Electronic Arts Inc - A Titanfall Story ?

Electronic Arts
A 32- year old gaming Titan, one that many love to hate and others who hate to love- Is that one and the same thing?  Electronic Arts Inc (NASDAQ:EA) has been nominated once again for The Consumerist's notorious “Worst Company in America” award and everyone is wondering if it’s going to be a hat-trick for the interactive entertainment software company. The final list has 32 nominees who have been filtered based on votes that have been cast by The Consumerist’s readers.

Grappling for top spot are companies like Microsoft, McDonalds, Bank of America and Ticketmaster. Electronic Arts Inc (NASDAQ:EA) won the award in 2012 and then again in 2013 after a series of turbulent game launches that could not be waived off to be a one-off occurrence. Server issues plagued the online-only reboot of the company’s SimCity series and paying customers could not access the game for days.

Another disastrous launch was Battlefield 4- technical issues hampered players from playing the game online and some of the glitches persisted months after the release. Eventually, Electronic Arts deferred the launch of many other games as it had to deal with these first and it definitely lost out on its chance to dethrone Call of Duty. But let’s swipe all the demons into the shadows for a bit and see what die-hard gamers of Electronic Arts’ games see in the company.

A Colored Past

Founded in 1982, Electronic Arts Inc (NASDAQ:EA) is the creator of some of the most stupendous interactive games such as The Sims, Plants Vs Zombies, Battlefield, Need for Speed, to name a few. A company that started out as a shine on the horizon has risen to be a dazzler in the gaming space and poses tough competition for companies like Activation Blizzard and Nintendo.

There is no doubt about the muscle that the company pulls in the industry. Its top-selling game, The Sims has sold over 175m copies and it is undisputedly the most successful computer game in history. The game has bagged 5 Guinness World Records Gamers Edition awards. And let’s not forget the hysteria that is attached to Titanfall, another blockbuster Electronic Arts Inc (NASDAQ:EA) game.

This game had been restricted only to the Microsoft Corporation (NASDAQ:MSFT) platform. But the rumor mills are working overtime and are saying that that its sequel, Titanfall 2 will not wear the Xbox One, Xbox 360 or the PC shackles. Respawn continued to be the IP owner for Titanfall when the deal for the 1st game was signed. From a technical viewpoint, they could have gone to any other publisher for the sequel but they have stuck to EA.

The first game was Microsoft exclusive and the deal ensured that the game was not launched on the PS3 or PS4. That shield has been stripped from the sequel. But this launch too seems to be overcast by a shadow. The hot out-of-the oven news is that Electronic Arts Inc (NASDAQ:EA) has now deferred the Titanfall Xbox 360 version’s launch by two weeks. The company had launched the Xbox and PC versions on 11 March and this is the 2nd time the release is being delayed for the Xbox 360. 

Azure losing Allure?

Another spot on the Electronic Arts eye-view lens is that Titanfall is an online-only game and this means it is “married” to Azure which is Microsoft’s cloud-computing infrastructure. Any turbulence in the cloud has the potential to lead to instability in the Titanfall- Azure “marriage”.

Add to that the fact that the game’s 11 March launch was saddled with certain glitches and several players couldn’t play the much-awaited game. This added fuel to the fire of ire and gamers were not amused. And in a classic chain reaction, Microsoft’s Xbox One has fallen back on sales while Sony Corporation (ADR) (NYSE:SNE)’s PS4 trots forth at a clipping pace. The last thing Microsoft needs is another troubled game launch.

Project Morpheus

Let’s go off on a tangent here and pan the landscape for some more industry news. Sony Corporation (ADR) (NYSE:SNE) is developing a virtual reality headset for its PS4 via what they are calling Project Morpheus. Currently, this prototype has a 90° field of view, a gyroscope, an accelerometer, 3D audio and a 1920×1080 panel resolution to boot.  Epic Games and Crytek officially signed in to develop games for this project and it’s anyone’s guess when others will follow suit.

