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EA Set to Launch NFL BLITZ

Zacks Equity Research

Video game developer and publisher Electronic Arts Inc. (NasdaqGS: ERTS - News), popularly known as EA, recently announced that it will release the new version of NFL Blitz in January 2012. The game will be available on Sony Corp.’s (NYSE: SNE - News) PlayStation for $14.99. Gamers can also download the game on Microsoft Corp’s (NasdaqGS: MSFT - News) Xbox LIVE Arcade for 1200 points.

NFL Blitz has an interesting history. The game was originally released by Midway Games way back in 1997. In 1998, the first console version was launched for Nintendo 64 and PlayStation, with several console editions released between 1998 and 2003.

However, in 2005, Midway lost the NFL license, but launched Blitz: The League, featuring fictional players and teams in a fictional league. The game was a huge hit and prompted a sequel known as Blitz: The League II, which was released on PlayStation 3 and Xbox 360 in 2008.

Post Midway’s bankruptcy in 2009, EA Sports acquired the NFL Blitz intellectual property (IP). Incidentally, EA is the exclusive holder of NFL's video game rights. EA Sports expects the new NFL Blitz to be an "arcade" football game, different from the simulation-oriented Madden series.

NFL Blitz will mark the first game of the franchisee to release in high definition (HD) and carry the official NFL tag. The game has different online modes where gamers can play co-operatively or competitively against each other.

The current series offers a number of features, such as the seven players per side as opposed to eleven in the real life game. The original 1997 version had also seven players, but in the later versions of 2002 and 2003, number of players was increased to eight and eleven, respectively.

The new game has been developed by EA Tiburon and has been rated E10+ (Everyone 10 and older) by the Entertainment Software Rating Board (ESRB). We believe NFL Blitz will cater to a large customer base and the ESRB rating will ensure enthusiastic participation from the younger generation. Therefore, the new game may be expected to boost the company’s top-line growth going forward.

However, we believe the new series will face strong competition from another popular franchise from EA called Madden NFL, which imitates real life gaming more effectively than NFL Blitz. Therefore, we tend to think that gamers who are ardent followers of EA’s simulation games will find the arcade game less attractive.

Moreover, we also note that EA is hugely popular for mature games such as Medal of Honor and Battlefield and the child gaming market is a relatively new territory for the company. We expect EA to face significant competition from established players such as The Walt Disney Co. (NYSE: DIS - News), Hasbro Inc. (NasdaqGS: HAS - News) and Mattel, Inc. (NasdaqGS: MAT - News) going forward.

Our Take

NFL Blitz is the second franchisee that will be revived by EA. Earlier, EA announced that the first-person shooter franchisee Syndicate, a remake of the original game by Bullfrog productions that was last published in 1996 would soon be available. The new game is also expected to launch in early 2012.

We believe EA boasts a strong product pipeline for fiscal 2012 and beyond, which will drive top-line growth going forward. Further, the revival of cult classics such as Syndicate and NFL Blitz in early 2012 will boost its market share in our view.

However, the gloomy macro environment in North America, increasing competition from Activision Blizzard Inc. (NasdaqGS: ATVI - News) and weak video game results over the last 12 months compels us to remain on the sidelines.

We, therefore, have a Neutral recommendation on Electronic Arts over the long term (for the next 3 to 6 months). Electronic Arts has a Zacks #3 Rank, which implies a Hold rating in the short term.

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