Video game developer and publisher,
Electronic Arts Inc.
) recently announced a new game called
) platform. The new title promises adventure as gamers play the
role of detectives, who travel worldwide to uncover secret plots as
well as to search for hidden objects.
In their journey to solve the mysteries, gamers will be able to
take the help of their friends. Moreover, gamers can also help
their friends to solve their own mysteries, which will earn them
social points, much similar to EA's popular Facebook game SimCity
Social. The co-operative feature will further boost the game's
attractiveness in our view.
Over the last couple of years, EA has taken several initiatives
to gain traction in the popular segment of social gaming through
various games such as
The SimCity Social
The Sims Social
is the latest offering from EA in this space.
According to market research firm eMarketer, there will be
approximately 76.5 million social gamers in the U.S. by the end of
2012, of which 48.0% will be social network users. Social networks
such as Facebook have become the major destination for social
gamers as well as game developers.
Social game makers such as
), Rovio and Mensing have successfully utilized the Facebook
platform to garner significant customer base and revenue over the
last couple of years. However, among all these developers, Zynga
has been the most successful to date. As of June 30, 2012, Zynga
had developed seven of the top ten games on Facebook, based on
daily active users (DAUs).
is EA's first hidden object game, a genre in which Zynga's
holds the leading position. EA believes that the new game will be
able to boost its customer base further and provide significant
competition to Zynga going forward.
We believe that EA is diversifying its revenue generating base.
With rising consumer spending on digital gaming (social, mobile,
casual), we remain optimistic on EA's growth trends over the long
term. The company is opening up new fronts in social, mobile and
online gaming based on its well known franchises, which is expected
to boost its customer base going forward.
We believe that EA's innovative product pipeline will boost its
market share in the online gaming market. Moreover, EA's strong
focus on the digital segment will help it stand out even amid
sluggish market conditions going forward.
However, the highly fragmented video game market continues to
witness increased competitive pressures, which are hurting its
overall profitability. This compels us to remain Neutral on the
stock over the long term.
Currently, EA has a Zacks #3 Rank, which implies a Hold rating
in the near term.
ELECTR ARTS INC (EA): Free Stock Analysis
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