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EA Positive on Dead Space 3 Success

Zacks Equity Research

Electronic Arts Inc.’s (EA) much-awaited Dead Space 3 has hit the ground running, with the demo version of the sci-fi action game registering approximately 2 million downloads on Microsoft’s (MSFT) Xbox Live Marketplace and Sony’s (SNE) PlayStation Network. Dead Space 3 is set to release on February 5, 2013 in North America and on February 8, 2013 in Europe.

EA also revealed that the current download was significantly higher than the franchise’s previous installment, Dead Space 2, and the new game garnered 90,000 new “likes” on social networking site Facebook (FB) from gamers across the world.

Dead Space 3 follows the adventures of Isaac Clarke and Ellie Langford, who get separated after their spaceship crash lands on the icy planet of Tau Volantis. The new game brings another character John Carver, who partners Isaac during co-operative missions.

Dead Space 3 is one of the most anticipated games of 2013 and the demo version download is an indication that the game is set to be a hit going forward. Dead Space is one of the most successful franchises of EA (6.7 million copies sold to date) and the publisher is making all efforts to make the new game a success.

We believe that EA’s strong digital portfolio and continuing growth in the online segment will drive top-line growth going forward.

However, we believe that soft video game industry performance, particularly due to weakness in retail sales amid an aging console system lifecycle and the cannibalizing effect of free-to-play games remain concerns in the near term. Moreover, overdependence on any particular new title could also impact the company’s results going forward.

Currently, EA has a Zacks Rank #4 (Sell).

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