Electronic Arts (NASDAQ:
) has become one of the most troubled companies within the game
industry. From the
that followed SimCity to the
closure of two studios
and hundreds of layoffs, EA is slowly losing its position as a
game publishing stalwart.
In fact, EA won The Consumerist's
Worst Company in America
award two years in a row.
Despite these and other issues, investors have given EA their
full support, raising the company's value by more than 25 percent
this year alone. Over the last six months, EA's stock has
increased by roughly 36 percent.
Why are investors so impressed while consumers and bloggers
are typically disappointed?
Consumers care about their own individual experiences with a
company, but investors look at the bottom line. For all its
flaws, SimCity still managed to sell
more than one million units
during its first two weeks of availability. It is not yet known
how the game performed after the relentless complaints hit the
Web, but even a sales decline may not be able to
change EA's strategy
After receiving an endless stream of bad press, Disney (NYSE:
) has announced that it has
signed a multi-year agreement
with EA to produce a series of new Star Wars games.
This announcement comes roughly one month after Disney
dropped a Death Star-sized bomb
on LucasArts, the game development studio that George Lucas
founded. Disney closed LucasArts and terminated all unannounced
game projects, leaving many to wonder what would become of Star
Wars' future. At the time, Disney indicated that it wanted to
find a development partner to produce new Star Wars games.
EA is a logical choice for a Jedi Knights and evil Sith Lords.
As the owner of BioWare (which is famous for producing the Star
Wars: Knights of the Old Republic franchise, among other popular
role-playing games), EA will bring a new level of prestige to
Star Wars game development. By enlisting in EA's help, Disney
could avoid producing
that are destined for the GameStop (NYSE:
) bargain bin.
That's not to say that EA's games are flawless. Medal of
Honor, for example, has taken a backseat (a very crowded, painful
and almost invisible backseat) to Activision's (NASDAQ:
) Call of Duty franchise. If it weren't for the Battlefield
franchise, EA would not even be able to compete in the action/war
Even so, EA is still a very strong company. The firm owns a
number of key franchises, including Madden NFL, FIFA and The
Sims, which will receive a
in 2014. With Star Wars at its side (and likely a new Star Wars
game every year once the movies begin to arrive in theaters), EA
might finally be able to turn things around -- in the eyes of
consumers, at least.
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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