Electronic Arts Inc.
) recently announced the availability of five titles for
next-generation consoles starting today. The new version of the
) PlayStation 4 and
) Xbox One will now be available on Origin.com and at retail
The titles which feature in this line-up include
Madden NFL 25
Need for Speed Rivals
for PlayStation 4, with
NBA LIVE 14
joining the league next week. These titles will be available for
Xbox One from Nov 22 onwards.
We believe this is an ideal time to launch these next-gen
console versions, in order to attract the gaming enthusiasts. We
believe this will be a win - win situation for both the game
development companies and the console manufacturers as one
influences the business of the other.
As per the latest gaming industry report published by Gartner
in Oct, 2013, the research firm stated that the worldwide video
game marketplace (including video game console hardware and
software, online, mobile and PC games) are expected to reach
$93.0 billion in 2013, up from $79.0 billion in 2012.
The growth will be primarily driven by strong mobile gaming
numbers and increase in video game console and software sales.
Moreover, the market is forecast to reach $111.0 billion by the
end of 2015.
Moreover, the Gartner report also states that new launches
from traditional console manufacturers such as Sony and Microsoft
and increase in demand for these new consoles will help to resume
growth during 2014. Sales of existing console hardware are thus
forecast to increase from $15.9 billion recently to $22.7 billion
This optimistic outlook is also reflected in the third quarter
guidance provided by the company. EA expects to generate third
quarter of fiscal 2014 non-GAAP revenues of approximately $1.65
billion. The company expects non-GAAP earnings to be $1.22 per
share. We believe this is an optimistic outlook, given the fact
PC gaming is going to take a backseat in the near term.
We believe that EA's strong digital portfolio and continuing
growth in the free-to-play and online segment will drive top-line
growth, going forward. Additionally, the company is gaining
traction in the tablet and smartphone market, though games
released on Apple's iOS and Google's platforms are
However, we believe that the company faces a number of
headwinds that include significant competition from other game
makers such as
Currently, EA has a Zacks Rank #3 (Hold).
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