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EA Works on Boosting Sims Franchise

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Electronic Arts Inc. (EA) and GlassLab are jointly developing SimCityEDU, an educational game from the Sims franchise. SimCityEDU is set to redefine learning through in-game urban planning, environmental management and socio-economic development. SimCityEDU will release on the same day as SimCity on March 5, 2013.

The Sims franchise was released in 2000, and since then EA has sold more than 150 million copies of the game and its sequels in 22 languages across 60 countries. To date, the game has generated more than $3 billion in revenues for EA.

To make the franchise more popular, EA recently unveiled expansion and stuff packs for The Sims 3 franchise, scheduled to release in 2013 on PCs. The Sims 3 70s, 80s & 90s stuff pack is the first of the lot and will be followed by a couple of expansion packs, namely The Sims 3 University Life in March and The Sims 3 Island Paradise in June 2013.

Lately, the frequent release of expansion packs and downloadable contents (DLCs) have been the lifeline for aging game franchises. The regular updates not only keep the customer’s interest in the games alive, but also contribute significantly to the publishers’ and developers’ top-line growth.

We believe that EA is diversifying its revenue generating base. With rising consumer spending on digital gaming (social, mobile, casual), we remain optimistic about 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.

However, the highly-fragmented video game market continues to witness increased competitive pressures from Activision (ATVI), Zynga (ZNGA) and Take-Two Interactive (TTWO), which are the possible headwinds.

Currently EA has Zacks Rank #4 (Sell).

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