When a Game is Business

Virtual Reality is not a new concept and biggies like Nintendo tried in vain to launch VR almost 20 years ago during the Virtual Boy launch. Since that time, Virtusphere developed its “locomotion platform” that makes VR an immersive experience. Last year, two Valve developers also created an AR (augmented reality) that was called castAR and VR system and Occulus Rift had created a VR device just prior to that. 

Sure it was Oculus Rift and castAR that prod Sony to eventually bring Virtual Reality to its PS4 but the company has been developing 3D headsets for years now. This is where the VR plot thickens. It was just last week that Electronic Arts’ Chief Executive Officer, Andrew Wilson said that they are exploring development of VR and like bobbers, more VR news started surfacing from still waters.

Everyone Joins the Fray

The rumormongers said that Sony was also developing a Virtual Reality headset for its PS4. Just days later, there were reports in the WSJ that Microsoft is developing a VR headset for its Xbox One.  Though no official announcement has come in yet from Microsoft, Sony has confirmed that the release will not take place in 2014. The 39-year-old Wilson took over the reins of Electronic Arts Inc (NASDAQ:EA) in 2013 September and is the company’s youngest CEO. Intrinsically a game developer, Wilson was the EVP of EA Sports & Origin before he moved into the Chief Executive role. He has an undying passion for the business and interactive entertainment.

The company’s fiscal Q3 earnings were a mixed bag so to say. They missed revenue projections which led Electronics Arts to issue a muted guidance for its upcoming quarter. Though there was a rise of 33% in revenue that came in at $1.57 billion, it still did not meet the $1.65 billion guidance that the company had previously issued.

This shortfall was attributed to the dipping demand for the latest PS4 and Xbox 360 titles. Resultantly, Electronic Arts Inc (NASDAQ:EA) has pulled-down its revenue guidance for the full-year, to $3.91 billion. Despite the drop in revenue, EA posted earnings gains with earnings per share of $1.26 that topped analyst projections by 4 cents/share. 

A Change of Season

And even as the seasons change in 2014, more drama and action surrounds Electronic Arts Inc (NASDAQ:EA). Just last week, there was news that the company’s servers had been compromised and that a new phishing page had been set up with the intention of stealing numerous Apple ID usernames, credit card information and passwords. Netcraft, the security firm exposed the phishing attempt on Wednesday.

The dust has still not settled on that issue and now Electronic Arts is saying that though its UFC franchise "feels" like it’s a biennial series, the final decision about the release schedule for the martial arts game has not been confirmed by the company. This is EA’s 1st mixed martial-arts game.

Burning Bridges-Building Some

A large number of the EA Sports games are annualized, including Madden football, FIFA soccer and NHL hockey franchises. Whether the UFC games follow that pattern is yet to be seen. The company has seen numerous changes since the new CEO assumed his role. EA is also searching for a new agency to now handle the company’s media business in the United States. WK Media was in charge of this business since 2005, but that bridge is now burnt.  Another shift has been that of ex- head of corporate communications at EA. After 14 years with the company, Jeff Brown, the sarcastic voice of the company has now moved on to being camera maker GoPro’s head of communications.

Whether EA will Weather the Changes

The winds of change are evident at Electronic Arts Inc (NASDAQ:EA) but the fact of the matter is that a business is about the people behind it, and Andrew Wilson is a veteran in the field. It is left to be seen whether he will be able to steer the EA ship through the varying currents and touch the 2015 port in good shape.

He understands what his people go through, to make these games and that is what counts.
The performance of the company’s stock is intertwined with its sales performance as well as the reactions of the market, to its games. The upcoming year’s biggest release is definitely The Sims 4 and it will play a pivotal role in the company’s 2014 stock performance.

If Electronic Arts is able to wear blinkers and not give undue credence to  distractions of geographies and platforms and of business models, it will be able to channel all its energies and resources into making fantastic games that appeal to a global audience- there is no way it can go wrong. At the end of the day- Gaming is virtually the kernel of Electronic Arts Inc (NASDAQ:EA)’s existence and no one wants to see a titan fall.

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