EA distributed Kingdom Hearts? News to Me!

By LUDWIG VON KOOPA — Unfortunately, that and more must be added to the boycott list.

While looking for things to write articles on, I decided to continue our fight against Electronic Arts. And so my search brought me to the story on "EA Spouse". However, we'll get to that in another article shortly. Long-story short, I was looking back on the SEC's repository of annual reports where something caught my eye.

According to EA's 10-K Report ending March 2003,

In May 1998, the Company and Square Co., Ltd. (“Square”), a leading developer and publisher of entertainment software in Japan, completed the formation of two new joint ventures in North America and Japan. In North America, the companies formed Square Electronic Arts, LLC (“Square EA”), which had exclusive publishing rights in North America for future interactive entertainment titles created by Square. Additionally, the Company had the exclusive right to distribute in North America products published by this joint venture. The Company contributed $3.0 million and owned a 30 percent minority interest in this joint venture while Square owned 70 percent. This joint venture was accounted for under the equity method. The joint venture agreements with Square expired as of March 31, 2003. Our distribution of Square products in North America will terminate on June 30, 2003.

In Japan, the companies established Electronic Arts Square KK (“EA Square KK”), which localized and published in Japan the Company’s properties originally created in North America and Europe, as well as developed and published original video games in Japan. The Company contributed cash and had a 70 percent majority ownership interest, while Square contributed cash and owned 30 percent. Accordingly, the assets, liabilities and results of operations for EA Square KK were included in the Company’s Consolidated Balance Sheets and Results of Operations since June 1, 1998, the date of formation. Square’s 30 percent interest in EA Square KK has been reflected as “Minority interest in consolidated joint venture” on the Company’s consolidated financial statements.
Effective March 31, 2003, the Company and Square terminated their joint venture agreement and reached agreement for the Company to purchase Square’s 30 percent interest in Electronic Arts Square KK. In May, 2003, the Company acquired such 30 percent ownership interest in Electronic Arts Square KK from Square for approximately $2.5 million in cash. As a result of the acquisition, Electronic Arts Square KK has become a wholly-owned subsidiary of the Company and has been renamed Electronic Arts KK. The acquisition was accounted for as a step acquisition purchase and the excess purchase price over fair value of the net tangible assets acquired of $1.2 million was allocated to goodwill.

To summarize, EA and Square formed a joint venture where EA would distribute Square's games in America, and Square would distribute EA's games in Japan, for 30% of the profits for the distributor and 70% for the game developer. These ventures ended when Square merged to become the Square Enix we know today. So where does this come into play?

Revenue from co-publishing and distribution revenue increased by $37.3 million in fiscal 2003. The increase was primarily due to sales of Kingdom Hearts, Ty the Tasmanian Tiger and higher current year net revenue for the Battlefield 1942 franchise titles, for an aggregate increase of $89.8 million, partially offset by a decrease in revenue on Final Fantasy franchise titles, $59.8 million.

So what games must be added to the boycott? Well, notably:

• Chocobo's Dungeon 2
• Final Fantasy VIII
• Chocobo Racing
• SaGa Frontier 2
• Legend of Mana
• Front Mission 3
• Threads of Fate
• Chrono Chross
• Vagrant Story
• Final Fantasy IX
• Final Fantasy Chronicles
• Final Fantasy X
• Kingdom Hearts
• Final Fantasy XI
• Final Fantasy Tactics Advance
• Final Fantasy X-2

The biggest loss there is Final Fantasy Tactics Advance, the only game on the list for a Nintendo system. We don't need the PlayStation version of Chrono Trigger. Get it on the DS (like I did) or the Virtual Console.

From what I can tell, nowadays both companies are big enough that they can distribute around the world by themselves. Of course, Electronic Arts did pretty poorly with Square distributing their games in Japan since... I guess the Japanese have good taste! Or better taste, anyway. Something seems off about their huge Monster Hunter fan base.

Follow Ludwig's crusade against EA by sticking right here to KoopaTV! And Follow him on Miiverse at NNID PrinceOfKoopas!


Ludwig almost broke his boycott for FIFA 18, but it didn't have a key feature it should have.