product, distribute, and
marketing it. Resources can be human, physical, intellectual, or financial.
 Engineers and Game Developers: The activity to design is very technical and
requires very skillful staff to get the job done. There are a bunch of engineers and
game developers involve in a single game.
 Computers, software, and Labs: To develop a high-quality video game is
needed for the best and fastest devices and software in the market. This also
requires an adequate environment for technicians to work and stay ahead of the
competition.
 High-speed internet: In 2019 was published the first free-to-play console game.
Claud gaming only can be run by powerful machines and high-speed internet
services to bring the best experience to players (Electronic Arts Inc., 2019).
 Musicians and actors: Today video games simulate more a film than an actual
game. This is the reason why many companies pay professional actors for
motion capture. They also need to create music for the game.
 Legal staff: Good legal staff will allow companies to defeat a lot of troubles. The
legal staff is in charge of identifying the contract with customers and suppliers
and identify the performance obligation in the contract. It is also necessary for
signing contracts, buy rights, and generate intellectual property registration.

 Marketing Staff: They develop campaigns to promote the product. Without the
marketing team, is lest probable that the customer meets the product. Very often
marketing team are highly qualified professionals that develop the 4Ps (Product,
Price, Place, and Promotion) strategy.
 Sale staff: It will help to generate revenues and engage with customers. This
staff is the face of the company. Customer loyalty can be to the salesperson as
much as the selling firm (Bonyuet, 2019). High qualified sales staff will contribute
to business success.
 Administrative staff: Administrative is the team that is not directly related to
development, but they play a crucial role in the organization. They provide
support and service by maintaining personnel records, handle documents, and
updating internal databases.
Key Partners
In this section will find the partners that contribute or need to affiliate to produce,
distribute, and sell the product.
 Hardware and software suppliers: Since game development needs powerful
PC and software, partners can provide access to the best tools and engine
available, in the case of Need for Speed it is Frostbite 3 used also in Battlefield.

 Consoles manufacturers: Sony and Microsoft's consoles PlayStation and
Xbox respectively are partnered with EA. This affiliation authorizes to Need for
Speed to develop and distribute disc-based and digitally delivered software
products.
 Apple, Google, and other app stores: It is based on the agreement to
distribute mobile applications and additional content through Appel and Google
amount others.
 Car Companies: Sometimes is difficult to maintain the partnership in good
health. This is the case with Toyota that has retired their cars from NFS Heat
according to the resource "because we do not promote illegal street racing”
(Alaniz, 2019). Nonetheless, AE maintains an extensive list of licenses with
other car companies like Nissan, Honda, Alpha Romeo, Aston Martin, BMW,
Corvette, Ferrari, Lamborghini, etc. (Electronic Arts, 2019).
 Law firms: Closely work with a law firm as a guaranty of reliable legal
representation. According to Hagens (2012), in 2008 EA was suet for $27 million
under the statement of “violate antitrust and consumer protection laws by
establishing exclusive license agreement with the National Football League
(NFL), National College Athletic Association (NCAA), and the Arena Football
League (AFL). This is only an example where the company has to face legal
issues and how this can drain the company’s resources.

 Studios and labels: Need for Speed Heat the last series includes a long list of
58 soundtracks (Electronic Arts, 2019a). To produce all this scenario is
necessary to keep a healthy relationship with musicians and labels.
 Vendor and stores: Games are sold directly to retailers in particular electronics
specialty stores and game software stores (Electronic Arts Inc., 2019).
 Government: The company is subject to many laws and regulations. This
includes regulation and laws related to user privacy, data collection and
retention, advertising, information security, taxation, and many others.
Cost Structure
These are all the major costs associated with the production process. It also includes
the cost of distribution and marketing.
 Pay for space (Labs and Offices): In this case, EA is headquartered in
Redwood City, California for business in the US, Canada, or Japan. For any
other country, the agreement is with EA Swiss Sàrl placed in Genova,
Switzerland. Keep two separated locations is costly (About EA, 2020b).
 Salaries: In many cases, the higher cost of any project is caused by payrolls.
The process of game development is complicated, and the cost depends on the
complexity of it. This process demand multiples stages and huge stuff working on

the project. This can make bleed out an organization is the time and salaries are
handling without caution (S. & Tryfanava, 2018)
 Licenses: Licenses often are expensive and hard to keep due to their
competence in getting it. Other car video game developers could try to gain
licenses over trademarks to produce their staff and compete. Super Street, for
example, doesn't have licenses cars, yet but they are a very dangerous
competitor becoming the number one in automotive tuning culture (Electronic
Arts, 2018).
 Purchase of Rights: EA held exclusive rights for Porsche vehicles. This is the
reason why this car is absent from other video games and other developers need
EA's permission to use Porsche cars (Alaniz, 2019).
 Marketing activity: Marketing campaigns can be expensive. The average cost
to maintain monthly campaign management on social media is between $1000
and $2500. In 1962 during the Super Bowl a 30 seconds advertising cost
between $37,000 and $42,500. In 2019 the same time advertisements raised to
$5.6 million (Su, 2020).
 Administrative costs: There are always cost associate with collateral activities.
According to Oum (2019), 6% to 10% of the total cost is associate with
administrative expenses.

