Video game developer and publisher, Electronic Arts Inc. (NasdaqGS:ERTS - News) better known as EA, is set to revive the classic Command & Conquer series of yester-years. BioWare, a division of EA, recently announced that it is developing a new game known as Command & Conquer: Generals 2, a sequel to the 2003 release Command & Conquer: Generals.
EA will use the Frostbite 2 game engine (used in the popular Battlefield 3) in the new game. The new installment of the much acclaimed series follows an interesting storyline where the gamers found themselves in the middle of an all-out war involving three unique groups. The new game features a single-player mode as well as cooperative and competitive multiplayer modes.
Command & Conquer: Generals 2 is expected to release in 2013 and will be exclusively available on PCs, which is surprising considering the declining profitability of the platform. However, we believe that the PC exclusivity is primarily due to the fact that Command & Conquer: Generals 2 is a real-time strategy game (NYSEArca:RTS - News).
In an RTS game, players have to maneuver units to secure areas of the map and/or destroy their opponents' assets within a very short span of time. RTS games made for consoles have been criticized due to lack of control and a PC’s keyboard and mouse are generally considered to be superior for this type of game.
The original Command & Conquer: Generals was released on Microsoft Corp.’s (NasdaqGS:MSFT - News) Windows platform and later on for Apple Inc.’s (NasdaqGS:AAPL - News) Macintosh platform. Although the game achieved significant popularity and also received rave reviews (Metacritic score of 84), we believe that the declining demand for PC games in recent times will make it difficult for the new game to be as successful as the original version.
In fact, the PC and console based games are facing the risk of extinction due to the increasing competition from portable devices. With the increasing consumer spending on mobile games and social networking games, demand for popular consoles such as Microsoft’s Xbox and Sony Corp.’s (NYSE:SNE - News) PlayStation are expected to decline to going forward. According to NPD data, hardware sales for the month of November 2011 were down 9% from the comparable quarter in the previous year.
We believe that EA’s significant exposure to digital gaming will boost its top-line growth going forward. EA has made significant acquisitions in such as Klick, PopCap games and Playfish over the last couple of years to bolster its presence in the social and mobile gaming market. The company has an important partnership with Facebook which has helped it fight significant competition from social gaming company Zynga.
We have a Neutral recommendation on Electronic Arts over the long term (for the next 6 to 12 months). Currently, Electronic Arts has a Zacks #3 Rank, which implies a Hold rating in the short term.
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