There’s a reason video game companies push things like map packs, season passes, and microtransactions so heavily. They’re cash machines.
At Electronic Arts (EA), downloadable content added $1.3 billion to the bottom line last year, CFO Blake Jorgensen told attendees of a Morgan Stanley investor conference. Roughly half of that comes from the Ultimate Team add-on of the company’s sports games.
Ultimate Team is best described as a fusion of a collectible card game and fantasy football (or soccer or hockey). Available as part of the FIFA, Madden and NHL franchises, it lets gamers buy, sell, and trade cards of the sport’s players—with the goal of building the best possible team. Friends can then compete against each other with their decks.
“It extends the engagement of the user with that product,” Jorgensen said. “We’ve found if we can extend your engagement, we can typically monetize that over time.”
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The game taps into the hypercompetitive emotions of players, a fire it deliberately stokes in its marketing of the game (as with this ad for Madden NFL 15 two years ago).
Ultimate Team has been a fast-growing franchise for EA, but the company has generally reflected that growth in percentages. (It saw an 82% year-over-year improvement in calendar 2014, for instance.) This is the first time EA has attached hard numbers to its earnings.
Jorgensen was also forthcoming about how the rest of the company’s “extra content” business shakes out. EA’s mobile games unit now has annual revenues of $650 million. Subscription services take in between $300 million and $400 million.
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And, in news that’s likely to further concern investors of GameStop (GME), Jorgensen said digital downloads now account for 25% of all EA full-game sales.
“The economics for us are obviously better for us delivering all of those products digitally than they would be physically,” he said.