Revenue Streams
It is how the company makes revenues. This is the final goal of every enterprise.
 Sales: Increasingly players purchase games as digital downloads and engage
with the new services and opportunities such as in-game purchases, extra
content, and esports broadcast. The company market and sell the game through
retail channels as well to keep flexible distribution and reach a high number of
players.
 Subscriptions: EA Play subscription is $4.99/month or can save some money
by paying $29.99/year. However, this subscription limited access to new
releases. On the other hand, EA Play Pro with unlimited access charges
$14.99/month or almost $100/year (Electronic Arts, 2020).
 Intellectual property: NFS as any other EA's brand operate based on a portfolio
of intellectual property.
 Royalties: The console manufacturers Sony & Microsoft pay a percent on the
revenue that derives from sales of the game or service. The same happens with
mobile application distributors such as Apple and Google.
 Licensing: Revenue is generated by licensing the game to a third party to
distribute and host the game (Electronic Arts Inc., 2019).

 Advertising: Company's website and services may contain advertising or link to
third- party services. When these links are clicked, the web will conduct the user
into a different website (Electronic Arts, 2018).
 Merchandize: From the official website on EA.com to TeePublic, Redbubble,
and Puma online retails stores there is NFS merchandise pretty much about all
series. Asos online retail store holds a whole clothes collection with every
character in the NFS Payback series. To get licenses and sell this products
retailer have to pay for it.

Conclusion
Based on the analysis the company is constantly challenged. There are many similar
products and competence have become strong. Racing car video games have a
decrease in popularity. NFS Heat the last series released in 2019 is a solid product that
may produce revenue over the time buy at a very slow rate. The franchise has a strong
reputation for millennials but very poor with the youngest generations. The company
relies on consoles and this represents over 60% of income but consoles are called to
disappear. Gen Z is a phone screen instead of a TV or PC screen generation.
For the company to stay ahead with competence it needs to produce more kinetic on
their games. It is also needed to adopt Virtual Reality (VR) and Augment Reality (AR) as
a new form of production. Moreover, promote an esports event and produce
broadcasting. It is the natural stage of how people will interact with video games. In my
opinion, there is not a soon recovery for Need for Speed if they ignore new trends.

References
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All Limits; Deep Customization, Authentic Urban Car Culture, an Open World,
and an Immersive Narrative All Fuel the New Need for Speed Game; Watch the
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Electronic Arts. (2018, April 18). Direct competitor to Need for Speed is coming this
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Appendix
Nine Elements of the Business Model Table.
Key Partners Key Activities Value
Proposition
Customer
Relationship
Customer
Segments
 Hardware and
software
suppliers
 Consoles
manufacturers
 Apple, Google
and other app
stores
 Car Companies
 Law firms
 Studios and
labels
 Vendor and
stores
 Government
 Game development and
improvement
 Creation and maintain a
platform
 Sound design
 Motion capture and
kinetics
 Purchase Rights
 Marketing
 Administration
 Intellectual Property
 Sales and distribution
 High quality
graphic video
game and
unique
environment
 Easy Access
 Support on
diverse
platforms as
PlayStation,
Xbox and PC
 A bunch of
series such as
Rivals, Most
Wanted,
Payback and
Heat.
 Need for
Speed- Official
EA Site
 Social Media:
Twitter,
Facebook and
a YouTube
Channel
 Merchandise
 Tech Support
 Males
between
13+ to 54
years old
who like
cars video
games
 Females 18-
35 years old
Key Resources Channels
(Distribution)
 Engineers and Game
Developers
 Computers, software,
and Labs
 High-speed internet
 Musicians and actors
 Legal staff
 Marketing staff
 Sale staff
 Administrative staff
 Official EA site
at ea.com
 Stores:
GameStop,
Walmart,
Target, Best
Buy
 Online stores:
Amazon, eBay,
Microsoft
Store
Cost Structure Revenue Streams
 Pay for space (Labs and Offices)
 Salaries
 Licenses
 Purchase of Rights
 Marketing activity
 Administrative costs
 Sales
 Subscriptions
 Intellectual property
 Royalties
 Licensing
 Advertising
 Merchandize

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