Electronic Arts' Troubles Will Continue in 2014, Even With "Titanfall"

EA has bungled multiple launches in 2013, and the bleeding of talent away from the company is not a good sign. Activision's "Call of Duty" franchise remains king amid weak sales for the troubled "Battlefield 4," although the release of "Titanfall" in March, an exclusive to Microsoft's Xbox One, may finally give EA something to celebrate.

Jan 11, 2014 at 10:00AM

Electronic Arts (NASDAQ:EA) has had a difficult 2013. With launches of major games like SimCity and Battlefield 4 plagued with problems, the latter leading to lawsuits against the company, EA is proving to be incapable of launching major games successfully. This has allowed Activision Blizzard's (NASDAQ: ATVI) Call of Duty franchise to remain on top of the charts, with the reputation of the Battlefield series significantly degraded. As top talent leaves the company, EA will have a tough road ahead of it in 2014, even with the expected launch of two blockbuster games, one of which could end up being a killer app for Microsoft's (NASDAQ:MSFT) Xbox One console.

Abandoning the EA ship
Electronic Arts is comprised of a variety of studios, many acquired over the years. Recently, prominent figures in four different EA studios have left the company, creating a concerning case of brain drain for EA. Last year, after the bungled launch of SimCity, three top developers from Maxis left EA to start their own indie studio. Criterion Games, the EA studio responsible for the Need for Speed and Burnout series, lost its leaders a few weeks ago to the desire to start a new studio. Soon after, PopCap lost key executives for the same reason. And most recently, the founders of Chillingo, the studio responsible for publishing the original Angry Birds game, have left the company.

Continued problems with Battlefield 4
More than two months after launch, EA's Battlefield 4 is still having technical problems severe enough to render the game unplayable to some. Battlefield 4 was supposed to be EA's answer to Activision's Call of Duty franchise, but the game's problems may lead to gamers abandoning the franchise.

Call of Duty: Ghosts is outselling Battlefield 4 by a significant margin. According to VGChartz.com, Ghosts has sold 16.5 million copies across all platforms since its launch, compared to a less impressive 6.7 million for Battlefield 4. While it's not clear exactly how much of this gap is due to Battlefield 4's technical problems, it is clear that Call of Duty remains the king of the first-person shooter.

Big launches this year
EA has two big games set to launch later this year that are worth mentioning. The first is Titanfall, an online multiplayer, mech-style combat game set to release exclusively on Xbox consoles and the PC. The game is being developed by Respawn Entertainment and published by EA, and is set to release in early March.

There's quite a bit of hype surrounding the game, which received more than 60 awards at its E3 2013 reveal. This is Respawn Entertainment's first game, although the founders of the studio are former members of Infinity Ward, the studio responsible for Activision's Call of Duty series.

Titanfall is relying on Microsoft's Azure cloud infrastructure to run dedicated servers for the game, hoping to avoid connectivity issues that have plagued EA's SimCity and Battlefield 4. Azure allows Respawn to scale its resources as the number of players changes, hopefully preventing the huge number of players at launch crashing the system.

Microsoft offers developers access to Azure for a lower cost than renting servers, allowing Xbox One games to access thousands of servers in the cloud to offload certain computational tasks. This may end up giving the Xbox One a significant advantage over the PlayStation 4, but it's up to developers to harness that power.

Titanfall may end up being the next Halo for Microsoft, driving sales of the Xbox One and spawning a very lucrative franchise. The use of Azure essentially guarantees that the game won't be coming to Sony's PS4, and it provides a much-needed exclusive for Microsoft.

Another big game for EA is The Sims 4, the next iteration in the popular Sims series. It seems that EA has learned from its mistakes with SimCity and is not making The Sims 4 require an Internet connection to play.

The Sims 3, along with its myriad of expansion packs, sold millions of copies, and The Sims 4 has the potential to be a real cash cow for EA. That is, of course, assuming that EA doesn't have a repeat of the SimCity fiasco. The game is set to be released this fall.

The bottom line
EA's struggles will likely continue into 2014, although big launches like Titanfall and The Sims 4 may ease the pain. The problems with Battlefield 4 are causing delays in other games, and the reputation of the series has been seriously degraded by the abysmal launch. With top talent abandoning the company, it will be difficult for EA to return to its former glory.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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