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Pre-Order Bonus from EA

Zacks Equity Research

Gamers who pre-order Electronic Arts Inc.’s (EA) Dead Space 3 from GameStop Corp. (GME) and Amazon.com Inc. (AMZN) will receive special bonus weapons. Moreover, gamers will also be entitled to a special Dead Space 3 Limited Edition package on pre-ordering the game. The bonus weapons are an EarthGov-issued sub machinegun (EG-900 SMG) and a Tesla Enervator.

Dead Space 3 is being developed by Visceral Games and published by EA. The first installment, Dead Space, was released in 2008. Dead Space 2, the sequel to the science fiction game first came to market in 2011. Other than these, two prequel games were also released.  All these games have garnered good ratings from metacritic.

Moreover, the Dead Space franchise has sold in excess of 6.7 million copies. The upcoming release of Dead Space 3 on February 5, 2013 (in North America) is expected to be incrementally beneficial to EA’s top line. In Europe, the game is scheduled to be released on February 8, 2013.

Dead Space 3 will be available on Microsoft’s (MSFT) Xbox 360, Sony’s (SNE) PS3 and PC.

The marketing strategy to entice gamers with bonus weapons and other game packages prior to the game’s release should definitely work in favor of EA. The company will get a better idea about the title’s popularity and its future performance. Moreover, EA will be generating revenue from the game even before it is released.

We believe that EA’s high-quality titles and a robust product pipeline along with the increasing online exposure and traction in the social and mobile gaming market will boost its top-line growth over the long term.

However, we remain cautious on EA due to sluggish consumer spending, dismal video game sales and increasing competition. Considering these factors, we have a Neutral recommendation on EA over the long term.

Currently, EA has a Zacks Rank #3 (Hold).

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